08 October 2020

Please note, the Coronavirus Job Retention (Furlough) Scheme has been extended until September 2021. The Coronavirus Job Retention Bonus will not be paid in February 2021. However the Government has announced that a ‘retention incentive’ will be ‘deployed’ at an appropriate time.

Due to the extension, the Coronavirus Job Support Scheme has been postponed until further notice.

Please refer to our new note for guidance on the extended scheme from November onwards. 

On 2 October, HMRC published a Treasury Direction which modifies the Coronavirus Job Retention Scheme (CJRS) to establish the Coronavirus Job Retention Scheme (Job Retention) Bonus (the Bonus).

In broad terms, the one-off taxable Bonus is available for employers in respect of any employee whom they have previously furloughed under the CJRS but whom they continue to employ through to 31 January 2021. Employers who also use the Job Support Scheme will still be able to claim the Bonus.

In order to be able to claim the Bonus, of £1,000 per qualifying employee, various eligibility requirements will need to be met. The Bonus does not need to be paid to the employee but the Direction makes it clear that the purpose of the Job Retention Bonus scheme is to ‘enhance and consolidate’ the purpose of the CJRS so employers may need to be able to demonstrate that they have used the bonus to ‘continue the employment of employees whose activities have been adversely affected by coronavirus’ – although the guidance (see below) does not reference any such requirement.

HMRC also issued guidance for employers on 2 October Check if you can claim the Job Retention Bonus from 15 February 2021. The Direction sets out the legal framework for the Bonus and is intended to have legislative effect. It is therefore likely that, where there is any ambiguity between the Direction and the guidance, the Direction will take precedence. 

Purpose of the CJRS and the Bonus

The Direction begins by reiterating the purpose of the CJRS is to provide for payments to be made to employers ‘incurring costs of employment in respect of employees who are within the scope of CJRS arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease.

Integral to the purpose of CJRS is that the amounts paid to an employer in accordance with the CJRS directions are used by the employer to continue the employment of employees whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission’.

The Direction goes on to state that the purpose of the Bonus is ‘to enhance and consolidate the purpose of CJRS’ and there is an explicit warning that no claim may be made in respect of an employee if it is abusive or is otherwise contrary to the exceptional purposes of CJRS or the Bonus. The extent to which HMRC will seek to verify how employers have used any Bonus is unclear.

Who is a qualifying employer?

To be eligible to claim the Bonus, the Direction provides that, at the time of making a claim, an employer must have:

  • a PAYE scheme which was registered on HMRC’s real time information system for PAYE;
  • made a CJRS claim in respect of the employee; and
  • delivered the required information to HMRC in relation to all relevant PAYE payments made by the employer in the period beginning on 6 April 2020 and ending on 5 February 2021.

Point to note: employers who have repaid all of their CJRS grants in respect of any employee will not be able to claim the Bonus for that employee. This applies regardless of the reason why the repayment was made. HMRC will also not pay the Bonus if the employer made an incorrect CJRS claim and the employee was found not to be eligible for the CJRS.

Who is a qualifying employee?

In order to claim for the Bonus the employee must be a ‘qualifying employee’. To be a qualifying employee:

  • the employer must have made a CJRS claim in respect of the employee;
  • the employer must have employed the employee (without terminating the employee’s employment) for the whole of the period beginning immediately after the end of period covered by the CJRS claim and ending on 31 January 2021 and made at least one payment to the employee in each of the three Bonus periods (see below) totalling at least £1,560 (gross); and
  • the employee must not be on notice of termination of employment with the employer on 31 January 2021. This includes a notice of retirement as well as employees who have resigned and are working out their notice periods.

Employers can claim the Bonus for individuals who are not employees, such as office holders or agency workers, provided they claimed a grant for them under the CJRS (and the other eligibility criteria are met).

