21 April 2020
Her Majesty’s Government of Gibraltar (“HM GoG”) have enacted the BEAT COVID measures under the Appropriation (Business Employee Assistance Terms COVID-19) Regulations 2020 (“the Regulations”). The legislation comes after HM GOG issued initial guidance on 25 March 2020.
The purpose of this article is to summarise the Regulations. The Regulations were published by the Chief Minister, acting in his capacity as Minister for Finance, having consulted with the Leader of the Opposition. The Regulations remain in force until 30 June 2020, unless an earlier Gazette notice announces otherwise.
HM GoG have published updated Guidance Notes which can be found here: https://www.gibraltar.gov.gi/uploads/BEAT%20Guidelines/20.04.21%20BEAT%20COVID19%20updated%20guidelines.pdf
Entitlement to HM GoG Assistance
The measures cover “Inactive Employees” working for an employer who is in a Relevant Sector (i.e. those who do not form part of an Excluded Sector) who cannot work remotely and are not provided with any work by their employer and who are told not to attend their place of work due to the current lockdown restrictions.
Inactive Employees can either be “full-time” or “part-time”, depending on whether they were registered as such with the Income Tax Office or Department of Employment as at 15 March 2020. Those registered thereafter are ineligible for HM GoG assistance.
Full-time Inactive Employees whose annual income was either declared by them or deemed by Government to be less than £15,000 are treated as part-time Inactive Employees.
The measures also cover and “Inactive Self-Employed Persons” provided they were registered as such with the Income Tax Office or Department of Employment as at 15 March 2020.
Both Employees and Self-Employed Persons must have been working for a period of at least 28 days in the period 15 September 2019 to 15 March 2020. The same conditions apply to those that are self-employed.
Non-Entitlement to HM GoG Assistance
Conversely, businesses and self-employed persons in an Excluded Sector will not be eligible for the measures. All other sectors are considered a “Relevant Sector”. We set out below a list of the Excluded Sectors.
Those who are on sick leave are not eligible for HM GoG assistance. In addition, detached workers are also illegible.
Employers who reasonably know that another employer has made or will make an application on behalf of the same employee should not include those employees in an application in order to avoid double recovery.
Any Inactive Employees receiving non-employment recurring annual income above £15,000 are also ineligible.
If an Inactive Employee returns to work then he/she is no longer Inactive.
Excluded Sectors are listed in Schedule 2 of the Regulations and at the time of writing include those listed below:
- Utility providers;
- Telecommunications operators and internet service providers;
- Data centre providers;
- Care workers;
- Market Stalls;
- Wholesalers with a tobacco licence;
- Petrol stations;
- Food delivery companies;
- Online gaming industry and casinos;
- Accountancy firms;
- Law firms;
- Businesses that are licensed by the FSC (including insurance businesses and intermediaries);
- Health stores;
- Bunkering, ship chandlers, sea transport and other shipping businesses;
- Property management companies;
- Businesses that are predominantly reliant on Government as their main source of income; and
- Any other business deemed to be in substantive operation
In exceptional circumstances, persons in the Excluded Sector can apply to HM GoG to be considered as part of the Relevant Sector.
The Application Process
Applications are made online, but employers may be required to sign a hard copy of the application submitted. Applicants can apply as employers or as self-employed persons. Those in employment should not apply on behalf their employer.
The Payment Process
Employers from a Relevant Sector who submit complete applications on behalf of their Inactive Employees will receive a “BEAT COVID-19 Contribution” by direct bank transfer before the end of April only if they apply before 21 April 2020.
They must give each Inactive Employee their attributable share no later than 3 working days from receipt of the contribution and hold it on trust until they do so.
Evidence of a “BEAT COVID-19 Payment” should be retained by the Employer, together with additional general information about the application.
If an Inactive Employee continues to receive part of their salary from their employer, then they are still entitled to a BEAT Payment so long as the employer payment does not exceed their full salary.
Inactive Self-Employed Persons will receive a “Self-Employed BEAT COVID-19 Payment” by direct bank transfer on similar terms if they apply in good time and are continuing to fulfil conditions of being inactive and having no other sources of income such as a full salary from employment or other recurring income (i.e. not their ordinary self-employed income) in excess of £15,000 per year.
Schedule 1 of the Regulations provides for the calculations of payments. The BEAT COVID-19 Contribution for each full-time Inactive Employee for any calendar month is £1,155 (or such lesser sum as HM GoG may determine given the information submitted in the application and historical information available to the Income Tax Office), calculated by multiplying 7.5 hours in a day by 22 working days by the current ‘BEAT COVID-19 Hourly Rate’ of £7.00 per hour.
For part-time Inactive Employees, the Contribution payable is calculated by considering the average of the normal working hours worked by the relevant part-time Inactive Employee from 2 January 2020 to 15 March 2020 (the ‘Average Hours Per Day’) and then multiplying that by 22 working days by the BEAT COVID-19 Hourly Rate (or such lesser sum as HM GoG may determine given the information submitted in the application and historical information available to the Income Tax Office).
