COVID-19: Chancellor unveils plan to back businesses with help to pay 80% of employees’ wages

Please Note: All information correct at time of writing on 20 March 2020. We do our very best to make sure our information is as up to date as possible, but we’d encourage you to check out our latest articles and to check the government website for updates as they happen.

This afternoon the PM and Chancellor held a joint press conference to explain the next phase of the government’s measures to delay the spread of Covid-19 and provide immediate financial support directly to workers.

The economic measures were striking but we did not see the formal imposition of self-isolation restrictions on vulnerable groups which the PM had announced would be implemented “before the weekend”.

Whether this was a deliberate omission indicating a deliberate change in direction or a reflection of their wish not to dilute the key economic message of direct wage support for workers, remains to be seen.

The key points discussed at this evening’s press conerence were:

Selected business closures

  • Cafes, bars, pubs and restaurants must close tonight as soon as they reasonably can and not reopen tomorrow but they can provide take out services
  • Nightclubs, theatres, gyms, cinemas and leisure centres must also close tonight
  • These closures will be reviewed each month

Financial support to workers

  • This will involve setting up a new coronavirus job retention scheme. Any employer, small or large, will be eligible for the scheme. Employers will be able to contact HMRC to obtain a grant to cover most of the wages of people who are not working but are kept on payroll rather than laid off.
  • Government grants will cover 80% of the salary of retained workers up to a total of £2500 per month.
  • Employers can top up the salary but will not be obliged to do so. The scheme will cover the cost of wages backdated to 1 March and the scheme will be open initially for three months. The Chancellor pledged to extend the scheme for longer if necessary.
  • There is no limit to the funding for this scheme – it can be used to support as many jobs as necessary. The Chancellor expects the first grants to be paid within weeks and they are aiming for the end of April.

Further financial measures

  • The Coronavirus Business Interruption loan scheme will now be interest-free for 12 months (increased from six months) and those loans will now be available from Monday (23 March).
  • The Chancellor will announce further measures next week to ensure medium and large-sized businesses can access the credit they need.
  • There will be further cashflow support through the tax system. To help businesses pay people and retain jobs, the Chancellor is deferring the next quarter of VAT payments i.e. no business will have to pay VAT from now until the end of June and businesses will have until the end of the financial year to repay those bills.
  • A major advertising campaign will be launched over the next few days to raise awareness of the support available to businesses and people. The Chancellor urged people to look at this carefully before making decisions to lay people off.
  • Inevitably there may be some job losses and the Chancellor, therefore, wants to “strengthen the safety net” by increasing the Universal Credit standard allowance for the next 12 months by £1000 per year and increasing the working tax credit basic element by the same amount and for the same period.
  • There will be support for the self-employed by suspending the minimum income floor for everyone affected by the economic impact of Covid-19. This means they will be able to access Universal Credit in full at the rate equivalent to SSP for employees.
  • Further support will be given to the self-employed by the deferment of the next self-assessment payments to January 2021.
  • Renters will get additional support through increased housing benefit and Universal Credit.

The Chancellor pressed on measures to protect zero-hours workers

During the question and answer session following the formal announcement The Chancellor was asked whether the wage protection scheme would cover zero-hours contracts and if so, how would their wages be determined and who will determine them?

An excellent question and the Chancellor responded that the scheme would cover everyone on the PAYE system (therefore workers as well as employees) and detailed guidance will be published shortly.

On a final note,  it was announced earlier that there has been a relaxation of EU drivers’ hours with effect from today up to and including Friday 3 April 2020.This applies to drivers in England, Scotland and Wales involved in the delivery of food, non-food (personal care and household paper and cleaning), over the counter pharmaceuticals and other medical supplies when undertaking the following journeys:

  • manufacturer to consumer’s home
  • stores / distribution centre to consumer’s home
  • supplier to consumer’s home
  • fulfilment centre to consumer’s home
  • retailer to consumer’s home

Helping you navigate the COVID-19 maze

As always, we’re keeping our eyes on the government updates as they happen and helping translate them into real, actionable insights for your business.

Keep an eye on our latest articlesfree guides and social media for more advice and guidance as we help you navigate this time of fast-paced change.

If you want the advice and backing of a team of HR and Employment Law experts feel free to give our team a call on 0345 844 1111 to talk through your business needs. Or, simply fill out your details in the form opposite and we’ll be in touch as soon as possible.

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