Update on the operation of the Government co-funded payroll scheme phase 2

Good afternoon

The global public health crisis caused by the 2020 Coronavirus pandemic has, over the past few weeks, fundamentally changed the way we live our lives. 

Some of these changes will be temporary, and many will have long-lasting effects. While there may be challenging consequences, there are also positive outcomes and opportunities for us, as our community comes together to overcome the greatest challenge of our time.

Since long before the first case of Covid-19 was confirmed in Jersey on 10 March, we have been planning carefully through this uncharted territory to protect Islanders. From the outset, our response has been planned around three priorities: ‘life, livelihoods and wellbeing.’

In Jersey, we have an amazing array of businesses and enterprises that we need to protect for many reasons.

Firstly, we need the whole economy to recover quickly when we are through the worst of this disruption. Keeping businesses operational is critical to keeping people in work. 

Secondly, we must try to maintain the critical relationship between employer and employee to protect from redundancies and job losses, now and in the future.

Thirdly, we must also ensure that businesses have the people and skills around them to adapt, where possible, to face this difficult and changing situation. We are seeing many businesses doing this already, and with incredible innovation and speed.

Fourthly, we must protect the self-employed people and sole traders on the Island.

And finally, we must never forget in this very difficult time, that it is far better and quicker for individuals and families to be paid directly from their employer than it is to have to start claiming benefits.

I have been hugely impressed by the resilience of local businesses and their employees over the last month, their ability to adapt to difficult circumstances, and their desire to keep working and their livelihoods intact. 

As I have stated since the beginning of this crisis, politicians must react and be agile to the needs of people and businesses in the island. 

Therefore, following extensive feedback from local businesses and stakeholders, and the welcome assistance of Jersey Business, I am pleased to report that the Council of Ministers have agreed to enhance the Government Payroll Co-funding Scheme in Phase 2.

We previously announced that for April, May and June we would refund employers, including charities, a maximum of £1600 per employee, per month. That is was 80% of a worker’s salary up to £2000.  

This funding would originally only be made available providing that the employer paid their employees in full, in the normal way.

To benefit from the scheme, businesses also had to demonstrate material detriment, confirming a drop in turnover of at least 30% in the month, because of COVID-19.

The amendments we are announcing today, provide additional flexibility for employers who are struggling the most - giving them the best opportunity to ensure their continued viability, and increasing their ability to retain their staff in employment.

Where a business can prove that it has insufficient working capital or cash flow to enable it to meet normal obligations, it will not be required to contribute a mandatory percentage to the scheme and it can therefore pass the value of the subsidy it receives directly to the employee - up to a maximum of £1600.

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. 

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. 

Employers will still be required under the employment law to agree all changes to employment contracts with their staff in the normal way.

For the self-employed, I can confirm that Islanders who work for themselves and are affected by COVID-19 business disruption, will receive a payment of 80% of their average monthly income - based on figures for 2019 - up to a total of £1600 per month for April, May and June 2020.

As a result of the changes announced today, employers in Jersey - like the UK - will now be able, in specific circumstances, to be reimbursed for up to 80% of employee wages from the Government. However, unlike the UK Furlough scheme, that employer can still utilise the employee for work over this time. This contributes to positive activity in the economy and helps islanders continue to work. 

The full scheme is expected to cost up to £138 million over three months – and can be reviewed for extension if disruption continues after June 2019. 

Can I also take this opportunity to say that planning is already under way to support businesses through the recovery phase once medical advice allows for the easing of Social Distancing and the Stay at Home measures. 

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

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.