On Friday 31st July, HMRC published further details on how the Job Retention Bonus will work. The guidance covers eligibility requirements and the process for claiming the bonus.
So, what are the main points?
Businesses will receive a one-off payment of £1,000 for every previously furloughed employee that is still employed as of 31st January 2021. This bonus will be taxable.
To be able to claim, employees must have earnt at least £520 per month, from November to January, or £1,560 average earnings across 3 months. For those with average earnings, the employee must have had some earnings in each of the 3 months – November, December and January. These earnings must have been paid and reported to HMRC via RTI.
All previously furloughed workers are eligible, so if they met the criteria previously, you will be able to claim. This includes: fixed term contracts; office holders; company directors; agency workers and umbrella companies.
Those employees who returned from statutory parental leave or being mobilised as a military reservist after 10th June 2020 and were eligible to be placed on furlough and claimed for via the CJRS, will also qualify for the bonus, so long as they meet all the other criteria.
You cannot claim for anyone who is within their notice period.
How can I make a claim for the bonus?
Claims will be submitted via GOV.UK from February 2021. We believe this will be an online portal, much like the CJRS one. The government have promised to release more information on this by 30th September 2020.
What should I do in the meantime?
It Is important to ensure that all your RTI records are up to date and that all CJRS claims are accurate and that records are kept. This should make the Job Retention Bonus claim process much more straight forward.
Penalties for wrong CJRS claims
HMRC have released guidance on how they will be handling the recovery of overclaimed CJRS grants and the potential penalties.
What do I do if I have overclaimed?
If you have overclaimed one month, you can rectify this the following month without having to contact HMRC directly.
However, if you do not plan to make any further claims, or it is the end of the scheme, then you need to contact HMRC directly to arrange repayment.
What are the notification periods?
The notification periods are as follows:
- 90 days after you receive any CJRS grant you are not entitled to;
- 90 days after the day circumstances changes so that you were no longer entitled to keep the CJRS grant (i.e. the employee claiming for has left the business);
- 20th October 2020.
The notification period ends on the latest of whichever date applies.
What are the penalties?
Penalties will be equal to the amount of CJRS grant you were not entitled to receive, including any amounts not used to pay furloughed employee wages and associated costs.
Payment will be due within 30 days.
Employees with more than 2 years’ service, who are made redundant, are entitled to a statutory redundancy payment based on their length of service, age and pay (up to a limit).
On 31st July 2020, it become law that furloughed employees’ statutory redundancy payments should be calculated based on 100% of their normal salary NOT 80%.
The legislation does not impact any enhanced redundancy pay.
Reminder of CJRS over next few months
From 1st August, the employer is responsible for paying ALL NI and pension contributions for hours worked and not worked. The rest of the scheme remains the same as July.
From 1st September, the employee will still receive 80% of salary, up to a maximum of £2,500 (gross) per month, however, the government contribution will be a maximum of 70%.
This means that the maximum amount an employer can claim via the CJRS is 70% of salary or a maximum of £2,187.50 (gross) per month.
Employers are expected to pay the additional 10% and all NI and pension contributions for hours worked and not worked (up to 80% or a maximum of £2,500 gross per month).
From 1st October, the employee will still receive 80% of salary, up to a maximum of £2,500 (gross) per month, however, the government contribution will be a maximum of 60%.
This means that the maximum amount an employer can claim via the CJRS is 60% of salary or a maximum of £1,875 (gross) per month.
Employers are expected to pay the additional 20% and all NI and pension contributions for hours worked and not worked (up to 80% or a maximum of £2,500 gross per month).