To obtain the Average Hours Per Day the total number of hours worked during 2 January 2020 to 15 March 2020 is considered. Provided it is no more than 390 hours, then the hours worked during the period are divided by 390 and multiplied by 7.5 to obtain the Average Hours Per Day.
For Inactive Self-Employed Persons, the Contribution payable is also £1,155 and calculated in the same manner as for full-time Inactive Employees at the time of writing. Inactive Self-Employed Persons may submit more than one application in the same month, but their previous application is deemed to be amended by the latter. Only one payment is allowed per calendar month in any event.
The figure of £1,155 is subject to review by Gazette notice and may be amended.
Restrictions on employers
No bonuses or dividends to shareholders are allowed to be paid by Relevant Sector businesses who receive a BEAT COVID-19 Contribution whilst the Regulations are in force.
Any termination of employment between 15 March and the time the Regulations are in force shall be void unless consent of the Director of Employment is obtained in writing, on receipt of proof of reasonable cause.
An Inactive Employee who is also a director or a shareholder of a company will be restricted from obtaining a BEAT COVID-19 Contribution if the company is non-compliant with its obligations and is in arrears in respect of PAYE and Social Insurance Contribution’s as at 15 March 2020, unless they obtain the prior consent of the Director of Employment and the Financial Secretary.
Obligations and rights of eligible persons
The Inactive Employee retains all employment rights and obligations except the rights to be paid a salary and accrual of holiday and leave entitlement, which may need to be suspended during this period.
Tax and social insurance
Tax shall not be chargeable in Gibraltar on any BEAT COVID-19 payments made to an Inactive Employee or Inactive Self-Employed Person.
No social insurance shall be payable in Gibraltar by an Inactive Employee, their employer or an Inactive Self-Employed Persons for as long as the Inactive Employee or Inactive Self-Employed Person remains inactive. However, an Inactive Employee and an Inactive Self-Employed Person shall be deemed to have made all their respective social insurance contributions for such part that they remain inactivate.
Any BEAT COVID-19 payments made by an employer to an Inactive Employee shall not be included in that Inactive Employee’s employer annual statement to the Income Tax Office (P8 Form).
Offences, anti-abuse provisions and issues with payments
Criminal offences are included to deter non-compliance or any abuse that is intentional or reckless, including providing false, inaccurate or misleading information. The offence is an either-way offence, which means it can be tried summarily in the Magistrates’ Court or on indictment in the Supreme Court, with potential imprisonment for up to 7 years and an unlimited fine in the latter court. A corporate offence is also included where a benefit is received by a corporate body which it would otherwise not be entitled to under the Regulations.
Additionally, a civil offence has been included which could lead to having to pay Government back up to three times the amount of BEAT COVID-19 Contributions received or applied for during this period, plus paying back the contribution(s) as a civil debt.
Anti-abuse provisions are provided for by way of notification obligations on both employers and Inactive Employees for issues including, but not limited to, overpayments, returning to work, receipts of non-employment recurring income, or having more than one employer. Further exclusions are provided for any Inactive Employees that continue to provide any services to their employer.
Any employer who has attempted where possible but cannot make a payment to one or more Inactive Employees must return the Contribution to Government within 14 days of receipt and inform the Inactive Employee of the reasons for not being able to make the payment.
The burden for erroneous payments lies with the employer who needs to repay this to Government unless they have reasonable cause, and also need to report erroneous payments received.
Insolvency proceedings, voluntary winding up and schemes of arrangement commenced by or against employers are also regulated so that relevant priority is given to unpaid payments and civil debts created under the Regulations as preferential debts.
Data sharing provisions are included to ensure Government can freely share BEAT COVID application data collected or generated with relevant tax, social insurance and other appropriate authorities within Gibraltar or in the country of residence of each Inactive Employee or Inactive Self-Employed Person in respect of whom an application is made. Consent is deemed as a lawful basis for this sharing of information and consent is deemed obtained upon receipt of payment. In addition, Government may demand banking institutions or tax authorities to confirm whether such persons are in receipt of other non-employment recurring annual income in excess of £15,000.
A BEAT-COVID-19 Appeals Board has been established to hear and determine appeals under the Regulations, which includes the Financial Secretary as its chairman as well as government officers. Appeals may be made on the basis of:
- Refusal of all or part of a BEAT-COVID Contribution
- Failures by employers of Inactive Employees to make a valid application or to make a BEAT COVID-19 payment.
- Any employer, Inactive Employee or Inactive Self-Employed Person being dissatisfied with the calculation or any relevant contribution or payment.
A further opportunity to appeal to the Magistrates’ Court is also provided for in the event the appellant is dissatisfied with a determination by the Board.
A “name and shame” provision has been included within the Regulations to allow persons who fail to comply with them to be named in the Gazette, and have further details published about them such as the business address and any other information as the Director of Employment considers appropriate to publish in order make clear that person’s identity. To prevent errors and potential defamation actions by those named, the Director of Employment can publish retractions as necessary.
If you are an employer, employee or a self-employed person who has been affected by the lockdown measures and consider you may be eligible for the BEAT COVID scheme, please contact firstname.lastname@example.org