Treasury and Exchequer
Ministerial Decision Report
Government co-funded Payroll scheme Phase 1
- Purpose of Report
To enable the approval of the Government Co-Funded Payroll Scheme Phase 1 and the allocation of up to £4 million from the General Reserve to the Customer and Local Services Head of Expenditure.
- Background
The outbreak of COVID-19 presents a public health emergency and the measures necessary to combat the virus are precipitating acute economic crisis that presents significant risk to Jersey’s economy. To support the economy through the crisis, the Government of Jersey has announced a bold package of interventions, which includes the Government Co-Funded Payroll Scheme
The Government Co-Funded Payroll Scheme: Phase 1 is being introduced to assist employers and employees whose businesses have suffered significant detriment as a result of the COVID-19 global pandemic (“COVID-19”) and the circumstances brought about by COVID-19.
The key aims of the scheme are as follows:
- To maintain employment in selected industries that are severely affected by the public health restrictions introduced in March to manage the outbreak of COVID-19
- To maintain, as far as possible, existing employment relationships so that businesses are able to retain trained staff. As far as possible, employees should be kept in employment that is as similar as practicable to the situation they were in pre-COVID-19.
- Along with other economic support measures being taken by the Government, to allow the business or self-employed individual a greater chance to remain solvent during COVID-19. This should also allow for businesses to resume normal business activity where appropriate as soon as possible post COVID-19, once restrictions are eased.
- Ultimately, the scheme hopes to assist in the recovery of the economy post COVID-19 by ensuring that businesses and employment income can restart quickly once restrictions are eased.
Eligible businesses for the scheme
The Phase 1 scheme will only support businesses within qualifying industries that the Government judged were most affected during the relevant period of the scheme. Qualifying industries are assessed within the Standard Industrial Classification (SIC) 2007 used by Statistics Jersey. Where the relevant SIC is not obvious, eligibility of a firm for the scheme will be determined by the Minister for Treasury and Resources (the “Minister”) or their delegate who will be mindful of the balance of an organisations’ business activities, the potential impact on employment and the affordability of the scheme. Any decision taken by the Minister or their delegate is final.
Where a business undertakes multiple business activities, if the majority of its trade would be within a qualifying industry, the business will be considered eligible for the phase 1 scheme.
Phase 1 qualifying industries are:
• Hotels
• Restaurants
• Bars
• Wholesale and Retail
(excluding retail food, wholesale or retail pharmacies, wholesale or retail fuel, wholesale or retail construction supplies/DIY supplies, retail sale of household electrical equipment and information and communication equipment, wholesale or retail medical supplies)
• Fisheries
• Hairdressing and other beauty treatment
Scope and key terms
Declaration of Significant Detriment
In order for a business to make a claim under the scheme, it will be required to confirm by declaration that it has suffered significant detriment during the relevant period as a result of the circumstances brought about by COVID-19. All claims will be made retrospectively.
The definition of “Significant Detriment” will be interpreted as a business having experienced in a drop in turnover of at least 50% during the period for which it is making a claim.
Businesses are required to retain documentation for audit or other purposes to provide, on request, evidence of significant detriment suffered. GST filings or financial statements/bank statements, correspondence with shareholders/banks about continued finance for the business, will be considered as evidence of significant detriment, when compared with previous comparable trading months. For industries with significant seasonal demand annual comparisons may be appropriate.
Eligibility of Employees
A business will be able to receive a co-funding payment for staff that have been retained in employment during the relevant period. The Phase 1 scheme will cover employees who were listed on the Social Security contribution schedule for February 2020 who remained in employment during the relevant period.
The scheme is available to both full-time and part-time workers and includes those employed on a fixed-term contract, and zero-hour workers who were paid during the relevant period. Agency workers are excluded from the scheme.
The scheme is not available to employees with gross earnings of more than £10,000 a month.
Eligibility of self-employed
The scheme will include self-employed people in Phase 1 qualifying sectors that pay Class 2 social security contributions. This includes sole traders and partnerships.
Income will be assessed against payment of Class 2 contributions for the last quarter of 2019.
The scheme is not available for individuals with total gross income of more than £10,000 a month.
Businesses providing staff accommodation
COVID-19 presents a unique challenge to our community, and public health restrictions mean that the market for accommodation is not functioning as it would under normal economic conditions. The Government expects all businesses benefiting from financial assistance under the scheme to act compassionately where a business provides staff accommodation. Any worker in employer-provided accommodation on 19 March 2020, must continue to be given the opportunity to remain in that accommodation for the duration of the scheme, whether or not they remain in employment. Employers who fail to meet this requirement may be excluded from this scheme and subsequent schemes.
This provision will not apply where there is a clear case of misconduct and appropriate procedures have been followed to dismiss an employee. Where an ex-employee begins working for another business, the provider of accommodation will be permitted to recover any reasonable incidental costs of maintaining the employee in staff accommodation up until the date of the change of employment.
