Coronavirus News: Support for Self-Employed and Casual Workers

Many of us may know somebody who has been furloughed by their employer during the pandemic, and so many of us probably also know how the Government’s furlough scheme, or 'Coronavirus Job Retention Scheme', works in practice. For an in-depth guide, take a look here. 

Unfortunately, many people who are self-employed and those working in the gig economy may still be unsure about what assistance is available to them if their income has been affected by the pandemic.

Help for the Self-Employed

Updated information as at 2nd July 2020

Towards the end of March 2020, the Government announced the Self-Employed Income Support Scheme. If the self-employed person is eligible, they will receive a taxable grant of 80% of their average monthly trading profit over the last three years, up to £2,500.00 a month.

To be eligible, the self-employed person needs to fulfill the following criteria:

• They must have traded in the tax year 2019-20 and still be trading when they apply, or they would be if it were not for the pandemic.

• They must have submitted a self-assessment tax return for the tax year 2018-19.

• Their trading profit must have been less than £50,000.00 in the 2018-19 tax year, or their average trading profit over the last three tax years must be less than £50,000.00.

• More than half of their income must have come from self-employment during the tax years 2018-19 and 2019-20.

• They must intend to continue trading in the tax year 2020-21.

• They must have been adversely financially impacted by the pandemic.

  • This includes people who cannot work because they are shielding, self-isolating or on sick leave, have caring responsibilities, or have had to scale down or temporarily stop trading.

If you are self-employed and not sure whether you meet the above criteria, HMRC has produced an online tool which you can use to check whether or not you are eligible for the grant.

Unlike the Furlough Scheme, which employers have to apply to take advantage of, HMRC will contact self-employed people if they are considered to be eligible. The value of the taxable grant will be calculated using an average of the self-employed person’s trading profits over the last three years, and it will be paid as a single lump sum to cover March to May inclusive.

Unfortunately, self-employed people will have to wait until at least the beginning of June before they receive the grant. Additionally, HMRC does not expect to have identified all eligible people until the middle of May 2020. When you are eligible, you can submit a claim through the online portal which opened on 13 May 2020. If you think you should be eligible but HMRC has not contacted you, you can ask HRMC to review your eligibility.

Help for the Self-Employed Who Are Not Eligible for the Grant

Many self-employed people, especially those who have not been trading for long enough to be eligible for the scheme, will not be able to access the grant provided through the Self-Employed Income Support Scheme. It therefore will come as no surprise that they will need some form of financial support to help them get through this crisis.

The Government has announced a number of schemes to help all businesses, from which self-employed people may also benefit, such as deferred self-assessment income tax and VAT payments, business interruption loans, and bounce-back loans. On an individual level, the government is advising people to apply for Universal Credit if they are ineligible for the Self-Employed Income Support Scheme.

Additionally, even self-employed people who are eligible for the Self-Employment Income Support Scheme are encouraged to apply for Universal Credit if they need the support while they wait for the grant. The Government has clarified that, while the grant may affect the amount of Universal Credit they get, it will not affect claims for earlier periods.

Help for Casual or Zero-Hours Workers

The Treasury’s guidance on the Coronavirus Job Retention Scheme (Furlough Scheme) makes it clear that workers as well as employees will be eligible for Furlough. Unfortunately, the guidance does not clarify how the scheme will specifically apply to casual and zero-hours workers, and there are many parts of the scheme which do not mesh very well with the way those workers work.

• For example, zero-hours and some casual workers are reliant on their employer offering them work, which it can do at its own discretion, and the worker must then accept the offer of work. The Treasury’s guidance states that, when calculating pay for the purposes of Furlough, pay which is conditional will not be taken into account. It is arguable that all pay to zero-hours and casual workers is conditional on the offer and acceptance of work described above. Because HMRC will audit employers’ use of the scheme, they may not want to take the risk of furloughing workers if the rules do not precisely fit the workers’ circumstances.

Additionally, due to the varied salaries that zero-hours and casual workers can receive depending on the availability of work to them, the salary they receive through the Furlough Scheme may end up being more than they would ordinarily have received. This could put-off employers, particularly those who do not have the reserves to make payment, from utilising the scheme.

Finally, all workers and employees will continue to accrue annual leave during furlough. If the worker would not otherwise have been engaged during the period, the employer may see this as an unnecessary liability.

All of the above may result in the employer simply choosing to terminate the zero-hours or casual worker’s employment. Unfortunately, the right not to be unfairly dismissed has not yet been extended to such workers, so there is minimal risk to employers of choosing this option.

If you are a zero-hours or casual worker whose employer has opted not to use the Furlough Scheme, you may be able to claim for Universal Credit and/or Jobseeker’s Allowance.

Joe Weston, Employment Team

If you believe you have a situation where you require free legal advice, please contact us on telephone 0116 212 1000 or 01858 445 480, alternatively complete the free Contact Us form and we will get in touch as soon as possible.

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