Government moves to ‘shield’ businesses and workers, warns against abuse
Chief Minister Fabian Picardo announced a second round of economic measures yesterday which, he said, would place “a shield around working people” and help to tackle the repercussions on business of the ongoing public health emergency.
The scheme will be known as the Business & Employee Assistance Terms (or BEAT) and will act as a lifeline for Gibraltar’s economy during the Covid-19 emergency.
It follows the imposition of lockdown measures across the Rock which have forced a number of businesses to close and are having a knock-on impact in other areas of the economy.
The new package of measures “extends and improves” the emergency budget measures unanimously approved by Parliament last week, with the aim of helping businesses remain solvent and to continue to pay their employees.
The measures, which were prepared with the Covid Emergency and Liaison Committee (CELAC) and agreed in consultation with the GSD Opposition, set out that businesses will receive a sum of £1,155 for full-time employees registered as “inactive” at this time, with reduced rates for those who work fewer hours or part-time.
The focus of Government’s economic support throughout this crisis will be to help businesses to enable them to help their employees by ‘pausing’ their employment and having the government shoulder the brunt.
These measures will also apply to the self-employed and to those on zero-hours contracts.
Mr Picardo also announced price control measures for high demand goods and further business measures such as the deferral of gaming duty.
But in setting out these measures at No.6 Convent Place yesterday, Mr Picardo underscored for Gibraltarians the importance of only seeking what they justifiably need at this time and no more.
“These BEAT Covid measures commit large amounts of public money to this community at a time of need and they are intended to be targeted exclusively at those who will need it the most,” he said.
These measures represent one of the largest incentive schemes any Gibraltar Government has ever announced.
Therefore any abuses in claims for these measures would be dealt with by the full force of the criminal law including fines and imprisonment, he said.
Additionally, he said that if any Gibraltarians still possessed “a sense of entitlement”, the Covid-19 pandemic had ended that.
“Wake up and smell the coffee,” he said, adding: “Those days are over, people need to have what they need and they need to wake up quickly.”
He said: “The market economy is largely broken. The dynamic of supply and demand is absent from our high street and beyond. There is as much a dearth of demand for retail products as there is for services. And we have had to stop economic activity in sectors where activity could have continued.”
“For that reason, these measures are designed to favour everyone who works in our economy. You are all part of our prosperity in the good times. In so far as we are able, we must stand shoulder to shoulder together in the bad times also.”
The measures are designed to ensure employees receive a basic amount each month.
- Claiming will require employers to complete an online form. That claim will result in businesses receiving a monthly payment from the Government. Those businesses will then have to pay the amounts received to each employee.
- The BEAT Covid rate has been 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 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.
- 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.
- In order to preserve the rights of employees, terminations of employment from March 15, 2020 will not be allowed without the specific consent of the Director of Employment. The Director of Employment will not grant consent, save in very exceptional circumstances, for the registration of any such termination. This is designed to ensure that employees at the start of this crisis are not somehow disenfranchised from the measures.
- To qualify for these measures, 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.
- It does not include an employee who is tasked to work from home. It is for employees who fall outside these categories and are otherwise unable to attend their usual place of work to carry on business.
- An inactive person in the case of a self-employed individual is a person whose income is affected by the Covid-19 emergency and who is consigned to their home by the lockdown measures announced.
Mr Picardo said the Government was moving fast on the issue because it understood that employees need their income to put food on the table.
“Employers need to know that they can continue in business with reduced employees or pay those who are rendered inactive by the Covid emergency,” he said.
“There are much larger countries, with far greater firepower, who have announced measures but have not yet put together the details.”
“I expect the relevant legislation to follow in 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.”
“We are also making arrangements so that we are able to continue these payments, if necessary, through the months of May and June, when we expect the economy to bear the brunt of the downturn in business.”
In terms of other assistance measures for businesses Mr Picardo announced:
- Gaming duty will also be deferred to the end of each quarter.
- The encouragement Government has provided for landlords to pass on rent waiver is limited to a period of three months - the second quarter in 2020 - however, if the pandemic extends beyond this second quarter, it will consider whether Government is able to provide assistance to affected landlords directly.
- 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 the Government on exceptional amendments to insolvency legislation and also in respect of continued operation of court services.
“I understand and appreciate that some businesses have been undergoing some expense to adapt their operations to the challenges of this pandemic. A BEAT COVID-19 corporation tax deductible will also therefore be introduced at the sum of £50,000 as a one- off capital allowance for the current financial year,” Mr Picardo said.
“One of the sectors that we are closely monitoring is the sports related segment of the online gaming sector.
We understand that their business is affected as it is wholly reliant on the availability of international sporting events and we are keeping this sector under close review.”
“We also understand how affected the financial services sector is and we will continue to review how to help that sector.”
“Both the gaming and financial services sectors will however be excluded from the first wave of parts of these measures by the agreement of their representatives.”
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