COVID-19 Payroll Co-funding schemes in Jersey and Guernsey

In the first of our new Channel Islands Employment Law video updates, our team focusses on wage subsidy schemes in Guernsey and Jersey launched in response to COVID-19 and how they differ from the UK.

You can watch the video here 

Please note that the information in this video was correct as at 29 April 2020.

You can read the content below, please note this is not a transcript.

Introduction

Helen Ruelle

Thank you for joining us today for this Ogier update.

I am Helen Ruelle, the Director of Ogier's Local Legal Services team for both Jersey and Guernsey.

The purpose of this videocast is to provide you with the latest advice on the government wage subsidy schemes that are available to businesses in Jersey and Guernsey, and how those schemes differ from the UK. Importantly, we will cover changes have been applied to schemes in recent days.

Our Ogier colleagues across the Channel Islands have contributed to this session and you will meet a number of members of the Employment Team throughout the session starting with

Section 1 - Payroll co-funding summary

Both Jersey and Guernsey have announced financial support for businesses and we have seen that government guidance is being updated, sometimes on a daily basis.

Rachel DeSanges is the Head of Employment in Guernsey. Rachel, perhaps you could tell us about the position in Guernsey first.

Rachel DeSanges

Thank you Helen.

Guernsey's Payroll Co-funding Scheme is available from this month – April 2020 - for an initial period of 3 months, which will take us up to late June.

It is designed to support businesses that have been trading for at least 6 months (so, since 1st September 2019) whose operations have been severely affected by Covid-19.

The scheme will be available to subsidise wages of permanent employees - in certain sectors only – where staff remain employed by the business, even if they are not actively working within the business.

The scheme is available to all companies regardless of the number of employees and will pay 80% of Guernsey's minimum wage, which is £8.50 per hour for employees aged 18 or more. This gives a weekly wage subsidy equivalent to £238 per employee for a 35 hour week. Employers must pay the remaining 20% which is around £60. 

Employers are encouraged to pay more if they are able to do so, but this is optional. For example, the employer may decide to pay more than the subsidised wage to employees who are actively working within the business.

Guernsey is also offering small businesses (those with 10 employees or less) and self-employed persons one-off grants in the amount of £3000.  The grant is also intended to be sector specific but may be paid to businesses who can demonstrate hardship as a result of Covid-19 irrespective of the sector.

I am now going to hand over to Will Austin-Vautier, who is a Senior Associate in Jersey, to tell us briefly about the Jersey wage subsidy scheme and how it is different from Guernsey.

Will Austin-Vautier

Thank you Rachel.

The Jersey Payroll Co-Funding Scheme is available, initially, for a three month period from 1 April.

Like Guernsey, a temporary scheme has been designed to support employers whose operations have been affected by Covid-19 where staff remain employed by the business, even if they are not actively working within the business.

The Scheme is not available to employees earning more than £10,000 a month and employees must have been on the payroll since at least February 2020.

The level of the subsidy is greater than in Guernsey. The government will subsidise up to £1,600 per employee per month.

The original scheme details released by government earlier this month would have required employers to pay 20% of wages, with the government subsiding 80%, up to a maximum of £1,600 per month.

However, on 22 April, the government amended the Scheme so that – unlike in Guernsey - Jersey employers will not have to pay 20% of wages on top of the government's 80%. Instead, Government will subsidise wages up to a maximum of £1,600 a month.

The Government has stated that employers will not be required to contribute a mandatory percentage towards wages where it can be demonstrated that the business has insufficient working capital or cash flow to meet its normal obligations. However, businesses are expected to do all they can to ensure that employees receive their normal wage. It is not clear at this stage what information employers will have to provide to meet this criteria.

Jersey also has a 'COVID-19 Special Situations Fund' to provide grants and loans to businesses that deliver a public good or serve an essential strategic purpose for Jersey. Businesses can apply if the measures introduced to manage the spread of Covid-19 have been detrimental the business.

Section 2 - UK Furlough

I will move on now to talk briefly about 'furlough' as there has been some confusion about this.

'Furlough' is when an employee is granted a leave of absence with pay. The UK has introduced a 'furlough' wage subsidy scheme for workers who have been laid off and are not working.

It is very important to clarify that 'Furlough' does not apply in Jersey or in Guernsey.

To claim the furlough wage subsidy in the UK, the employer and employee must have agreed in writing that the employee will cease all work but will remain employed. No wage subsidy is available for employees who continue to undertake work for the employer.

In Jersey we have no concept of 'Furlough Leave' and we do not have any statutory provisions regarding lay-offs on full pay, or short-time working.

The Jersey and Guernsey wage subsidy schemes are available where the employee remains employed by the business, as in the UK.

However, both Islands have taken a very different approach to the UK in that wage subsidies are available whether employees are working their normal hours, working different hours, or not working at all.

Many employers in Jersey will be able to continue to pay full wages to staff who are working as well as those who are not working.

This is intended to help businesses to retain their employees – and to keep  their business operating where that is permitted - so that they can resume normal business activity as soon as possible after the restrictions are eased.

Rachel, is there anything that you would like to add in relation to the position in Guernsey compared to Jersey or the UK?

Rachel DeSanges

Thank you Will.

