COVID-19 is a moving beast and the advice / support from the government seems to be changing daily. However, on Friday evening, the Chancellor, Rishi Sunak, set out the financial help the government is going to give to support businesses through this crisis.
This is our summary of the financial help that, as of today, 23 March 2020, is out there for businesses.
Employees (including zero hour workers)
If, as a result of COVID-19, you are considering laying off / making your employees redundant or your employees are self-isolating because of COVID 19, this is the help available:
Coronavirus Job Retention Scheme
If you are having to lay off or make your employees redundant as a result of the downturn in business, you no longer have to do this. You can now make them a “furloughed” worker and claim 80% of their wages (capped at £2500 per month) from the HMRC. How do you do this?
- You must write to your employees to tell them they are a furloughed worker and inform them that this means they remain employed whilst not working.
- You then submit information to the HMRC via an online portal of the employees who are furloughed and what they earn. More details will follow from HMRC on this.
- It is hoped that payments will come through in the next two weeks, but the Chancellor promised payments will be with you by end of April 2020.
If you have laid off or made employees redundant since 28 February 2020 (so what that means is that they were still on your Payroll on 28 February 2020) you can write to these employees reversing the lay off / redundancy decision and make them furloughed workers. That means you can then claim the relief from HMRC for them backdated to 1 March 2020.
To be eligible to claim for a furloughed employee they must be paid through your PAYE. They must not perform any work for you in the furloughed period. Therefore, the CJRS will not assist if you in asking your employees to work reduced hours (short-time working).
Presently there is no guidance around zero hour / casual workers. Our advice however is that if the employee was working with you and had hours on a weekly basis until this crisis, you should furlough them and work out their average pay by using their last 12 weeks’ pay.
If your business needs short term cash flow support you can claim for a Business Interruption Loan (see below).
Clearly this does not cover you if you are able to retain staff but on reduced hours. Our advice therefore if you have some work and can keep some employees working is to talk to your employees about who would like to be classed as a furloughed worker and see if you can gain agreement. If you cannot do this or you need to select certain positions to furlough, you will need to think carefully about this as if you select persons based on any discriminatory characteristic (or there is a possibility this could be alleged) then you could face a discrimination claim. Additionally, if the selection is unfair and the employee has over two year service, they could resign in response to an alleged fundamental breach of their contract and claim constructive unfair dismissal. We can help you if you are faced with this situation.
If your employees
- have COVID-19;
- are self-isolating because they have symptoms (for 7 days);
- are self-isolating because someone in their household has symptoms (for 14 days); or are self-isolating because they are in the at risk group (so over 70, pregnant or entitled to a free flu jab – including those with chronic respiratory diseases, chronic heart, kidney or liver disease, diabetes and those with a weakened immune system.
if they are not able to work from home, then you must pay the SSP from day one (if they are entitled to SSP) or contractual sick pay if this is applicable. However, where the nature of a pregnant employee’s role means that they cannot work from home and there is no suitable alternative work available that they could do from home, the employer should consider suspending the employee on full pay
If you are a small to medium sized business (so less than 250 employees) then you can reclaim 2 weeks SSP.
You will need to keep records but employees do not need to produce a sick note. If you need evidence the employee should be able to get an isolation note from NHS 111 online or from the NHS website.
If you engage someone who is self-employed, then there is no obligation to pay them what was agreed if they cannot continue to do the work agreed. Self-employed persons are directed to claim Universal Credit (if eligible).
As many self-employed workers would have had a pipeline of agreed work, this seems highly unfair, as the maximum they can claim per week under UC is the same rate as SSP – £94.25 a week until April 2020 and then £95.85 thereafter. We therefore envisage the Chancellor changing his position in respect of self employed contractors given the increased pressure from the self-employed.
Self employed are also entitled to defer their income tax payments from July 2020 to January 2021 and see Time to Pay below.
Loans and Grants
Business Interruption Loan Scheme
This will launch this week, delivered by the British Business Bank (BBB), and will support small and medium sized businesses (that means a turnover of no more than £45mill per year and you meet the other BBB eligibility criteria) to access bank lending and overdrafts. 80% of each loan is guaranteed by the government and the scheme can offer up to £5mill in value. The fist 12 months is interest free as the government will cover the interest in that period.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
The Retail and Hospitality Grant Scheme provides business in the retail, hospitality and leisure sector with a cash grant of up to £25,000 per property. If your rateable value is £15,000 or under, the grant is £10,000. If the rateable value is between £15,001 and £51,000, the grant is £25,000.
Corporate Financing Facility
Under this facility, the government will buy short term debt for larger businesses. There is very little detail on this at present other than this will start early in w/c 23 March 2020 and more information is available from the Bank of England.
Tax relief / deferment and business rates
VAT is deferred from 20 March 2020 to 30 June 2020.
Business rate holidays have been introduced for retail, hospitality and leisure businesses for the 20/21 tax year with the refund coming from your local authority.
If you are a business that pays little or no business rates then you will get help through the Small Business Grant Scheme. You will receive a one off grant of £10,000. This will come from your local authority.
HMRC Time to Pay
If you have outstanding tax liabilities and are in financial distress you may be able to get help through this Scheme – it is assessed on a case by case basis. If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.
Finally, if you have cover under your insurance for pandemics and government ordered closure, you should be covered under your insurance as the government asked certain businesses to close on 17 March 2020.
Please therefore do check your insurance for any such cover.
The content of this article is not intended to be specific legal advice. If you require any assistance in relation to this area of law, please contact Kath Kidd.