Reforms to statutory sick pay could force micro-businesses to close, warns Baker Tilly
From 6 April this year, businesses are to lose the right to reclaim any statutory sick pay (SSP) which could result in some small businesses having to close, warns accountancy firm Baker Tilly.
Currently, employers pay a worker who has been signed off as sick £86.70 per week in SSP, and pay a replacement worker to cover the absence. Once the SSP exceeds 13% of the total National Insurance bill for the period, employers can recover it under current rules known as the Percentage Threshold Scheme (PTS). This was designed as a disaster relief scheme for small employers who cannot afford to bear the SSP cost when too many workers are off sick.
However, from 6 April, employers will have to pay the replacement worker’s wages and the SSP with no right of recovery, as the PTS is being abolished.
David Heaton, Baker Tilly tax partner said: From April, statutory sick pay will be £87.55 per week, so if one employee is absent for a long period, the bill will be a maximum of £2,450 for 28 weeks or more of absence. This is a huge burden for a small business to bear and I fear this will make some businesses uneconomic.’
The PTS is being abolished to fund a new health and work service, an occupational health service for small business to which any worker off sick for four weeks must be referred, once it is up and running, in late 2014 or early 2015.