How to apply for the Coronavirus Job Retention Bonus

A few weeks ago, as part of the Summer Statement, Chancellor Rishi Sunak announced the job retention bonus – £1,000 for employers that brought furloughed employees back to work and kept them on during November, December and January.

Now though, new details have been released and we have a much better idea of how the scheme will actually work, who is eligible for the bonus, and what employers need to do now.

How does the Coronavirus Job Retention Bonus work?

While the government continues to refuse calls to extend the furlough scheme beyond the end of October, it did offer an olive branch of sorts to struggling employers, a £1,000 Coronavirus Job Retention Bonus for businesses that bring furloughed workers back and keep them on.

This bonus only applies to workers that were successfully claimed for via the Coronavirus Job Retention Scheme (AKA the furlough scheme).

Under the current regulations, those employees can only be furloughed until 31 October 2020.

After this date, employees must be either brought back to work (either full or part time, and with the aid of the Coronavirus Job Support Scheme where applicable) or fired.

To encourage employers to keep people on, the government has promised to pay £1,000 per furloughed employee brought back to work provided the following boxes are ticked:

✅ Employees must be continuously employed (without a break) from 1 November 2020 to 31 January 2021

✅ Employees must meet the minimum income threshold – they must be paid at least £520 per month on average (£1,560 in total) during this period

This refers to their gross taxable earnings

Some deductions, such as payments into a company pension scheme, may affect which employees meet the minimum income threshold See these example calculations for more guidance on this.

(They do not have to receive this amount every month, but the total pay during this period must exceed £520 per month on average and they must be paid something in each month)

✅ Employers must have a UK bank account and pay details must be submitted online via PAYE under HMRC’s Real Time Information (RTI) reporting system

Who is eligible for a Coronavirus Job Retention Bonus?

Provided employees meet the criteria explained above, a wide range of UK businesses would be eligible for the bonus:

There is however one key exclusion:

❌ Employees serving contractual or statutory (legally required) notice periods that started before 1 February 2021 are not eligible for the job retention bonus

Fixed contract workers are eligible for the scheme provided they meet the criteria and were continuously employed – this can include the contract being extended or renewed.

For employees who returned from statutory parental leave or were mobilised as military reservists, 10 June 2020 is a key date. If employees returned after this date and were then placed on furlough, then they are eligible for the bonus.

Can I claim for both the Coronavirus Job Retention Bonus and Job Support Scheme?

Yes, the government has made it clear that businesses will be able to bring furloughed workers back to work, get help with the cost of their wages via the Job Support Scheme, and then claim the Job Retention Bonus when they have completed the required period of employment.

If you’re planning to do this, make sure to check the criteria for both schemes (full guidance on the Job Support Scheme is expected to be published shortly).

How can my business apply for the Coronavirus Job Retention Bonus?

Businesses will be able to apply for the bonus through an online system that will be up and running by 15 February 2021.

Applications will close on 31 March 2021.

(Before this of course, businesses wouldn’t have enough payment months to be eligible)

Further information on the application process will be published by the end of January 2021.

For now, accurate record keeping is crucial – with the government guidance making clear that “failure to maintain accurate records could jeopardise an employer’s claim”.

There are two key parts to this:

• Make sure that your Coronavirus Job Retention Scheme (the furlough scheme) claims have been correctly submitted
• Make sure that you are keeping accurate records of employee pay and submitting these on a Full Payment Submission (FPS) via HMRC’s Real Time Information (RTI) system

Also, make sure that you:

• Keep your payroll up to date, and report the leaving date for any employees that stop working for you before the end of the pay period that they leave in (usually the end of the month)
• Use the irregular payment pattern indicator in the Real Time Information system to account for all employees not being paid regularly

Essentially, all this boils down to making sure that the government knows what’s going on in your business – who’s on furlough, who isn’t, and how much they’re being paid every month.

Finally, the £1,000 bonus is taxable, so this needs to be reflected on your self-assessment or corporation tax return.

Key points for your small business

• The Coronavirus Job Retention Bonus is designed to reward companies who bring furloughed employees back to work and keep them on throughout November 2020, December 2020 and January 2021
• If companies do this, they will be paid £1,000 per employee
• To be eligible, employees must be paid at least £520 per month on average in gross taxable earnings (£1,560 in total) from November 2020 to January 2021
• Employees must be continuously employed during this period
• There are no restrictions in terms of company size, and both permanent and fixed term employees are eligible
• Employees serving notice periods that started before 1 February 2021 are not eligible for the bonus
• Payment data must be submitted via PAYE through HMRC’s Real Time Information (RTI) system
• Business will be able to claim the bonus through an online system that will be up and running by 15 February 2021