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Government announcement on employee wage support

The Chancellor Rishi Sunak has announced a suite of unprecedented measures to help businesses facing financial difficulty continue to pay staff wages in an effort to reduce the financial impact of the COVID-19 pandemic.

This comes at a time when the Government is ordering certain leisure sector businesses to close their doors to the public.

The measures include:

  • A coronavirus job retention scheme that any employer in the UK is eligible to access if they furlough their employees. Furlough means paid leave of absence.
  • Under this scheme HMRC will issue grants to cover most of the wages of those who are not working but are kept on payroll rather than being laid off. The details include:
    • Cover for 80% of wages up to a maximum of £2500 per month;
    • Wage costs backdated to 1 March 2020; and
    • Cover for three months initially but with scope to extend.
  • The business interruption scheme loans will now be interest free for 12 months and will be available from Monday 23 March 2020.
  • All VAT payments are deferred until the end of June 2020 and businesses will have until the end of the financial year to repay.

It is expected that the job retention scheme will apply to the wages for anyone on the PAYE scheme and will therefore include casual staff. The first payments will be made within weeks however there will be significant demand under this scheme so delays are to be expected.

The announcement also included measures of support for self-employed workers and those on low incomes. These include:

  • The next self-assessment tax payments which would have been due in July 2020 are to be deferred until January 2021;
  • The minimum income floor for universal credit has been  suspended which will allow self-employed workers to access the equivalent of Statutory Sick Pay (SSP);
  • Universal credit and tax credit payments to increase by £1000 per year.

There will be further measures of support for medium and large businesses announced next week.

The Government has taken remarkable steps to support businesses and to help protect jobs.  This will be welcome news for so many employers as the impact of COVID-19 continues to develop. We will provide further detail and commentary on these measures in the coming days as we continue to support our clients and business contacts during this difficult time.

If you have any queries on this or other employment related matters in the meantime please get in touch.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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