Coronavirus – The Government’s support proposals?

25th March 2020 Corporate

On Monday, Prime Minister Boris Johnson announced that the UK would follow the approach adopted by other countries as he implemented further restrictions on leaving the home as a result of Covid-19. The government later published a document entitled “Full guidance on staying at home and away from others”. Travelling to work is now only permitted where “it is absolutely necessary” and work “cannot be done from home”. This will raise further questions as to how those who cannot work can survive financially and what support the government has and will put into place.

Below we have summarised the recent government announcements and proposed legislative changes, however, at this stage the detailed information as to how and when all of these announcements will be implemented is limited.

On 17 March 2020, the government published details of the Coronavirus Bill containing proposed emergency measures designed to address the outbreak. The legislation is time-limited to two years and not all of the measures contained within the bill will be brought in immediately.

Coronavirus Job Retention Scheme

The Chancellor Rishi Sunak announced the Coronavirus Job Retention Scheme on 20 March 2020. The effect of the scheme is that an employer can obtain a grant to cover 80% of the salary of employees who would otherwise have been laid off, up to a total of £2,500 a month for each retained employee. The scheme will cover the cost of wages backdated to 1 March 2020 and is initially open for a period of three months subject to any further extensions. Employers can choose to top up salaries to 100% of the employee’s salary.

The aim of this scheme is to retain as many jobs as possible and support the salary of workers who would have been laid off/made redundant and it is clear than an employee must remain on payroll rather than being dismissed. Employees are being told that they must not undertake work for their employer during this time.

It is available to all UK businesses and the figure of £2,500 a month equates to an annual salary of £30,000 which is the national median salary. The scheme is limited to those on PAYE and to obtain the grants, the employer will need to:

  • Designate affected employees as "furloughed" and notify them of the change; and
  • Submit information to HMRC about furloughed employees and their earnings, through a new online portal.

To date, no information in respect of the online portal has been made available. The guidance makes it clear that the arrangement is subject to the usual contractual arrangements and where a dispute does arise, we would recommend the early involvement of solicitors to help you manage the dispute effectively.

Self-Employed and Freelancers

There has been a proposed amendment to the Coronavirus Bill on 23 March 2020 which is entitled “Statutory self-employment pay”. The bill has not yet been accepted and we expect to hear further later this week. If accepted, the effect is that freelancers (which is yet to be defined) and self-employed people should receive guaranteed whichever is the lower of:

(a) 80% of their monthly net earnings, averaged over the last three years; or

(b) £2,917 per month.

It is likely that a further announcement will be made by the government confirming the details in due course. 

The Coronavirus Business Interruption Loan Scheme (“CBILS”) 

The CBILS is now available through participated lenders and was announced by Rishi Sunak in the 2020 Budget. The scheme supports loans up to £5 million for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cash flow for businesses. Eligible businesses are those with a turnover of up to £45 million. The government is providing a partial guarantee (80%) on each loan and the first 12 months of the loan is interest-free.

The features and eligibility of the scheme can be found on the British Business Bank website.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

  • Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000; and
  • Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.

To be eligible for the scheme the business must be based in England and be in the retail, hospitality and/or leisure sector. If you are eligible for the grant your local authority will write to you.

Deferred VAT and Income Tax Payments

The government has announced that VAT payments will be deferred for 3 months. The VAT deferral will apply from 20 March 2020 until 30 June 2020. All UK businesses are eligible and it is an automatic offer with no applications required.

Further, for those who are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. Again this is an automatic offer with no applications required, there are no penalties or interest for the late period in the deferral period.

Changes to SSP

Statutory Sick Pay (“SSP”) can be claimed from the first day of sickness (applying retrospectively from 13 March 2020). Further employers who have fewer than 250 employees can reclaim SSP that is paid in relation to the first 14 days of Covid-19 related sickness absence (applying retrospectively from 14 March 2020).

Further, the definition of “incapacity” for the purpose of claiming SSP has been extended to cover those who self-isolate or are social distancing in accordance with the government guidelines.

It is important for employers to maintain records of staff absences and payments of SSP.

If you want to discuss any of the content in this blog, please contact your usual JMW contact ​​​​on 0345 872 6666 or complete the contact form found on this page.

This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice and reflects the position as at the time of writing (25th March 2020). We recommend that you review the daily updates and guidance issued by the government. 

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Mark Heppell is a Partner located in Manchester in our Corporate department

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