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Statutory Sick Pay Changes

No more Statutory Sick Pay reclaims – Abolition of Percentage Threshold Scheme

The Government has ended the Percentage Threshold Scheme (PTS) under which employers who suffered from high levels of sickness absence were able to reclaim a portion of their SSP payments. Using the money saved from PTS, which has been described by the DWP as “an outdated system which does nothing to promote or support active management of sickness absences by either the employer or employee”, the Government plans to set up a new Health and Work Service – expected to be set up by the end of the year – which will offer advice, voluntary medical assessments and treatment plans for employees who are off sick. The Government has estimated that the existing arrangements cost £50m per annum and that the new service will cost between £25m to £50m per annum.

Taxable revenues are anticipated to increase by £100m to £215m.

What’s the cost to employers?

A recent survey by MetLife found that one in five SMEs suffers “serious disruption” as a result of staff illness, with employee absence costs taking up around 13% of payroll on average. Although the DWP argues that the “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” some commentators are not reassured. David Heaton of accountants Baker Tilly fears that the inability to reclaim SSP will prove a “huge burden for a small business to bear” and could even result in some small businesses having to close. Meanwhile, speaking in the House of Lords, Baroness Sherlock noted that micro-employers could be particularly heavily hit by the changes.

Will the Health and Work Service work?

According to a leading independent occupational health adviser, there are not enough occupational health therapists to meet the timescale of the Health and Work Service and that proposed phone assessments could end up being “templated rubbish.” So it remains to be seen if the abolition of PTS will simply amount to a further challenge for SMEs without any effective replacement. What do you think – how will the changes affect your business?

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