Sick pay abolition could make small businesses ill.

Changes to statutory sick pay (SSP) regulations are set to take place on 6th April 2014 and could create a catastrophic financial burden on small businesses.

Currently when an employee is absent their employer pays them £86.70 a week (due to rise to £87.55 next year), they also have to source and pay a replacement worker to carry out the absent employee’s duties.  At the moment employers can recover some of the SSP paid out under the Percentage Threshold Scheme (PTS) when their SSP payments exceed 13% of the total national insurance bill for the period.

This is referred to as ‘disaster relief’ as it helps businesses (particularly small ones) when an employee perhaps has a long period of sickness or when a number of employees are absent at the same time.

That’s all set to change though as from April businesses won’t be able to claim any relief from the government.  This could be a massive worry to a lot of small businesses where an employee is absent due to a serious, long-term condition such as cancer. However, the government says that in the long run this change will be better for everyone.

How do they work that out then?

Simply, the Department of Work and Pensions (DWP) feels that the current scheme doesn’t incentivise employers to get employees back to work quickly after a period of illness. That’s why they’ve earmarked the savings that will be made from the abolition of PTS on a yearly basis (estimated at £50m – £70m), for a new small business Health and Work Service (HWS) due to be launched later this year.

Under the new service employers will be able refer employees who have been off for more than four weeks to this new body, to be run by private sector companies, who will offer the employee a voluntary occupational health assessment, where the outcome will be a plan of action and support to help them get back to work quickly.

A ploy by the government to save money?

Minister for Disabled People Mike Penning says not.  He’s stated that the money currently given as a rebate to employers’ amounts to an average of only £10 per week. Money he says can be invested more wisely in HWS and which he believes will benefit smaller businesses that don’t have an internal occupational therapy resource.

However, not every company will see it like that particularly where an employee has long term health issues that won’t allow them to return to work quickly, no matter how much they want to. The removal of the rebate scheme will also put pressure on some employers to force an employee to return to work prematurely, which could have a significant detrimental impact on the profitability of the business and the health and happiness of the employee in the long run.

Interesting times ahead

It’s extremely important that the emphasis is on getting people better before they return to work, rather than a forced return to stop them being a financial burden on their employer and the economy. Therefore it’ll be interesting to see what direction and assistance the government will give to small businesses when telling them how implement and sell the new service as a ‘good thing’ to their employees.

To discuss this post contact Stephen Usher on 0141 418 6550 or

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