80% of staff wages could be paid by States

Tuesday 24 March 2020

Thousands of businesses and self-employed workers are now eligible for immediate financial support from the States in the form of a payroll co-sharing scheme and a grant scheme for smaller businesses.

The new support schemes have been announced by Policy & Resources today and will see up to £41m ploughed into businesses over the course of the next three months.

The main area of focus and financial support has been around helping businesses to keep employees on their books so that firms are well-positioned to resume operations as soon as conditions allow. 

Deputy Lyndon Trott, Vice-President of the Policy & Resources Committee, who is leading the economic support measures on behalf of the Committee, said they were responding to feedback from the local industry.

"It is critical that measures agreed are able to be communicated and implemented almost immediately, given many businesses are fast running out of time to delay critical decisions on their ongoing trading plans and future of their workforce. For that reason, measures also need to be simple to implement and administer to avoid critical delays to businesses accessing this support.

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— Nichole Culverwell (@MrsCulverwell) March 24, 2020

"The Coronavirus Payroll Co-funding Scheme will enable the States to support businesses in the way that many of them have requested - providing funding to keep employees in post, ensuring they are ready to support businesses when they enter the recovery phase.

"The scheme also helps individuals stay in employment. It means that they and their families retain an income, which provides some comfort and support during this challenging time for all of us."

The Coronavirus Payroll Co-funding Scheme will work in the following way:

The States funds 80% of employee wages, based on the minimum wage of £8.50 per hour, which equates to a gross payment of £238 for a standard 35 hour week, pre Income Tax and States Insurance contributions. This would be on the basis that employers contribute a minimum of 20% to reach the full minimum wage although employers can opt to pay more given many employees will be on higher rates. The reference to minimum wage is designed to ensure a level playing field. Having such a scheme avoids the need for employers to pay severance packages meaning more can be spent on keeping the business going through the crisis period.

The initial period of support proposed is 3 months (13 weeks) which will cover the period to late June. 

There is no restriction on the size of the business that can apply for this support and the number of businesses that could potentially qualify is estimated at 1,700, with total employees of 10,500. Not all of these businesses will claim, Deputy Trott predicted, as some may decide to stop trading completely and lay off staff, whereas some may also be able to continue trading close to normal via diversification.

Pictured: The States agreed to defer social insurance payments amid a host of emergency measures last week.

A further measure confirmed is the award of a £3,000 grant to all businesses and the self-employed with fewer than 10 employees, which is designed as additional support to these smaller businesses and can be used however they want to use it.

Deputy Trott commented: "The Policy Letter presented to the States of Deliberation last week made initial reference to establishing a hardship allocation for businesses to provide targeted support primarily to enable them to retain employees. An amount of £5m was suggested at that time. The further work since then and escalating situation has revealed that substantially more support is required to help businesses through the crisis.

"It is important we get as much support to our businesses and self-employed as possible. These are further steps today, and by the end of the week we expect to be in a position to confirm the establishment of a loan finance guarantee scheme with the banks, Jersey and the Isle of Man.

"No single step will solve the economic shock. But taken together the measures we have put in place will support businesses and the self-employed in providing cashflow, reducing cost and helping them stay on their feet to plan for recover."

The measures announced today are in addition to those announced in the States last week.

In the first instance, businesses are asked to send their details to business.support@gov.gg to register for the new measures.