Business to make available staff for community benefit
Where the business claims under the scheme, and it is envisaged that staff will have spare working capacity, those staff should be made available to the Government of Jersey to participate in appropriate activity required to support the government and community actions needed, including volunteering, whilst this national crisis in relation to COVID-19 remains on-going.
Co-funding contribution under the Phase 1 scheme
For the period 20 March to 31 March, a business in a Phase 1 qualifying sector can apply for support of £200 per week for a worker who has worked during the relevant period and has been paid either:
• at least £320 per week; or
• at least £1,390 per calendar month
For workers earning lower weekly or monthly amounts a payment of 60% of 39% of the usual monthly wage (around 21%) will be made. This largely equates to 60% of the relevant wage for the proportion of the month that was affected by restrictions (12 days out of 31 days or 39%).
Process to claim under the scheme
Businesses will be reimbursed after wages have been paid. A dedicated online form will be available which will require businesses to provide their contact details, industry, bank details, names of every worker (including social security numbers) and the wages they have been paid for that month. Businesses will also be required to make formal declarations related to each of the conditions of the scheme.
Claims will be processed within three working days of receipt. Payments will then be made by BACS to the customer’s nominated bank account and will take a further three working days to arrive.
Governance
The lead Minister for the Government Co-Funded Payroll Scheme Phase 1 will be the Minister for Treasury and Resources
Funding will be transferred to Customer and Local Services which will administer all payments under the scheme. The relevant Accountable Officer will be Ian Burns.
This initiative is one of package of economic support measures introduced to help mitigate the impact of Covid-19 on the economy. The governance groups outlined below will be established to provide oversight of all such economic support initiatives and this scheme will likewise be monitored by these groups.
Coronavirus Government Support for Businesses Political Oversight Group (POG)
Member | Role |
Sen. Lyndon Farnham (Chair) | Deputy Chief Minister Minister for Economic Development, Tourism, Sport & Culture Assistant Minister for Treasury & Resources |
Dep. Susie Pinel | Minister for Treasury & Resources |
Dep. Judy Martin | Minister for Social Security |
Sen. Ian Gorst | Minister for External Relations Assistant Minister for Treasury & Resources |
Functions
- Receive reporting including data, advice and other information from the SOG
- Provide oversight, political steerage and decision making to the SOG
Senior Officer Group (SOG)
Member | Department |
Charlie Parker/Catherine Madden (Chair) | CEO/Chief of Staff |
Richard Bell or designate | Treasurer |
Richard Corrigan or designate | FSDE |
Ian Burns or designate | CLS |
Tom Walker or designate | SPPP |
Functions
- Receive reporting including data, advice and other information from the OG
- Provide oversight and officer level steerage for the OG
- Provide reporting including data, advice and other information to the POG
- Cascade political steerage and decision making from the POG to the OG
Officer Group (OG)
Member | Role |
CLS operational representative | Government Co-Funded Payroll Scheme Operations |
SPPP Social Security policy representative | Government Co-Funded Payroll Scheme Policy |
FDSE operational and policy representative | Bank Loan Guarantee Scheme Policy/Operations Special Situations Fund if administered here |
Economy operational representative | Special Situations Fund if administered here |
Treasury operational representative, policy representative | Special Situations Fund if administered here Overall policy and financial oversight |
Economics Unit policy representative | Economic policy input |
- Recommendation
The Minister is recommended to approve the establishment of the Government Co-Funded Payroll Scheme Phase 1 and to approve the transfer of up to £4 million to the Customer and Local Services Head of Expenditure.
- Reason for Decision
Article 15(3) of the Public Finances (Jersey) Law 2019 states that the approval by the States of a government plan authorises the Minister to direct how an approved appropriation for a reserve head of expenditure in the plan may be spent (including on another head of expenditure) in the first financial year covered by the plan.
The current Contingency Allocation Policy (published as R.23/2020) sets the requirement for all allocations from contingency to be considered by the Investment Appraisal Board, Principal Accountable Officer and States Treasurer prior to submission to the Minister for approval. However it also states that ‘Where a request is made for £100,000 or less, or where the Minister is satisfied that there is an urgent need to provide funding in the public interest, an allocation may be made by the Minister on the recommendation of the Treasurer.’
The Scheme having been agreed by the Assistant Chief Minister and the Social Security Minister, is approved by the Treasury and Resources Minister and, recognising the urgent need, the Minister is approving £4 million of funding from the General Reserve on the recommendation of the Treasurer of the States.
- Resource Implications
The General Reserve will decrease by up to £4 million and the Customer and Local Services Head of Expenditure will increase by an identical amount.
Report author : Head of Cost-Benefit Analysis ＆ Investment Appraisal | Document date : 1st April 2020 |
Quality Assurance / Review : Head of Financial Governance | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2020-0032 - Payroll Co-Funding Scheme Phase 1 |
MD sponsor : Treasurer of the States |
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