WATCH: Struggling businesses won't have to pay into payroll scheme

Wednesday 22 April 2020

The government has pledged to still pay 80% of workers’ salaries as part of its co-funded payroll scheme - even if businesses cannot afford the remaining 20% due to financial difficulties.

The move comes as part of measures to enhance the second phase of the Payroll Co-funding Scheme announced this afternoon.

The government had previously said it would only refund employers, including charities, 80% of a worker’s salary - up to £1,600 per employee, per month - if they paid their employees in full, in the normal way.

To benefit from the scheme, businesses also had to demonstrate their turnover had dropped by at least 30% in the month due to covid-19.

Video: The Economic Development Minister announced the measures at a press conference this afternoon.

But the Minister for Economic Development, Senator Lyndon Farnham, today announced changes to the scheme that he said would help employers struggling most and give them “the best opportunity to ensure their continued viability, and increasing their ability to retain their staff in employment."

Mr Farnham said that if a business can prove it has insufficient working capital or cash flow to meet its normal obligations, it will not be required to contribute a mandatory percentage to the scheme. It will therefore be able to transfer the value of the subsidy -  up to £1,600 - directly to its employee.

Contrary to the UK furlough scheme, Jersey employers will still be able to employ their workers while receiving the subsidy, as the Minister said it contributed to “positive activity in the economy and helps islanders continue to work”.

“I would like to stress, at this stage, that we expect businesses to do everything in their power to ensure workers receive their agreed wage,” the Minister added.

“However, where there is a risk that the employee would not be paid, it is preferable that they can continue to benefit from remaining in employment, albeit on reduced hours, rather than potentially facing lay-off or redundancy.”

Pictured: Local businesses will still be able to employ their workers while receiving the subsidy.

Senator Farnham reminded islanders that businesses will still be required to agree all changes to employment contracts with their staff in the normal way, as the Employment Law stipulates.

Self-employed islanders whose business has been disrupted by covid-19 will also be able to receive a payment of 80% of their average monthly income - based on figures from 2019 - up to a total of £1,600 per month for April, May and June 2020.

The full scheme is expected to cost up to £138m over three months – and will be reviewed for extension if disruption continues after the end of June. 

The Minister also assured that plans are already underway to support businesses through the recovery phase once medical advice allows for the easing of lockdown and social distancing measures.

“We are also planning to engage with local business experts and our specialist advisors to make a robust plan for our economic future,” he said.

“I would like to stress that as our economy recovers, we will need to work together to replenish our reserves in the coming years, and we will work with islanders and businesses to make sure this is done in a sensible way that is fair and affordable for us all.”

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