Carey Olsen Starting Point Guides are intended as a general introduction and guide to different aspects of Jersey employment law.
They are a summary of the most important issues that we come across. It is very much the edited highlights of those issues. If you would like legal advice in relation to any specific circumstances, please do give us a call.
This Starting Point Guide addresses the fundamentals of starting a business in Jersey.
JERSEY - NOT JUST COWS
Jersey is the largest of the Channel Islands and is a British Crown dependency.
It has its own financial, legal and judicial systems. It is not part of the UK or of the European Union (although it has close relationships with both). It also has its own breed of instantly recognisable cows.
STARTING A BUSINESS IN JERSEY
Starting a business in Jersey (or relocating one here from another jurisdiction) is relatively straightforward, particularly compared to some other jurisdictions. However, there are some key issues of which you should be aware.
DO I NEED TO FORM A JERSEY COMPANY?
Companies which are based in foreign jurisdictions can conduct business in Jersey and there is no requirement that a business be owned by a Jersey company –subject to the business licensing issues below.
However, many businesses do adopt a Jersey structure to hold or operate their Jersey business assets and to employ.
Whilst there are a wide range of ownership structures in Jersey – including sole traders, partnerships and Limited Partnerships, the majority of businesses in Jersey elect to trade through a company structure.
The key legislation governing companies in Jersey is the Companies (Jersey) Law 1991 (the "CJL").
The CJL provides that a company may be formed:
as a public or private company (save that a company may not be registered as private if it has more than 30 subscribers, unless the Jersey Financial Services Commission is satisfied that by reason of the nature of the company’s intended activities its affairs may properly be regarded as the domestic concern of its members); and having the liability of all or any of its members:
o limited by shares (i.e. limited to the amounts unpaid on their shares), o limited by guarantee (i.e. limited to the amounts which they
undertake to pay on a winding-up), or o unlimited; and
which is a par value, no par value or a guarantee company.
Types of companies permitted under the CJL include cell companies, being either protected cell companies (which can create protected cells, not having their own separate legal identity) or incorporated cell companies (which can create incorporated cells with their own separate legal identity).
Of the possible combinations, the most common type of company formed in Jersey is a private par value company limited by shares (although this is in part due to the similarity between such form of company and an English private limited company; from a legal perspective a no-par value company offers greater flexibility in terms of capital etc).
The main incorporation steps for a Jersey Company are as follows:
A statement of particulars, signed on behalf of the original subscribers. These particulars include: the name and intended registered office address of the company and, in the case of a public company, details of its proposed directors and financial year end date. A memorandum and articles of association, in a form suitable for the type of company. A cheque or other payment of the prescribed fees, which are currently £200 for an incorporation in normal timescales (typically 2 or 3 working days) or £400 for a same day incorporation.
In addition, it will be necessary to make an application to the Jersey Financial Services Commission under the Control of Borrowing (Jersey) Order 1958 (known as "COBO") for consent to issue shares in the Company. This is generally a simple process, although the Jersey Financial Services Commission's "sensitive activities" policy requires additional work to be undertaken when the proposed business of the company (including its subsidiaries) involves a "sensitive activity".
It may also be necessary to apply for authorisation from the Jersey Financial Services Commission should the business be intending to undertake regulated financial services.
The company may also need to register under the Jersey Data Protection law if it will hold / process personal data. This covers data on employees, and therefore any company which has local employees is likely to require such a registration. More information on employing employees in Jersey is set out below.
Finally, certain unregulated activities are subject to anti-money laundering / "know your client" regulations, and require a registration with the Jersey Financial Services Commission.
Businesses generally need to register with:
the Income Tax Department; the Social Security Department; and the Taxes Offices (for GST)
Goods Services Tax ("GST")
GST at the standard rate of 5% is payable on the majority of goods and services supplied in Jersey for local use, including imports.
Registration is required for businesses with a turnover of over £300,000.
Most Jersey residents (other than high net worth individuals) are subject to income tax at 20%. There are no capital gains, gift or inheritance taxes. Sole traders and partners in partnerships are taxed at 20% on the profits of their businesses.
Employers must make appropriate deductions in respect of income tax from wages and salaries and account to the Income Tax Department for them under the Income Tax Instalment Scheme ("ITIS").
Stamp duty is only payable on the acquisition and financing of Jersey property and a capped probate duty is payable on the registration of Jersey wills. There is no stamp duty generally in respect of the transfer of shares in a Jersey company (except local real estate transactions where property is owned through shares, in which case Land Transaction Tax at the same rate as stamp duty is ordinarily payable).
Social Security is payable both by employers and employees as follows:
Employee social security contributions Any income up to £3,918 per calendar month
(or £47,016 per year) will attract social secu- rity contributions at the rate of 6%.
Any income above £3,918 per calender month will not attract employee social security contributions.
Employer social security contributions Standard Earnings Limit – any income up to
£3,918 per calendar month (or £47,016 per year) will attract social security contributions at the rate of 6.5%.
