COVID-19 Legal Update: Employers and Employees

The government has proposed a package of measures to protect public services during the period of disruption caused by Covid-19.

Support for employers

The “Coronavirus Job Retention Scheme” seeks to protect employees who would otherwise have been laid off during this period. Businesses can receive government grants worth up to 80% of their employee’s wage, up to £2,500 per month plus employer’s NIC and pension contributions on this amount if they designate the employee as “furloughed” for a minimum of three weeks. The employee is not allowed to undertake any work for the company during this period. Employers can choose whether to top this up to the employee’s original full salary.

The Business Interruption Loan Scheme will provide loans of up to £5m with no interest due for 12 months. These loans will be delivered through the British Business Bank. Businesses will be eligible for this if they are UK based, with turnover of no more than £45m per year and subject to certain other British Business Bank requirements.

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. The government are also going to provide support for business that are paying sick pay to employees to enable them to reclaim Statutory Sick Pay paid for absence due to COVID-19. The government will support business by deferring VAT payments due between 20 March 2020 and 30 June 2020 (all UK businesses eligible) if requested. Businesses who defer their VAT payments as a result of Coronavirus must pay the VAT due on or before 31 March 2021.

Further measures include:

A 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000

Support for employees

The Coronavirus Act 2020 includes, among other things, a right for employees to take time off for emergency volunteering.

Support for the self-employed

Self-employment Income Support Scheme: This scheme will allow individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. For the self-employed, Income tax payments due on 31 July 2020 will be deferred until 31 January 2021.

Please contact Daniel Isaac for further information.

The information in this article was prepared on 3 April 2020. The law and practice is currently changing daily, so please check the up to date position before acting on anything you read here.