Job retention bonus: summer economic update

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A third iteration of support to employers who have furloughed employees and accessed the Government’s job retention scheme has been announced.

This latest announcement has been designed to help mitigate the potential job loss cliff edge anticipated when the scheme comes to an end on 31 October – the Chancellor also confirming today that there is no intention to extend the current scheme beyond this date on a general or sector specific basis.

The new Job Retention Bonus will be available to employers who have furloughed employees and subsequently bring them back to work if they continue to continuously employ them until January. Employers will be able to receive a one-off bonus in January of £1,000 per eligible employee who has returned and remained in employment.

We still need detail on the qualifying conditions for the bonus and some key questions that still need to be answered include:

  • Which employees will employers be eligible to receive the bonus for? Will it apply for any employee who has been furloughed since March 20, or only those who remain furloughed under the current (post-June 30) scheme?
  • Will the employee have to return to the same role, or simply remain employed by the business? Business models will undoubtedly have changed and adapted, meaning employees may now return to the business but in a different role from the one they were in before being furloughed
  • While the employee may remain in continuous employment and have been paid at least the Lower Earnings Limit (LEL) for National Insurance per week (currently £120), will a reduction to the employee’s usual working hours post-furlough restrict an employer’s entitlement to the bonus?
  • Will employers have to have made a Coronavirus Job Retention Scheme claim to receive the bonus for an employee? This would be relevant to those employers who have furloughed an employee but not been eligible to make a claim for them, i.e. employees not included on a RTI submission by March 19 or where the employer missed the June 30 claim deadline under the original scheme
  • If the employee decides to resign in the qualifying period to January, will this stop the employer claiming the bonus, even though their intention was to keep the employee employed up to January?

£1,000 is unlikely to cover the employment costs for employers during the qualifying period of the bonus and the scheme is clearly nowhere near as favourable as the current or previous job retention schemes. If employers do not envisage a furloughed employee’s role existing in the long term, this bonus is unlikely to factor into the difficult decisions ahead when thinking about terminating employment.

That said, the bonus could provide some welcome additional support for employers in industries where the furloughed employee role is likely to return in time, and provide an additional incentive to preserve those jobs and stand by their employees in the short term.

Depending on the conditions of the scheme, it could also be welcome news for those employers who have been able to bring their employees back to work and off of furlough to date.

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