Fiona Young Consultant
The BEAT Covid 19 Measures (Gibraltar)
On Tuesday 24th March 2020, the Chief Minister of Gibraltar announced a series of initiatives, rules and measures to assist businesses and employees in the community to get through these extraordinary times.
The measures are designed to favour everyone who works in the Gibraltar economy and were designed following an intensive weekend of consultation and collaboration with the Covid Emergency Liaison and Advisory Committee (CELAC) made up of government ministers, representatives of the various business communities in Gibraltar and the Unions. Their brief was to introduce the most effective financial undertaking and commitment for the duration of the Covid crisis to support the local economy and all citizens of Gibraltar. The scheme is called:
Business & Employee Assistance Terms (or BEAT)
Who does the scheme assist?
- The focus of the Government of Gibraltar’s (GOG) economic support throughout this crisis will be to help businesses continue to pay their employees, including those on zero hour contracts.
- It does not differentiate between Spanish or Gibraltarian residents, it applies to affected employees registered to work in Gibraltar.
- In addition, the scheme will also include the self-employed.
GOG will create a new status in law for employees in this Covid period called the ‘inactive’ employee.
- An “Inactive Employee” is an employee that is registered by their employer as being inactive during this period of the pandemic.
- All businesses (other than Exempted Businesses) will be able to immediately apply for the employees they register as inactive to be paid for by the Government.
- The key aim of this is to enable businesses to continue to pay those employees who cannot work during the Covid crisis and to prevent mass lay-offs and redundancies.
How will the measures work?
- The measures are designed to ensure employees receive a basic amount each month.
- Claiming will require employers to complete an online form.
- The Business will be required to register all employees who are eligible for the scheme (inactive employees).
- The money to pay the salaries will be provided to the Business once the application process is approved.
- Businesses will NOT be entitled to retain or deduct any amount from the amount corresponding to each employee. It will be an offence for them to do so.
- In the case of the self-employed person, claims can be made by the self-employed person themselves who will receive the monthly payment directly into their bank account.
What if I have already taken steps to terminate the employment of my staff?
Terminations of employment from 15 March 2020 will not be allowed without the specific consent of the Director of Employment and the Director of Employment will not grant consent save in very exceptional circumstances for the registration of any such termination.
Who do the measures apply to?
To qualify, an individual will have to:
- Be registered by their employer in an affected sector, as an “Inactive Employee”.
- An Inactive Employee will be a worker whose employer has experienced a downturn or cessation in business, and as a consequence of this downturn or cessation, has sent the employee home.
- An Inactive Person in the case of a self-employed individual is a person whose income is affected by the Covid emergency and who is consigned to their home by the lockdown measures announced.
- It does not include an employee who is tasked to work from home.
How soon will the payment be available?
GOG expects the relevant legislation to follow in the coming days, with the first payments to employers so that they are in a position to pay their inactive employees by the end of April 2020, and will aim to continue these payments if necessary through the months of May and June 2020.
How do you access these measures?
- The application form is available online at the link shown above.
- The business (the employer) will apply on behalf of each Inactive Employee.
- In the case of the self-employed person, that individual must apply.
- Employers who are subject to any closure orders will be able to access their place of work to obtain the details they require to complete the form.
- The employer must provide the business bank details to which the payment will be sent.
- The employer must inform GOG of how many of their employees will be designated as inactive.
- The details GOG will require for each employee will include:
- the name;
- tax reference number;
- the individual employee’s contact details (mobile and email); and
- the form also requests information on whether each employee is a full time or a part time employee.
Calculating working hours:
This is important as this amount of hours will be used to pro-rata the daily rate for part-time employees.
- A person will be deemed to be working full time if they are working 7.5 hours each day or more.
- If the person is part-time the employer should provide the average amount of hours that individual has worked in any day based on the average for the period from 1 January 2020 to 15 March 2020.
- The same is true for those on zero-hour contracts who have worked an average of less than 7.5 hours a day in the first ten weeks of the year.
- To prevent abuse GOG will cross check applications against the PAYE and Social Insurance returns for this period to ensure that no employer seeks to cheat the mechanisms being put in place.
- Employers should note that there will be serious CRIMINAL penalties for providing false or erroneous information.
- The final section of the form contains a number of declarations to be made by the person completing the form.
- There will be penalties for providing inaccurate or false information.
How much is the BEAT Covid rate and how is it determined?
The BEAT Covid rate is based on the minimum wage of £7 per hour and is computed based on 7.5 hours per day and 22 days in any given month.
- The rate will be £1,155 per month for a full-time employee or a self-employed person
- It will be any fraction thereof for those who work less than full time.
- example: an employee who has worked the average of 4 hours a day will receive £616 for a month.
Will the pay be subject to tax and PAYE?
- These amounts will be paid TAX FREE whatever the cumulative income of an employee over the year might be.
- The sums will attract no PAYE or SOCIAL INSURANCE deduction on the part of the employer, the employee or the self-employed.
- GOG will provide in law that social insurance records will be deemed as paid in April 2020 even though the Government has waived them.
The Employer’s obligation:
The Government requires the employer:
- to process that amount which is paid to them;
- pass it on in its entirety and without deductions to the employee (a failure to do this will result in criminal as well as financial penalties); and
- to advise GOG if an employee for whatever reason ceases to be an inactive person.
When is the payment going to be made?
- It will be paid toward the last week of each month during the Covid Period starting from the last week in April 2020.
- GOG expects employers to honour their March 2020 salary obligations.
What if I pay my staff weekly?
- GOG asks businesses to turn to shareholders (or other financial resources) to make payments to staff between now and April, knowing that they have the confidence that GOG will be providing this cash injection into their businesses.
- Equally, those businesses could also turn to some of the local banks who have offered to provide lending at very favourable rates and will no doubt do so against the guarantee of these payments set out in my address.