Employers may also claim for employees of a previous business who have transferred to them if:

  • TUPE applied;
  • the PAYE succession rules applied;
  • the employees were associated with the transfer of a business from a liquidator of a company in compulsory liquidation where TUPE would have applied had the company not been in compulsory liquidation.

However, in order to claim the Bonus for these employees, the employees must meet all the eligibility criteria and the employer must have furloughed them and successfully claimed for them, under the CJRS, as their new employer. This means employers will not be able to claim the Bonus for any employees who transferred to them after the CJRS ends on 31 October 2020.

The minimum income threshold

As stated above, the employer must have made at least one payment to the employee in each of the three Bonus periods totalling at least £1,560. The Bonus periods (in which at least one payment to the employee (of any amount) in each of the three periods must be made) are:

  • the period beginning on 6 November 2020 and ending on 5 December 2020;
  • the period beginning on 6 December 2020 and ending on 5 January 2021; and
  • the period beginning on 6 January 2021 and ending on 5 February 2021.

The minimum income threshold of £1,560 applies regardless of:

  • how often employees are paid, and
  • any circumstances that may have reduced the employee’s taxable pay in the relevant periods, such as being on statutory leave or unpaid leave or the level of relevant pension deductions that have been made. This may have an impact in respect of employees who are unwilling or unable to return to work when the current CJRS ends at the end of October – for example those who are clinically vulnerable and who cannot work from home and those with ongoing childcare issues.

HMRC states that it will check that the employees have been paid at least the minimum income threshold by checking the information submitted by the employer through Full Payment Submissions via Real Time Information (RTI).

HMRC has published guidance giving examples to help employers decide which employees meet the minimum income threshold for the Bonus.

How much can be claimed?

An employer may claim a one-off taxable payment of £1,000 in respect of each qualifying employee irrespective of their actual wages. Any Bonus received will need to be included as income when calculating taxable profits for Income and Corporation Tax purposes. Individuals with employees who are not employed as part of a business, for example, nannies, will not have to pay tax on the Bonus.

When can a claim for the Bonus be made?

Employers are able to claim the Bonus from 15 February 2021 until 31 March 2021. No further claims for the Bonus will be accepted after that date. HMRC intends to update its guidance for employers by the end of January 2021 with details on how to access the online claim service on GOV.UK. Before employers can make a claim for the Bonus, they will need to have reported all payments made to a qualifying employee between 6 November 2020 and 5 February 2021 to HMRC through Full Payment Submissions via RTI.

HMRC suggests that employers take these steps now to make sure they are ready to claim:

  • continue to be enrolled for PAYE online
  • comply with the PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021
  • keep payroll up to date and report the leaving date for any employees that stop working for the business before the end of the pay period that they leave in
  • use the irregular payment pattern indicator in Real Time Information (RTI) for any employees not being paid regularly
  • comply with all requests from HMRC to provide any employee data for past CJRS claims.

Next steps

The CJRS ends on 31 October 2020 and will be replaced by the Job Support Scheme. The Direction confirms that the last day that an employer can submit a claim for a CJRS grant is 30 November 2020. Employers should therefore review their operations and workforce requirements to ensure that any claims for a CJRS grant are submitted within the deadline and employees in respect of whom the Bonus may be claimed are identified. A claim for a Bonus cannot be submitted until 15 February 2021, but in the meantime employers should ensure that they comply with the PAYE requirements on time and keep their payroll up to date. Any mistakes in relation to CJRS grants must also be notified to HMRC by 20 October 2020.

We have been advising many employers on the issues arising out of the Coronavirus Job Retention Scheme. If we can help your organisation, please contact Luke Bowery or any other member of our employment team. 


This briefing gives general information only and is not intended to be an exhaustive statement of the law. Although we have taken care over the information, you should not rely on it as legal advice. We do not accept any liability to anyone who does rely on its content.

Key contact

Luke Bowery

Luke Bowery Partner

  • Employment
  • Restructuring and Redundancy
  • Equality, Diversity and Discrimination

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