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Welsh lockdown: support available for businesses

Gateley Legal

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On 19 October 2020 it was announced that there is to be a national lockdown in Wales. This will start at 6pm on Friday 23 October and end on Monday 9 November. During the lockdown period, non-essential businesses will need to close, raising questions as to what will happen with employees’ wages during this period.

The default position is that if the employee is ready willing and able to work, they will normally be entitled to full pay even if no work is provided for them. 

Employers will need to reach some agreement with the employees that during this lockdown period they will be ‘furloughed’. This will enable the business to get Government support in relation to the wages.

What support is available for businesses which have to close in Wales?

The position for any business that has to close in Wales is that they have to deal with two different support schemes.

The Job Retention Scheme will still be operational for another week when the lockdown starts on 23 October 2020. Claims may be made to the Government in respect of employees furloughed in this week. It will be subject to the employee receiving 80% of their pay with the employer paying a 20% contribution and the Government grant the other 60%.

When that finishes on 31 October 2020 the employer will need to agree a new ‘furlough’ arrangement under the extended Job Support Scheme.

This new scheme replaces the existing furlough scheme from 1 November and will run for 6 months. 

Businesses that are told to close will receive two-thirds of their employees’ wages, subject to a cap of £2,100 a month. 

Full details of the Job Support Scheme and extended Job Support Scheme have yet to be published but employers in Wales who will need to close their businesses will need to enter into agreements now with their employees that cover both the Job Retention Scheme and the new Job Support Scheme which provide for differing levels of pay over the lockdown period.

Is there support available for employees who have never being furloughed?

It will need to be taken into account also that employees who have never been furloughed will not be covered by either scheme in the first week of the lockdown.

In respect of these employees where there is no provision for lay off in their contracts of employment employers may wish to agree that the first week of lockdown is taken as a period of holiday. 

What government grants are available for affected businesses?

In a Welsh Government press release issued on 19 October, it was confirmed that some grants would also be available payable direct to the affected businesses. 

This includes a £1,000 grant for every business covered by the small business rates relief. Whilst small and medium-sized retail, leisure and hospitality businesses, which have to close will receive a one-off payment of up to £5,000.

Further information regarding the Welsh lockdown

If you require more information regarding the support available to businesses and employees affected by the Welsh lockdown, please contact our experts listed below.

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