The Chancellor has promised to pay companies £1000 for every employee they furloughed if they bring them back after the scheme wraps up in October.
Rishi Sunak announced the £9bn “job retention bonus” as he insisted the furlough scheme could not go on indefinitely.
The £1000 “bonus” will be paid to firms for each member of staff they keep in work until January provided they pay them at least £520 a month on average.
If all nine million furloughed workers in the UK – including more than 800,000 in Scotland – are taken back by their employer, the scheme will cost the Treasury £9bn, Sunak said.
Providing an economic update in the House of Commons, the Chancellor said: “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before.
“The longer people are on furlough, the more likely it is their skills could fade, and they will find it harder to get new opportunities.
“It is in no one’s long-term interests for the scheme to continue forever, least of all those trapped in a job that can only exist because of government subsidy.
He continued: “Today, we’re introducing a new policy to reward and incentivise employers who successfully bring furloughed staff back – a new jobs retention bonus.
“It’s vital people aren’t just returning for the sake of it – they need to be doing decent work.
“So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January.
“Our message to business is clear: if you stand by your workers, we will stand by you.”
More than 9.4 million people have been put on furlough across the UK, with the UK Government covering up to 80% of their salaries, at a cost of £27.4bn, according to the latest figures.
The scheme began allowing for furloughed staff to begin flexible work from July, with employers covering progressively more of their salaries each month until the scheme winds down completely in three months.