Upper Earnings Limit - Any income above the Standard Earnings Limited, i.e. £3,918 per calendar month (or £47,016 per year) up to £12,964 per calendar month (or £155,568 per year) will attract social security contribu- tions at the rate of 2%.
In general terms, a Jersey incorporated company is subject to Jersey income tax at a flat 0% rate in respect of its income, unless it is within a restricted sector of local financial services companies or utility companies or it has local property-related income.
A financial services company, which is regulated in Jersey in respect of certain types of financial services, is subject to Jersey income tax at a 10% rate.
A utility company, which provides local utility services, is subject to Jersey income tax at a 20% rate.
Property-related income is subject to the 20% standard income tax rate.
Anyone wishing to set up a new business in Jersey will need to understand the provisions of the Control of Housing and Work ( Jersey) Law 2012, which governs:
The residential and employment status of employees. Business licencing.
Residential and Employment Status of Jersey Residents
Jersey residents fall into one of four residential and employment categories:
Entitled – those with 10 or more years’ residence (similar to the previous (a) to (h) categories). Licenced – essential employees with less than 10 years’ residence requiring immediate housing rights (taking over from the previous (j) category, i.e. skilled workers). Entitled for Work Only – those with between 5 and 10 years’ residence. Registered – those with less than 5 years’ residence.
Further details of the residential status categories are set out in the Appendix.
Jersey property falls into one of two categories:
Qualified - in which only those who are Entitled or Licenced may live. Registered – in which anyone may reside.
Obtaining a Business Licence
A person wishing to start a new business in Jersey must apply to the Population Office for a Business Licence.
There are three business licences (each with different fees):
A business licence which will either be a licence for a:
Resident undertaking (essentially one in which the majority of employees are based in Jersey); or Non-resident undertaking (essentially one in which the majority of employees are based outside of Jersey).
A Hawker’s licence (essentially non-resident door to door sales); and A Non-resident trading licence – a “non-resident trader” being any person (other than a hawker) who:
is not ordinarily resident in Jersey, or who does not have any permanent business premises in Jersey, and who visits Jersey to buy or sell good to or from the public.
For most employers, the two key forms of licence will be those for resident and non- resident undertakings.
Most employers will be resident undertakings, and will thus receive a business licence specifying:
their permitted licenced activity; the number of Licenced employees they are permitted to engage; and the number of Registered employees they are permitted to engage.
There will be no upper limit to the number of Entitled and Entitled for Work Only
employees which an employer may take on.
Licences for non-resident undertakings are likely to come up most often for Jersey employers in the context of non-Jersey contractors who send personnel to Jersey for the purposes of specific projects. Such contractors will require a licence if they are in Jersey for more than 30 days in any period of 12 months (5 days in the construction industry) – and there will be a fee payable.
Exceptions to Maximum Licence Numbers
The following exceptions to the maximum permitted number of Licenced and
Registered workers will apply:
Replacements - A person working as a replacement for another member of staff who is leaving (but continuing to work at present) - simultaneous working up is permitted for up to 30 days; Providing cover - A person working as cover for another person who is on leave up to:
o 9 months in relation to maternity and sickness, or o 3 months in all other cases of leave;
De minimis - Any person working for an undertaking for less than 10 days in any 12 month period;
Directors & Officers - Directors of a Company, or Partners in a Partnership, or a Member of the Council of a Foundation, or equivalent persons, who are in the Island for 60 days or less in any 12 month period;
International Financial Services Groups having an office in Jersey where the employee works mainly outside Jersey may second employees to Jersey for up to 60 days in any 12 month period;
Zero-hours - zero hours contract staff do not contribute to an undertakings maximum numbers if they do not do any work for the undertaking (e.g. they count only when they work); and Agency Workers will be reflected on the agency's own business licence (rather than that of the end user).
Who Doesn't Require a Business Licence?
There are various exceptions to the requirement for a business licence. The most likely to be of general application (particularly within financial services) are as follows:
a resident undertaking that:
carries on any regulated activity; or carries on any activity where the activity is administered or managed by a person or body of persons carrying out regulated activities,
in each case, where each person working in or for the undertaking does so for fewer than 60 days per year, and holds a specified position (including, amongst others, a director or secretary, partner or trustee);
a non-resident undertaking that:
carries on any regulated activity; or carries on any activity where the activity is administered or managed by a person or body of persons carrying out regulated activities.
a resident undertaking that:
operates in Jersey for an aggregate period of 10 days or less in any period of 12 months, and one or more persons working for the undertaking at any time during period has Registered status;
a non-resident undertaking which operates in Jersey for an aggregate period of 30 days or less in any period of 12 months.
Any person wishing to start new employment must have a registration card. Conditions specifying the maximum number of Licenced and Registered persons allowed to work for an undertaking will be imposed when granting business licences (see above).
Employers will need to ensure that they inspect employee's registration cards before they start work and:
ask for photo identification (in addition to the registration card); ensure that the photo identification matches the registration card; take (and retain) a photocopy of the registration card and photo identification; and check the registration card is in date.
