Firms get new bonus for saving jobs as furlough evolves into new £9bn scheme

- Businesses to get £1,000 bonuses for bringing furloughed staff back to work

- Chancellor delivers news on next phase of pandemic response plans for the economy

Businesses will get a one-off £1,000 bonus for every furloughed employee they bring back to work, the Chancellor has revealed this afternoon.

Rishi Sunak has set out the successor to the furlough programme – the Job Retention Bonus scheme.

New incentive for employers

Described as a new reward to incentivise employers who successfully bring back furloughed staff, the bonus will apply to every furloughed employee who remains continuously employed through to the end of January 2021.

If all nine million people who were furloughed continue to be employed, it will amount to the Government spending £9bn to retain people in work.

Conditions for businesses

But businesses were warned there are conditions to qualify for the bonus.

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.

“If you stand by your workers, we will stand by you,” Mr Sunak declared.

The move is about businesses getting the confidence to retain and hire staff, he explained.

Furlough winding down

Mr Sunak said furlough would be wound down flexibly and gradually, continuing to support people till October.

Mr Sunak delivered the news as part of his Summer Statement - an update on the economy and Government plans for tackling the COVID crisis.

He said furlough had been “a lifeline for millions” but “cannot and should not go on forever”.

When furlough ends it will be “a difficult moment” for many, he admitted, but insisted “endless extensions” would be irresponsible and provide “false hope”.

Mr Sunak also unveiled a range of other measures, which we will summarise later here.

Bleak economic outlook

A grim picture of the economy - which has retracted 25% - the same amount it grew in the last 18 years, was laid before MPs by the Chancellor, who said significant job losses are to be expected.

He acknowledged “people are worried still” about unemployment and their future job prospects.

He said: “We will do all we can to give people the opportunity of good and secure work. Although hardship lies ahead no one will be left without hope.”

For help for accountants as we adapt to the next normal, visit our resources hub here.