Government will pay 80% of wages for staff unable to work due to Coronavirus


In a press conference held this afternoon (20 March 2020), Prime Minister Boris Johnson, Chancellor Rishi Sunak and Deputy Chief Medical Officer Jenny Harries announced new measures to protect British businesses and employees during the Covid-19 (Coronavirus) outbreak.

The British government will pay 80% of wages for employees unable to work during the Coronavirus, provided they are kept on and furloughed by their employer and enrolled in the pay-as-you-earn (PAYE) system. This aims to help counter financial hardship for individuals, and encourage employers to avoid using lay-offs as a measure of coping with the business impacts of the crisis.

Sunak stated that there would be no limit placed on the funding available to businesses, in the form of grants available via HMRC, to be used by employers to pay 80% of employees’ wages, up to a cap per person of £2,500 per month.

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The scheme will be backdated to 1 March 2020 and be open initially for the next three months. The first grants will be paid within weeks, according to Sunak.

This announcement came at the same time as Johnson pressed for the indefinite closure from this evening of pubs, restaurants, clubs and leisure centres, among other locations associated with social proximity deemed dangerous during the a spread of Coronavirus.

Upon being questioned by a member of the press, Sunak clarified that the grants would apply to paying individuals enrolled in PAYE; it was not made clear how this might affect gig economy and zero-hours workers.

In addition to the grants, the previously announced Coronavirus business interruption loan scheme’s six month interest-free period has been extended to 12 months. These loans will now be available starting from Monday 23 March 2020, and will be extended to larger and medium-sized organisations.

Businesses will also be able to defer the next quarter of VAT payments, and will have until the end of the financial year to repay these bills.

Johnson said: “We the government say, we will stand by you. I say to businesses, remember our joint objective to beat this virus. [We will] help workers of all kinds to get through this crisis, supporting [them] directly in a way government has never done before.

“These steps are intended to be temporary, and I am confident that in time the UK economy is going to bounce back. We stand by you, and we hope that you will stand behind your workers.”

Sunak said: “The economic intervention that I’m announcing today is unprecedented in the history of the British state. Our planned economic response will be one of the most comprehensive in the world.

“For the first time in our history, the government is going to step in and help pay people’s wages.”

James Farrar, chair of trade union United Private Hire Drivers (UPHD), commented: “Rishi Sunak missed a critical opportunity to insist that existing law on minimum wage protection and holiday pay is now urgently enforced for firms like Uber. It is unconscionable that Uber drivers now face the abyss while the global rideshare giant continues to get a free pass from the government.

“In London alone, 94% of private hire drivers are from [black, Asian and minority ethnic] communities. The government’s decision to protect pay for PAYE workers while offering no pay protection for gig workers shows how the brunt of the burden of the pandemic is falling unequally.”

Crowley Woodford, employment partner at Ashurst, said: “This historic and unprecedented move from the Chancellor will be welcomed by employers throughout the nation. It is significant and wide-ranging, and will provide a life-line to many business large and small which are facing a financial cliff-edge.

“This move reflects the government’s priority of preventing large-scale redundancies and ensuring that workers are shielded from the worst effects of suddenly losing their income. The key will be in the detail of how this scheme is implemented to ensure it is easy to use, administratively light and implemented quickly.”