The outsourcing company Serco has announced it will repay government furlough scheme support and give staff £100 bonuses each in recognition of their work during the pandemic.

Serco has been running much of the UK government’s contact-tracing operation. The furlough scheme repayment will cost about £3m, while about 50,000 frontline staff will receive the one-off bonus payments, at a cost of £5m.

The company said the combined cost was equivalent to 5% of 2020 underlying trading profits of £160m-£165m. It said the overall effect of the pandemic before the payouts would be to increase its annual profits by about £14m.

Serco’s profits have been boosted by lucrative contracts to run some contact tracing as part of the UK government’s heavily criticised test-and-trace programme. The company is also contracted to run some test centres. Serco said its work on test and trace was still growing and it was operating 200 test sites, up from about 125 in October.

The company said it had again delayed a decision as to whether to pay a dividend to shareholders or bonuses to executives until it reported its final results for 2020, which is likely to occur in early 2021.

Rachel Reeves, the shadow Cabinet Office minister, raised concerns in October, saying Serco and its executives may benefit from government spending that would be better directed towards the NHS.

In September the government’s Scientific Advisory Group for Emergencies (Sage) said the test-and-trace programme had had only a “marginal impact” in reducing transmission of Covid-19. Serco’s work has also been criticised for tracing fewer people than contact tracers working in the public sector.

Serco’s chief executive, Rupert Soames, has rejected criticism of his company’s work, saying it hit all targets set by the government. However, those targets do not include the number of people successfully reached by contact tracers, according to key performance indicators listed in documents first reported by Private Eye.

Soames said Serco workers had been “resilient, flexible and dedicated to ensuring the delivery of public services”. He added that although Serco and other companies still faced “unprecedented levels of uncertainty”, he expected to make similar revenues and profits in 2021.

The company said it expected to report revenue growth of 19% to £3.9bn for 2020.