Today (19 October 2020) the First Minister of Wales, Mark Drakeford, announced that from 6pm on Friday 23 October 2020, Wales will be in a ‘circuit breaker lockdown’, which will end on 9 November 2020. The announcement comes after large areas of Wales have already found themselves in local lockdown due to an increase of COVID-19 infections. David Sheppard considers the implications for employers.
The new regulations mean that everyone in Wales is required to stay and work at home as far as possible.
Moreover, all non-essential retail, leisure and tourism services will be forced to close, along with Community Centres, Libraries, Recycling Centres and places of worship (exceptions have been made for weddings and funerals).
However, childcare services will remain open throughout the lockdown and schools will reopen after the half term for primary school students, year 7, year 8 and students sitting exams.
The Welsh Government has announced a series of support packages to assist businesses who have had to close due to the new restrictions. All funds will be available on the first week of the lockdown.
The national lockdown period will straddle the end of the UK Government’s Coronavirus Job Retention Scheme (CJRS) on 31 October, and the start of the Job Support Scheme (JSS) on 1 November 2020.
To support payment of wages, employers will have to rely on the CJRS until 31 October. But only employees who had previously been properly furloughed for at least 3 consecutive weeks at any time between 1 March 2020 and 30 June 2020 by the same employer can now be re-furloughed until 31 October. Any employees who had not been previously furloughed for this minimum duration before 30 June 2020 will not be eligible for furlough support. Many new recruits since June 2020 will therefore be without any support for at least the first week of national lockdown in Wales.
The current CJRS support is 80% of normal salary, up to a maximum of £2,500 per month, but the UK Government’s contribution since 1 October is limited to 60% of salary (capped at £1875 per month), with employers having to meet the shortfall up to the lower of 80% or £2,500 per month. Employers must also pay the full employer’s national insurance and pension contributions on this pay. This is still a significant cost to employers forced to close.
From 1 November, Welsh employers who are closed potentially have access to support under the JSS. However, no substantive details or rules have yet been published by the UK Government on the eligibility for support under the JSS, other than employees would need to be submitted to HMRC on the employer’s real time payroll data on or before 23 September 2020.
The Chancellor has recently indicated that businesses which are required to close directly in consequence of lockdown measures would be able to obtain a variation of the CJRS from 1 November, with furlough pay up to 2/3rds of normal salary, capped up to £2,100 per month.
However, no details have been provided as to whether employers are required to contribute to JSS pay, and whether devolved administrations’ lockdown measures would trigger automatic support from the UK Government under the JSS. The Welsh Government has therefore closed large swathes of the economy in the hope the JSS will apply in these circumstances.
It was notable that the Welsh First Minister’s statement indicated he had asked the UK Government to bring forward the JSS to take effect on 23 October, but as we stand no rules on eligibility under the JSS and other important details have been published by the Treasury.
There will also be glaring problems for businesses which although not directly ordered to close, are significantly impacted by the lockdown to make it economically unviable for them to remain open.
However, in absence of those businesses being directly ordered to close by law, an economic forced closure, unlike under the CJRS, does not entitle those businesses and their employees to JSS support. The impact of the Welsh lockdown in terms of temporary layoffs with guarantee pay only of a maximum of £150 and permanent redundancies for employers and employees falling through the cracks between CJRS and JSS remains to be seen.