Job Retention Bonus – £1k to those who Retain Furloughed Employees until January 2021

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As the Coronavirus Job Retention Scheme (CJRS) winds down, Chancellor Rishi Sunak introduced a job retention bonus payment of £1,000 to employers for every furloughed personnel they bring back to work.  

The incentive is part of a comprehensive scheme called “A Plan for Jobs 2020”. It is built to protect livelihoods and save the declining economy, which had contracted by 25% in the last two months.

But the ultimate question is this—how will it affect both employers and employees? Will the plan job retention bonus backfire and endanger businesses instead?

What Is The Job Retention Bonus?

The UK government plans to give a one-off payment of £1,000 for every furloughed staff employers brings back to work, retaining them in their positions up until January 2021.

This is a way to incentivize enterprises to still employ their workers despite the revocation of the furlough scheme.

The scheme applies to:

  • Every UK furloughed employees who retained their jobs until January next year.
  • Workers who are earning above the lower earnings limit (£520 per month) on average.

· The government will issue payments from February 2021.

The job retention bonus payment is the same for every worker despite salary differences. However, the bonus scheme intends to target and help workers with low wages.

Someone earning a fixed rate of £520 a month would highly benefit from the bonus for it will cover almost two-thirds of their salary.

Businesses will also get to use the modest sum of money to settle deferred tax debts due in January up until March (VAT deadline).

How Job Retention Bonus Affect Companies?

Implementing the furlough scheme was a brilliant decision to make. It did benefit both sides of the coin by preventing job losses and helping enterprises cover the cost of furloughing.

It succeeded in supporting over nine million furloughed workers under the CJRS, which is approximately more than a quarter of the UK’s working population.  

But with its end on October 31, many organizations feel that the one-off 

“job retention bonus” payment from the government cannot even begin to cover the costs of retaining these employees.

Several organizations do welcome the Chancellor’s kind intention to prioritize jobs and protect millions of employees.

But according to the director-general of the CBI, the allotted money is insufficient to support firms badly hit by the pandemic.

Currently, almost 70% of enterprises are running low on monetary funds. These companies cannot possibly support and cover employee wages, pension, and National Insurances.

Not to mention the monetary contribution they need to pay staff (from September to October) as part of the flexible furlough scheme agreement.

With these expenditures, on top of low business demand, organizations will not have any choice but to let some workers go. The £1000 incentive cannot persuade them as they are also trying to survive the repercussions of the sudden recession.


The intentions behind this job retention bonus are laudable. It will, indeed, save thousands from unemployment and poverty.

However, it might need some rethinking around the edges by considering the situation of employers. If not, then it might backfire and result in a much bigger problem—a rapid increase in unemployment.

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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.