Government to cover 67% of employees’ wages for businesses forced to close due to coronavirus restrictions

Chancellor Rishi Sunak has announced that the government’s Job Support Scheme will be expanded to businesses which are forced by law to shut as a result of tougher local or national restrictions.

The UK-wide scheme will begin on 1 November 2020 and will be available for 6 months, with a review point in January 2021.

Firms whose premises are legally required to close for some period over winter will receive grants to pay the wages of staff who cannot work. For eligible businesses, the government will pay 67% of each employee’s salary, up to a cap of £2,100 a month.

Employers will not be required to contribute towards wages, and will only be required to cover National Insurance contributions and pension contributions.

Businesses will only be eligible to claim the grant while they are subject to the restrictions, and the employees in question must be off work for a minimum of 7 consecutive days. Payments will be made in arrears, and will be made via an HMRC claims service that will be available from early December.

Employees of firms that have been legally closed prior to 1 November 2020 can continue to use the existing Coronavirus Job Retention Scheme, which ends on 31 October 2020.

In addition, Sunak has announced that the government is increasing cash grants for businesses forced to close in England, with up to £3,000 a month paid every fortnight.

Scotland’s Economy Secretary Fiona Hyslop has outlined details of a £40m fund to help Scottish businesses required to close by regulations.

The Covid-19 Restrictions Fund will provide one-off grants of up to £3,000, to bars, restaurants, and other businesses that have been forced to close by law. Up to £2,000 will be payable to businesses with a rateable value of up to £51,000, and for those with a rateable value of £51,001 or above, the sum will be £3,000. The grants will be distributed by local authorities.

A hardship fund with grants of up to £1,500 will support businesses that remain open but are directly impacted by the restrictions, including those in the direct supply chains of firms that must close.

Funding of £9m will help with the costs of re-furloughing staff by supporting the 20% salary contribution required by the UK government, and a discretionary fund of up to £11m will help businesses that require support but do not fall into the above categories.

These measures will operate alongside the original Job Support Scheme, designed to support businesses facing lower demand over the winter months, and the £1,000 Job Retention Bonus, which encourages employers to keep staff on payroll.