It is expected that those employers (or self-employed individuals) seeking to benefit from this should complete the relevant forms as soon as possible such that these can be processed, checked and validated in time for the payment to be made by GOG for all affected employers and self-employed individuals during April.
BEAT COVID MEASURES:
In summary, all business not specifically excluded from the application of these measures will benefit from the following:
- A waiver of commercial rents for the second quarter of 2020 where Government is the direct landlord of a business within a Relevant Sector.
- They will benefit from the encouragement for private landlords to provide commercial rent waivers for the second quarter in 2020 with HMGoG applying a tax on gross rents and a deduction against tax liability of 3 times rent paid, or a rent waiver and lease extension of 3 months.
- Business rates are waived for the second quarter in 2020 for all businesses in our economy.
- A deferral of utility charges for businesses in non-excluded sectors for the month of April 2020 can be paid over the following 12-month period. This will be reviewed to consider whether it should be extended by further months or not on a monthly basis.
- Payment of salaries to employees who continue at work in sectors not excluded will not attract PAYE or employer or employee Social Insurance contributions for the month of April. These sums will be retained by the employer and the law will change to exceptionally permit this for this extraordinary period.
- Employers across all sectors (including the Excluded Sectors) will be allowed to defer their PAYE and Social Insurance contributions for the second quarter 2020 by a period of 12 weeks from month end instead of the 10 weeks previously announced.
- The stock repurchase scheme for businesses in the catering sectors with perishable stock will continue.
- The import duty waiver for all classes of goods except for tobacco,fuel and alcohol is in effect until midnight on 30 April 2020 and its extension will be reviewed monthly (in relation to motor vehicles, the waiver will be administered as a rebate upon the sale of the vehicle that is imported in this period.)
- The streamlining of work permit and registration process for gaming and financial services sectors and the waiver of all fees in this respect will continue and will include all sectors, as some of these businesses may need to grow their workforce during this period of increased activity for some.
- The deferral of FSC fees that would normally be payable for the whole year in advance in April was to be payable quarterly in advance this year.
- This has now been extended further so that the fees are paid quarterly in arrears, giving FSC licensed businesses even greater leeway. In terms of new measures.
- Gaming duty will also be deferred to the end of each quarter.
- The encouragement GOG has provided for landlords to pass on rent waiver is limited to a period of 3 months (that is to say the second quarter in 2020), however, if the pandemic extends beyond this second quarter, GOG will consider whether it is able to provide assistance to affected landlords themselves.
- The FSC is looking at some of the issues raised by the Finance Centre Council and the Insurance industry. Specialist teams have also been set up to make recommendations to us on exceptional amendments to insolvency legislation and also in respect of continued operation of our court services.
- A BEAT COVID-19 corporation tax-deductible will also be introduced at the sum of £50,000 (fifty thousand pounds) as a one-off capital allowance for the current financial year to take into account corporate expenditure required to implement adequate health and safety measures for staff.
Both the gaming and financial services sectors will be excluded from the first wave of parts of these measures by the agreement of their representatives. (Other sectors will be added to this).
Protection for Citizens:
- There are also a series of further measures that GOG are rolling out in order to further protect all citizens during this period:
- The first of these is a price control measure that will be applied to high-demand goods (These include hand sanitiser gels, gloves and masks, paracetamol, inhalers and disinfectants.)
- These price controls will mean that a business will be unable to sell or offer for sale any of these goods with an increase of more than 10% above the price for which they were previously sold prior to 15 March 2020 unless they have a reasonable cause to do so.
- Reasonable cause will depend on whether the business itself is able to source these items at the same prices that it was able to do so on 15 March 2020.
- In circumstances where a business has a justifiable cause because the price that they pay is higher, the business will be limited to selling these high demand goods at a maximum of 20% over the price paid for the goods on importation.
- These price control measures will be enforced through the Office of Fair Trading.
- Any complaints can be made directly to OFT.
- There will also be a fine of up to £5,000 for any person that contravenes these price control measures.
Restriction on recording in medical facilities
- There will be a strict restriction on any recording within medical facilities in Gibraltar unless it has the prior written consent in writing from the GHA.
Ban on evictions
- GOG will put in place measures to ensure that no evictions can be carried out or sought in law in cases where the tenant of residential property has been unable to pay rent in the period of the Covid emergency.
- GOG is also working on what relief may be able to provide to first time home buyers of affordable property who are in hardship in respect of their pre-completion instalment payments because of the current circumstances.
- Anyone in such a situation of genuine hardship should contact GRP who will work with you on how to alleviate your difficulties.
- GOG is asking management companies not to take any action against any property owner in an estate for failure to pay estate services charges for the second quarter of 2020 where hardship has arisen as a result of this Covid emergency.
- Some of the measures will require legal changes which can happen under existing rules and regulations.
- The Chief Minister may have to use emergency powers to amend any law. He will only use those powers sparingly and in consultation with the Leader of the Opposition.
The GOG has called for solidarity and cooperation amongst the business community and the community as a whole. It is clear that where businesses are able to continue to contribute to the economy they are being asked and urged to do so and not to take advantage of the measures put in place to protect those businesses and employees severely affected.
DO NOT Abuse the measure:
- Do not claim for an inactive employee if that employee can work.
- Do not pretend to be inactive if you can work.
- If you can pay your employees without our help, please do so for as long as you can.
- If you can pay your rent, please do so and do not rely on waivers.
- If you can pay your mortgage, please do so and do not seek a waiver of the mortgage payments.
- If you can pay your service charges, do so.
Contravention or abuse of the measures put in place during the crisis will be taken very seriously indeed and there will be penalties, including potential Criminal action for those persons or businesses found to be contravening or abusing the laws put in place.