Guernsey Coronavirus Payroll Co-Funding Scheme

It is recognised that while the end of the core summer season brings a return to normal trading for many businesses, the absence of a positive summer period may bring financial strain over the coming months. The expectation for these businesses is to look to other sources to provide required financial support such as personal means or bank borrowing. A reminder that the Business Disruption Loan Guarantee Scheme (BLDGS) is available until the end of December which involves government guaranteeing 80% of the loan and thereby makes it easier for viable business to access borrowing at this time. Businesses at risk of failing and meeting the criteria set out above can have their position assessed on a case by case basis with States’ support expected to be seen as a last resort.

Earlier in the year, it had been expected that changes to travel restrictions that formed part of the move to Phase 5c may see an increase in travel activity.  However the high prevalence rates of COVID-19 in other jurisdictions means this has not been the case and the Bailiwick continues to see very little travel and this has informed the decision to extend the scheme.

While it is unlikely, should the situation improve very quickly and more travel does resume in the short-term, the Policy & Resources Committee may review again if the support for businesses should continue. If it becomes the case that the support is no longer needed, the Committee will give business advance warning so they can plan accordingly.

It is likely that some behaviours and activity will not return to pre-COVID conditions for some considerable time or perhaps ever. An example of this is corporate travel whereby the greater use of technology is likely to see future levels of activity reduced. Clearly there is need, and expectation, for businesses to adapt to the new conditions as the taxpayer cannot be expected to financially support businesses who may never to return previous levels of profitability. 

Businesses in the sectors listed below will be able to continue to apply for either 80% or 100% of the minimum wage for employees depending on the extent to which the business is impacted. The expectation is that businesses within these sectors that are more reliant on inbound and outbound travel will be hardest hit and far more likely to require support over this extended period. In addition, only businesses that had their previous claim approved in the July-September period will be eligible. 

The sectors which will be eligible for support are as follows:

• Travel agents & tour operators
• Event companies such as those working in corporate events or weddings
• Taxi Operators, subject to a cap of 80% payroll support*
• Exceptions considered for businesses heavily impacted by travel restrictions

*Taxi Operators continue to be impacted by low volumes of off-island travel. However, given that there are reasonable levels of demand locally which should be sufficient to enable operators to achieve the minimum turnover threshold of 40%, assistance will be capped at 80% payroll support from December onwards.

Additional financial support for hotel and accommodation providers is now available. More information can be found at https://covid19.gov.gg/guidance/visitor-accommodation 

The States remains open to assessing the need to provide support for those exceptional businesses on the basis operating conditions remain heavily impacted by the border closure. In these circumstances an application for support will need to be made by emailing business.support@gov.gg. It is recognised that income and profit levels may not return to normal levels for some time for businesses within several others sectors, with the expectation that these businesses will determine how best to adapt to the new conditions. Note, businesses clearly classed within another sector not highlighted in the eligible list above will not be able to claim.

Under the basic scheme, the States of Guernsey will help you to pay your employees an amount equivalent to Guernsey’s minimum wage to ensure a level playing field. This is currently set at £8.50 per hour (£8.05 for 16 and 17 year olds). For a 35-hour week, this figure would equate to a gross figure of £298. The States of Guernsey will meet 80% of this figure (i.e. £238 per week based on a 35 hour week). Employers must make up the remaining 20% (equivalent to £60 per week). Employers are encouraged to ‘top-up’ these amounts further if they are able to do so.

Under the enhanced scheme, this is still linked to the minimum wage of £8.50 per hour (£8.05 for 16 and 17 year olds). Support will be calculated based on the normal contractual hours worked by your employee(s) up to a maximum of 42 hours per week. For example, based on a 35 hour week, funding would be £297.50 per week or £1,289 per month.

For business owners and self-employed claiming payroll support, hours that can be claimed are capped at 42 hours of £1,547 per month.

Employers will still be responsible for paying the social security employer contribution of 6.6% but are able to request that this is deferred for both Quarters 1 and 2.

Businesses who have put in an application for or are currently claiming payroll co-funding support who are able to return to some level of activity but are still experiencing a significant impact on their turnover will be able to continue claiming support. Payroll co-funding can still be claimed for all members of staff, including sole traders and business owners. However, as is currently the case, businesses will be asked to declare an estimate of their level of activity relative to normal. The value of the support provided may be adjusted to reflect the increased level of activity in the business.

To be eligible for support, businesses must work within the following sectors and have been trading continuously since 1 September 2019:

• Travel agents & tour operators
• Event companies such as those working in corporate events or weddings
• Taxi Operators
• Exceptions considered for businesses heavily impacted by travel restrictions

Support will be calculated based on the normal contractual hours worked by your employee(s) up to a maximum of 42 hours per week.

To be eligible for payroll reimbursement, you must comply with the conditions below. Employees must:

• Be permanent employees,
• Be included as an employee in the quarterly employer returns submitted to the Revenue Service for ETI, and
• Have been employed by the business before 16 March 2020, or re-employed since that date. The number of staff should not exceed the number of staff employed in the corresponding period in 2019 (e.g. July 2020 compared to July 2019).

On 15 April 2020, the Original Scheme (the Coronavirus Payroll Co-funding Scheme) was extended to self-employed individuals (whether operating through a company or as a sole trader). These individuals may apply for payroll funding and will be subject to the same eligibility criteria as set out above.

Self-employed business owners must provide the following:

• If a self-employed person is on the payroll of their company, then a copy of the payroll should be submitted with the claim.
• If a self-employed person draws their income from the business, or a sole trader does not have a payroll set-up, then they should submit a claim up to a maximum of their usual level of income.  Applicants are asked to note that there is a cap of 42 hours payment on the amount that the States will reimburse, up to a maximum sum of £1,237.60 per month under the Standard Level and £1,547 for the Enhanced Level.

It will not be necessary to register as an employer and generate payslips or submit quarterly ETI returns in order to be eligible to claim.

Payroll Co-funding is a reimbursement scheme. Applications for payroll support can only be made in the month following the month payroll was paid in.

For example November Payroll can only be applied for from December 1st to December 31st. December payroll can only be applied for from January 1st to January 31st and so on.

Applications for Payroll must be applied for here.  

You will need to answer a few questions to check eligibility before your claim can be processed.

Details on other support measures, including the Loan Guarantee Scheme and Utility Bills, can be found in the guidance document below.