Employers to receive £1,000 bonus for every furloughed employee returning to work

Employers to receive £1,000 for every furloughed employee brought back to work

Mini-Budget 2020: The government has introduced a payment to UK employers of £1,000 for each furloughed employee who returns to work and remains with the business through to the end of January 2021.

Employees must be earning above the lower earnings limit of £520 per month between the end of October 2020 (when the furlough scheme ends), and the end of January 2021. Payments will be made from February 2021 and further details about the scheme will be published by the end of July.

The government previously outlined further details regarding the government job retention scheme (GJRS), which will require employers to contribute to employee costs from August 2020, while introducing extra flexibility from 1 July 2020.

The government will continue to pay 80% of employees wages, capped at £2,500 until October 2020, however, employers will need to start paying national insurance and pension contributions, representing 5% of employment costs, from August 2020.

Rishi Sunak, Chancellor of the Exchequer, said: Throughout this crisis, I have never been the prisoner of ideology. For me, this has never just been a question of economics, but of values.

“We believe in the nobility of work. We believe in the inspiring power of opportunity. We believe in the British people’s fortitude and endurance.

“Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.”

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Stephen Ratcliffe, partner at Baker McKenzie, said: “The jobs retention bonus of £1,000 for each employee brought back to work after having been furloughed is a welcome, and surprising, development. Again, however, urgent guidance is needed to assist employers to understand the key requirements of the scheme, particularly as regards the minimum pay requirements.

“Those facing cash flow issues will also need comfort that the bonus will be paid promptly, without unnecessary administration. Both those making use of this scheme, and those who have used and continue to use the furlough scheme, also need reassurance that the government will not later seek to recoup those funds due to minor or inadvertent errors in applying the rules, particularly given the contradictory and uncertain guidance we have seen in respect of the furlough scheme.”