I think it is fair to say that the intention of the schemes in both Jersey and Guernsey is to avoid redundancies so that staff can remain employed, whether or not they are required to work within the business at this time.

With different schemes and different qualifying criteria across the three jurisdictions, it is not surprising that some businesses are not sure how to adjust their operations.

The wage subsidy schemes in Jersey and Guernsey mean that staff can continue to work for their employer as far as they are able, subject to the guidance issued by the government during the duration of Covid-19.

It is important to emphasize that the wage subsidy schemes available in Guernsey and Jersey will help to sustain employment relationships and business continuity, rather than just supporting wages for those who are not at work.

The scheme is however only available to businesses in certain sectors.

My colleague Kellie Sherwill who is an Associate in Guernsey will now tell you more about that.  

Section 3 - Sector coverage

Kellie Sherwill

Thank you Rachel.

The payroll co-funding scheme in Guernsey will be available to business in sectors that are affected by a loss of income due to Covid-19.

The States of Guernsey has provided a list of the sectors that are expected to be affected initially. These include hospitality and tourism, personal services (like hair and beauty), recreation, entertainment, non-food retail, construction and manufacturing.

However, government acknowledged that it may need to consider extending the sector coverage. On 15 April, the scope of the scheme was widened to cover a number of additional business activities. These included cleaning, gardening, estate agents, freight transport, facilities management and self-employed individuals.

The Jersey scheme is also only available to businesses in certain sectors.

Laura Shirreffs, an Associate in Jersey can tell us more about that.

Laura Shireffs

Thank you Kellie.

Yes, the position in Jersey is similar. The sectors that you would expect to be most affected by Covid-19 are covered by the scheme, such as hospitality, recreation and non-food retail.

Employers will need to check the guidance carefully. The States of Jersey has provided detailed lists of the sectors that are covered by the scheme, and those that are not covered.

The Jersey scheme was expanded to cover a wider range of sectors on 9 April to include activities such as air and freight transport, media, advertising and design, recruitment agencies, legal and accountancy practices.

The Scheme is available to employers in sectors that are likely to experience material detriment due to restrictions put in place to help manage the spread of Covid-19. 

"Material detriment" has been defined as at least a 30% loss in turnover compared with a previous comparable trading period. Employers will need to demonstrate that they this meet this condition when applying for the wage subsidy.

Section 4 - Staff working elsewhere/ support community activities 

There is an additional - slightly unusual - condition of the scheme in Jersey.

Where a business is receiving a wage subsidy for staff that are not required in the workplace, those employees must be made available to support government and community activities during the pandemic.

This means that any employee who is not working within the business may need to be made available to help with any appropriate activity required.

It is not yet clear how this will work in practice in terms of notifying the government of any individuals who might be available at a particular time. However, it is important that businesses in Jersey let their staff know that this is a condition of receiving the wage subsidy.

Kellie, is there any similar requirement in Guernsey?

Kellie Sherwill

No, there is no similar requirement in Guernsey.  It is an interesting concept and we will be interested to see how it will work in practice.

Staff who are being paid their full salary and who are not on annual leave should remain available to return to the workplace if requested as they will continue to be employed by the business.

Employers in both Guernsey and Jersey will be able to ask employees to return to the workplace and might want to offer an appropriate period of notice, such as 48 hours'.

I will now hand back to Rachel for some final thoughts on the next steps that employers should be considering.

Section 5 - Next steps for businesses 

Rachel DeSanges

Thank you Kellie.

In terms of next steps, I would say that businesses should first confirm if they are permitted to continue operating. For employers with shops or offices in both Islands, it will be really important to establish this before making operational decisions.

In some cases, the advice will differ in Jersey and in Guernsey. For example, garden centres have been deemed as an 'essential service' in Jersey, but in Guernsey such businesses must cease trading.

The business can then decide what, if any, changes it needs to make to account for Covid-19 and either temporary cessations in trading or staff working from home and so on.  Where employers do decide to make contractual changes e.g. to working hours or pay, we would recommend that advice is taken because the usual obligations apply in respect of varying terms of employment regardless of Covid-19

Businesses will also need to check if they are in a sector that qualifies for a wage subsidy. If the business is in a qualifying sector, they should register with the States of Guernsey as soon as possible so that financial assistance is paid out as soon as it becomes available.

We understand that the scheme is already operational and has made payments in relation to a number of applications. Businesses should send their details to business.support@gov.gg

Helen, do you have anything to add about what businesses should be doing now?

Helen Ruelle 

In addition to the points that Rachel has already made, businesses in Jersey should consider whether they will meet the slightly different qualifying criteria – most importantly whether the test of 'material detriment' is likely to be met as a formal declaration will be required as part of the application process.

Finally, I would recommend that businesses make sure that their wage records are in order. We know that the Jersey wage subsidy will be paid direct to the employer after they have paid wages in each month. This means that wage records will need to be submitted to the government with the wage subsidy claim.

Businesses should apply via the online form, which we understand will be available by the end of April (within the next few days).

I hope that you have found this videocast helpful to clarify the wage subsidy schemes that are available and some of the differences between Jersey, Guernsey and the UK.

We intend to provide you with further updates on how to deal with annual leave and variations to contracts so please look out for those.

Thank you for joining us today. Stay safe.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice