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HM Governments proposals to reduce ill health-related job loss consultation – two million workers could become eligible for statutory sick pay?

HM Governments proposals to reduce ill health-related job loss consultation – two million workers could become eligible for statutory sick pay?
Paul Chappell
Written by Paul Chappell
Tuesday, 16 July 2019 12:25

With headlines hitting the media talking of two million low-paid workers who could receive Statutory Sick Pay for the first time if the Government’s consultation paper becomes a reality, I’ve taken a look at the proposals to pick out what is relevant and could have an impact on businesses.

As Government consultation papers go this is a meaty chap, extending to 31 pages with a ministerial forward and executive summary no less. Reading between, through and behind the lines, the main aims of the consultation are to obtain views from across the spectrum of interested parties on:

  • Making changes to encourage employers to support employees with health issues that affect work and intervene at the early stages of sickness
  • Reforming SSP
  • Improving Occupational Health provisions
  • Improving employers’ and self-employed workers access to advice and support

In this blog, I will concentrate on the second bullet point, the reforming of SSP as this is the one causing all the ‘hoo-ha’. Further blogs will cover the other areas of the consultation.

Statutory Sick Pay was introduced in 1983. There has been some tinkering over the years, particularly around SSP compensation that certain employers could claim to ease the burden of employees on sick and the additional costs there may be in engaging cover for sickness.

The consultation proposes reforms to ensure that SSP is available to all employees. The proposed changes include

  • Amending the rules to allow phased returns to work
  • Making SSP available to lower paid workers
  • HMRC to receive additional legislation to strengthen enforcement of SSP when employers do not play by the rules

Let’s look in more detail at the changes proposed.

Amending rules to allow phased returns to work

SSP in its current form is inflexible. There is either sickness or there is work. The proposed phased return to work is designed to encourage workers to return to work, where possible, earlier through phased returns. The proposals are to pay a mixture of wages and SSP instead of the all or nothing approach that we currently have. This would allow the flexibility to the employer and employee where sickness has extended beyond 2 weeks.

The worker would be paid the full pay for the time worked and SSP for the days not worked (both on a pro rata basis).

The current rules allow for 28 weeks of SSP to be paid. The proposals are that part days’ of return to work days would not count towards the 28 week entitlement but a full days sick taken during a phased return to work would count.

Making SSP more readily available

Employees who earn less than £118 per week do not currently qualify for SSP of any other employer funded support whilst on sick. The current rate of SSP is £94.25 per week. For employees earning below the current weekly rate, it would be inequitable for SSP to be paid at the full rate as this would constitute an increased rate of pay.

The proposal is that for workers earning less than £118 per week, SSP will be paid at 80% of their wages as SSP.

Should the proposals pass scrutiny, employees who cannot currently receive SSP will be paid and therefore not be disadvantaged by being, legitimately, off sick.

Although this is beneficial to lower paid employees, there is of course a knock-on effect to employers. Many of those employers will be small businesses that historically have employed part time or lower paid employees. In this respect close scrutiny will be required to ensure that such employers are not disadvantaged.

Compliance and enforcement

We cannot escape the clutches of HMRC, however all good compliant employers should not fear any additional legislation behind and SSP reforms going forward. HMRC want to ensure that employers pay the correct amounts of statutory payments (of course there is nothing to stop employers from continue paying full wages)

One suggestion is enforce SSP, as HMRC currently enforce National Minimum Wage which involves the naming and shaming and hefty penalties for employers who do not comply with the rules. SSP may well follow a similar route in respect of compliance failures.

Finally, the consultation is looking at a targeted rebate system although they are not consulting on specific proposals they remain interested in views on this. Most employers will recall the SSP compensation scheme which enabled employers to recover any amount of SSP that exceeded 13% of their NIC bill in a month. The Government will not sanction such a generous compensation scheme but watch this space for further information on this point.

As I will be inputting our thoughts and comments into the consultation, I would welcome your feedback as employers and clients of Dataplan.

Further blogs to follow on the other aspects of the consultation in the near future

Paul Chappell

Paul joined Dataplan from HM Revenue and Customs in 2007 and runs our PAYE compliance and investigation services.

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