COVID 19: BEAT Regulations Amendment

As part of the Government of Gibraltar’s ongoing effort to alleviate the economic ramifications of the COVID-19 pandemic on local businesses, an amendment to the currently enacted Appropriation (Business Employee Assistance Terms COVID-19) Regulations 2020 (“the Regulations”) has been published.

The newly amended Regulations now provide for “partly inactive employees” as well as provisions relating to the furloughing of staff in private sectors. Our previous write up on the measures as implemented prior to this amendment can be found here and this summary should be read in conjunction with this.

Partly Inactive Employees

These are defined as those employees who are inactive for an aggregate period of at least half a calendar month during which an application for a contribution has been made for their inactivity.

The Regulations now require employers to set out within their application whether an employee is either partly or fully inactive. Employers who designate an employee as partly inactive will have an obligation to pay 50% of that employee’s wage but shall not deduct any PAYE tax from this figure. Further, in respect of tax, any employee’s claims for allowances shall be reduced by 1/24th for each month a partly inactive employee receives a payment.

Any and all contributions and/or payments made to a partly inactive employee will be reduced by 50%.

Private Sector BEAT Measures

The amendments to the Regulations establish the possibility of a furlough period for employees of an employer who is listed under the Excluded Sector. Such a furlough period will in essence designate an employee as inactive for as long as the period lasts during which time, the employee will not provide any services to the employer.

Any employer who seeks to designate an employee as furloughed will first notify the employee in writing.

Furlough periods are limited to 1 month or less or some other period which may be agreed with the Director of Employment (although such “other period” needs to fall within certain caveats).

Any employer seeking to avail itself of these provisions must do so by making an application in writing to the Director of Employment who will determine (with the approval of the Financial Secretary) whether it is fair and reasonable in the circumstances. Employees who are furloughed will have a new status in law whereby they retain all their employment rights and obligations save for the right to be paid their salary.

Furloughed employees will receive either 50% of their contracted salary or £1,155 per month, whichever is higher – this amount is to be paid by the employer. Any employer who wishes to pay the furloughed employee a sum higher than the 50% of their contracted salary may do so, provided always that this payment exceeds £1,155 over a calendar month period. Any of these payments made by the employer are tax exempt as BEAT payments save those amounts paid by the employer which exceed £1,155 for which the employer will be liable to make PAYE contributions on the extra.

For the avoidance of doubt, the above payments are payable by the employer and not from the special response fund set up by the Government.

No more than 25% of an employer’s workforce may be furloughed save where an application in writing is made to the Financial Secretary and he in turn agrees that it is fair and reasonable in the circumstances and that it is in the public interest.

Any furloughed employees who worked less than 37.5 hours a week shall have the amount of £1,155 pro-rated against the average number of hours that they ordinarily worked per week before 15 March 2020.

Employees may make representations to the Director of Employment and/or Financial Secretary within 48 hours of receiving the notice referred to above and said representations will be taken into account in making determinations.

Verralls remains dedicated to guide you through these provisions and represent you should you need us.

Please contact us generally at office@verralls.gi or Jonathan Tirado at jtirado@verralls.gi.