No additional application will be necessary to engage Entitled or Entitled to Work individuals. If an undertaking is allowed to take on Licenced staff a description of the work that may be done by those persons will be specified and other conditions may
be attached relating to accommodation or naming individuals who may work for an undertaking.
There are various individuals who will not require a registration card, including:
Existing employees; A person who is in Jersey for an aggregate period of 60 days or less in any period of 12 months for the purposes of that person's work as:
a director of a company; a partner in a partnership; a member of the council of a foundation; or a trustee of an express trust (or the equivalent of any of the above);
A person who is in Jersey for an aggregate period of 60 days or less for the purposes of a secondment within an international financial services group; A person who is a hawker or non-resident trader for the purpose of the activities of hawking or being a non-resident trader; A person who works in or for one or more undertakings in Jersey, the period of work for each undertaking being an aggregate period of 10 days or less in any period of 12 months; and A person who works in or for a non-resident undertaking
Employers must do the following for every employee:
Ensure that they understand the residential and employment status of the individual which they wish to employ. Ensure that their business licence permits the engagement of the employee in question. Provide a written statement of terms for each employee, setting out the terms and conditions of employment. This must be done within 4 weeks of the employee's start date. Pay each member of staff at or above the minimum wage (currently £6.63 per hour but subject to certain exceptions). Obtain Employer’s Liability Insurance and display the certificate Obtain a registration card and photographic identification for every new employee Make the correct deductions from the employee’s wages. Keep a record of the wages paid and deductions made for 10 years. Account to the income tax and social security departments for ITIS and Social Security contributions in respect of each employee. Provide each employee with an itemised payslip each time that wages are paid.
The following employees do not require a work permit to work in Jersey:
a British citizen or a British subject with the right of abode; a national of a member state of the European Union (EU) / European Economic Area (EEA) (except if you are a Croatian national); a non-EEA family member of an EEA national may also work without a permit but must obtain an EEA family permit before entering Jersey; a Swiss national; a Commonwealth citizen admitted as a working holiday maker; a Commonwealth citizen admitted on the grounds of UK ancestry; a Commonwealth citizen with a certificate of entitlement to the right of abode; a minister of religion; a business visitor; or a non EU / EEA passport holder who has no restrictions attached to your stay. Employees from other countries may require a work permit.
To obtain a work permit for an employee, employers will need to be able to show that there are no suitable local candidates available.
A new law governing copyright and other unregistered intellectual property rights came into force on 18 December 2012.
The new law, the Intellectual Property (Unregistered Rights) (Jersey) Law 2011 means that Jersey has modern local legislation dealing with issues arising from copyright and other forms of unregistered intellectual property rights.
Jersey also provides secondary registration rights in respect of certain trademarks, registered design rights and patents which are registered in the UK and European Union.
Further information can be provided on request.
SECURING COMMERCIAL PREMISES
The residential property market in Jersey is heavily regulated in order to preserve housing stocks for the local population. Commercial property is more accessible, and generally acquisitions of purely commercial premises will not require separate consent. If the premises in question include dwelling accommodation, however, consent to the transaction will be required to be obtained from the Population Office.
There is very little statutory intervention into the commercial landlord and tenant relationship in the Island, and it is therefore recommended that legal advice is taken before entering into negotiations (or committing to) property transactions. Similarly, because Jersey does not have a registered system of title, it is important to engage lawyers at an early stage when negotiating the purchase of real estate in the Island (whether commercial or residential).
We are happy to supply specific advice where required.
GENERAL TAX AND BUSINESS LINKS
States of Jersey
USEFUL LINKS FOR EMPLOYMENT
States of Jersey http://gov.je/Working/Contributions/RegistrationCards/Pages/home.aspx http://gov.je/Working/Contributions/RegistrationCards/Businesses/Pages/ BusinessStaff Licences.aspx
www.gov.je/Government/Departments/Chief Ministers/Chief MinistersSections/ges/ PopulationOffice.aspx
Jersey Arbitration Conciliation Service
USEFUL LINKS FOR HOUSING AND PROPERTY
States of Jersey
APPENDIX - SUMMARY OF RESIDENTIAL STATUS
Lived in Jersey for 10 years, or who is granted this status on hardship or on social or economic grounds.
May purchase or lease any property. (1(1)(K) equivalents will still be limited).
Can work anywhere, or start their own business.
An essential employee.
Purchase or lease any prop- erty so long as they occupy that property and maintain their Licenced status.
Employer needs a licence to employ a Licenced person in that role.
Entitled to Work Only
Either lived in Jersey con- tinuously for 5 years, or is the spouse of someone who is Entitled, Licenced, or Entitled to Work.
• lease Registered Property for their own occupation; or
buy Qualified Property jointly with their En- titled spouse; or occupy property with an Entitled person in so far as the Entitled person occupies the substantial portion of the property.
Someone who can work anywhere, or start their own business.
Does not qualify under the other categories.
lease Registered Property for their own occupation; or occupy property with Entitled person in so far as the Entitled person occupies the substantial portion of the property.
Employer needs a licence.