The Job Retention Bonus – A Plan for Jobs
As part of the Governments recently announced “A Plan for Jobs“, which sets out its proposals to combat job losses caused by the Covid-19 pandemic, a Job Retention Bonus is being introduced as an attempt to try and avoid the much talked about cliff edge when the Coronavirus Job Retention Scheme ends on 31 October 2020 and the impact that this will have on employees that are currently furloughed under that scheme.
The Job Retention Bonus is a one-off payment of £1,000 to UK employers for every furloughed employee who remain continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.
Like many aspects of the Job Retention Scheme, the detail of the scheme is yet to be published but based on the information available so far it does appear that the bonus may be payable to employers who have put employees on furlough at some stage even if they have already returned to work.
With the furlough scheme benefiting an approx. 9 million employees in the UK, the estimated cost of the scheme could be £9 billion. However, whether the potential to receive a payment of £1,000 per employee for retaining furloughed employees will be enough to persuade employers to avoid making redundancies will need to be seen. To receive the payment, for some employers, it would mean paying the increased furlough costs August through to September and then, once the furlough scheme ends, salary November through to January. As such, whilst the retention bonus is very welcome, it may not be enough to avoid the redundancy route.
If you have any questions on the job retention bonus or options as the furlough scheme come to end with increased employer costs from August 2020, please contact Matt Jenkin.