Covid-19, News

Furlough Bonus Scheme

Furlough Bonus Scheme

Having stated expressly that the Job Retention Scheme (‘furlough scheme’) will not be extended beyond October of this year, the government has seemingly identified another potential way of encouraging employers not to make redundancies as a result of the economic effects of the COVID-19 pandemic.

This is known as the ‘Job Retention Bonus’. In short, employers may claim a £1,000 lump sum for retaining furloughed employees (who will cease to be furloughed at the end of October if not sooner) in their employment – continuously – up to 31 January 2021.

There are certain conditions to claiming this bonus, as summarised below:

  • Employees in question must have been previously furloughed in accordance with the furlough scheme
  • The employer must have up-to-date RTI records on employees in question for November, December and January
  • Employees in question must not be under notice on 31 January 2021
  • Employees in question must earn at least £520 per month on average between November and January, being the Lower Earnings Limit
  • Those who were furloughed and had a claim submitted for them after 10 June 2020 (when the CJRS closed to new entrants), because they were returning from paternal leave or time serving as a military reservist, will also be eligible for the bonus as long as they meet the other eligibility criteria
  • Employees who transfer under TUPE legislation will still be covered, provided the other conditions regarding furlough and continuous employment have been met, and the new employer has also submitted a CJRS claim for those employees (but employees transferring after 31 October 2020 won’t be covered)

The bonus payment is taxable, according to the government’s policy paper that was published on 31 July 2020.

With the furlough scheme ending in October, it remains to be seen how many employers will consider that this bonus makes it worth retaining for three months employees who would otherwise be redundant, or whether it will encourage the preservation of jobs for long enough for the economy to improve and the spectre of redundancy to diminish.

Full details of the bonus scheme are expected in September.

This article is provided for general information only and is not intended to be nor should it be relied upon as legal advice in relation to any particular matter. If you would like to discuss any aspect of it or employment law generally please contact Richard Berry at richard.berry@burlingtons.legal.

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