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Beware the changes to sick pay

Posted: June 5, 2014

Thousands of businesses across Kent have received a letter from Prime Minister David Cameron advising them of The Employment Allowance, which came in to affect on 6 April 2014, giving a reported 1.25 million eligible business and charities up to a £2,000 reduction on their annual National Insurance contribution.

However, Burgess Hodgson is warning small businesses that alongside The Employment Allowance boost, from April 2014 the Government have much more quietly abolished the Percentage Threshold Scheme (PTS) and replaced it with a new Health and Work Service (HWS). This change could have a worrying impact on businesses, as employers are no longer able to recover a percentage of the SSP paid for long periods of sickness absence.

According to the Government, around one million people are currently off work due to long term sickness, and almost 50% of these are employed by small companies with no more than 50 employees. With an average cost to UK business of £600 per employee per year, the Government’s annual employment allowance boost of £2,000 could be needed to offset the bill for statutory sick pay (SSP).

Burgess Hodgson Partner Matthew Sutton (pictured) has the following advice for any business affected by these changes:

1 – If you receive the Employment Allowance boost, don’t spend it all at once! Although it may seem like your business has made some savings, bear in mind that if any of your employees are taken ill, you won’t be able to recover anything from the Government so you might need it in reserve.

2 – To avoid being faced with increasing costs, implement or review your current company sickness policy. With the new HWS, anyone who has been away from the workplace for a period of four weeks or more should be referred for an assessment by an occupational health professional with a view to getting them back to work. There will also be access to advice through a phone line and website.

HWS is yet to be finalised, but we expect an announcement towards the end of this year.

3 – Talk to your accountant. If you need any further advice on how the April changes will affect your business, our payroll department would be happy to offer advice based on your individual circumstances.

Contact our payroll department on 01227 454627 or send them an email.