Winter Economy Plan

Friday, September 25, 2020 - 08:12
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The Chancellor, Rishi Sunak, unveiled the Government’s “Winter Economy Plan” on Thursday 24th September 2020, which it says aims “to protect jobs and support businesses over the coming months.”

Winter Economy PlanMr Sunak explained that: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery. Our approach to the next phase of support must be different to that which came before.”

The Job Support Scheme

Following the upcoming end of the Coronavirus Job Retention (“Furlough”) Scheme on 31 October 2020, the Government has announced a new Job Support Scheme that will be introduced from 1 November 2020 for a period of six months, in order to protect what it refers to as “viable jobs in businesses who are facing lower demand over the winter months due to Coronavirus.”

The basic parameters of the Scheme are that:

  • Employees will need to work a minimum of 33% of their usual hours for which they are paid by the Employer in the usual way;
  • For every hour (of the usual hours) not worked, the employer and the Government will each pay one third of the employee’s usual pay, but the Government’s contribution will be capped at 697.92 per month.

Winter Economy PlanThe effect of the above (when an employee works 1/3 of their usual hours (33%)) is that for the 2/3rds remaining hours (the employee is not working), they receive pay for 22% of those hours from the employer and 22% from the Government (provided that the latter does not exceed £697.92). In this instance, the employee will receive 77% of his/her pay (provided that the Government capped contribution of £697.92 is not exceeded).

The new Job Support Scheme will be open to small and medium sized (SME) employers across the UK, including those who have not previously taken advantage of the “Furlough Scheme”, with further guidance to be published soon. Larger organisations will be required to prove that their profits have been affected by the pandemic in order to benefit from the Scheme.

Employers will not be able to issue redundancy notices whilst part of this Scheme.

The previously announced Job Retention Bonus Scheme remains unaffected.

The Self Employment Income Support Scheme

The Self Employment Income Support Scheme (SEISS) grant will also be extended, beyond its original planned end date of 31 October 2020.

A taxable grant worth 20% of average monthly profits, up to a total of £1,875, will cover the period 1 November – 31 January 2021. The grant will be made available to those who are eligible for the existing Scheme and continue to trade but face reduced demand.

A second grant, full details of which may be determined nearer the time, will be available for self-employed individuals to cover the period from February 2021 – April 2021.

Again, further guidance on the SEISS is expected soon.

BVRLA Chief Executive, Gerry Keaney comments: “Businesses most affected by the pandemic need all the help they can get right now and we welcome the Chancellor’s decision to extend financial support beyond October. Our latest Covid Survey shows that 37% of BVRLA members expect to have employees still on furlough at the end of October, so this additional support will help to stem potential job loss. Our industry is resilient and continues to adapt ways of working to protect lives and livelihoods, but cash is king when it comes to survival and this additional support will provide a lifeline for many organisations that are battling to maintain a sustainable business and protect jobs.”

David Wells, Chief Executive of Logistics UK, comments: “Logistics UK warned government that urgent action was needed to protect struggling businesses to avoid an avalanche of redundancies and insolvencies; we are pleased the Chancellor has listened to our fears and offered a platform for economic growth and recovery. With the UK remaining in crisis mode as coronavirus cases rise, ongoing, flexible financial support for businesses will be essential until the economy recovers. We are pleased to see the targeting of hospitality, tourism and small and medium sized companies, all of whom have been hit particularly hard by the COVID-19 containment measures. We also support the measures to assist businesses with cashflow issues with more generous loan terms and VAT deferrals.”

Logistics UK (formerly FTA) is one of the UK’s leading business groups, representing logistics businesses which are vital to keeping the UK trading, and more than seven million people directly employed in the making, selling and moving of goods. With COVID-19, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK plc. Logistics UK supports, shapes and stands up for safe and efficient logistics, and is the only business group which represents the whole industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.


Partner Sue Dowling, head of Blandy & Blandy Employment Law team

 

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