Statutory Sick Pay changes could affect small employers

A major change to Statutory Sick Pay (SSP) comes into force on 6th April 2014, which will affect all employers.

Currently, under the Percentage Threshold Scheme (PTS), employers can recover SSP costs for their employees’ sickness if the total SSP paid in a tax month is more than 13% of their gross Employers’ (Class 1) National Insurance contributions in the same month.

The PTS is there to compensate employers who have higher-than average sickness absences amongst their employees, but a recent review showed that it had not encouraged employers to manage sickness absence in the workplace. The cost of sickness absence is falling but still costs the UK economy £14 billion a year and hits small businesses particularly badly. The PTS has been described as “disaster relief” for small firms faced with a big financial outlay when too many workers go off sick at the same time.

On 6th April, PTS will be scrapped and employers will no longer be able to reclaim money spent on SSP. The money saved by the Government will be diverted to the new Health and Work Service, which is to be launched later this year/next year, aimed at helping employees who have been on sickness for four weeks return to work quicker and help employers improve their sickness absence management.

SSP is currently £86.70 per week, rising to £87.55 on 6th April 2014. Employers pay this and are likely to have to pay for a replacement worker to cover for the sick employee.

The Department for Work and Pensions (DWP) defended the decision, which has attracted a lot of criticism, by saying:

“Any financial loss to business from the ending of the PTS will more than likely be offset by a reduction in lost working days, earlier return to work and increased economic output”.

Many detractors believe this change will threaten the UK’s smallest businesses, giving them new financial pressures, and that the changes have been badly publicised.

So, from 6th April:

  • Employers will no longer be able to recover some of their SSP costs.
  • They have until the end of the 2015-2016 financial year to recover SSP paid for sickness absences that occurred before the end of 2013-14.
  • Their record-keeping obligations associated with the PTS will also be abolished, but they will still need to maintain records for PAYE purposes and show they are meeting SSP obligations.

If you have any questions let us know!

 

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