Enter Your E-mail

From 6 April 2014 employers are no longer able to claim reimbursement for Statutory Sick Pay (SSP), following the abolition of the Percentage Threshold Scheme (PTS). The change will affect those who take on a personal assistant employed to help them with their care needs – a group already denied access to the £2,000 National Insurance contributions (NIC) break recently given to most other employers. The cost to vulnerable employers could be up to £2,500 a year.

 

Before the change, most employees were entitled to receive SSP from their employers for up to 28 weeks of sickness absence. Under the PTS scheme an employer was entitled to recover some of the SSP actually paid to its employees from the Government. This helped mitigate financial loss to the employer due to sickness and provided safeguards for employees in ill health.

 

The PTS provided a measure of compensation for employers faced with high levels of sickness absence. Unless an employer qualified under PTS, it would not be entitled to recover any of the Statutory Sick Pay (SSP) paid to its employees. An employer was entitled to recover some of the SSP actually paid to its employees if the total amount of SSP paid in a tax month was greater than a set percentage of its gross Class 1 NICs (employers’ and employees’) liability for that tax month. The amount the employer could recover was the SSP it had paid over and above the set percentage threshold of its NICs liability. More information on the PTS is available from the HMRC website.

 

The LITRG has expressed serious disappointment and surprise that there appears to have been virtually no formal public consultation on this substantial change. The group’s analysis shows that elderly or disabled people who use their own money or money from schemes set up to help them live independently to employ a personal assistant could be up to £2,500 a year out of pocket. Since the announcement of the Government’s plans to abolish the scheme, LITRG has been unable to find any justification to warrant such a material financial change for many vulnerable people.

 

Many of the Government’s reasons given for the abolition of the PTS – such as fewer administrative burdens and helping employers to better manage sickness absence – just do not apply to those who are only employers by virtue of hiring someone to care for them.  Equally, the new sickness ‘helpline’ for employers and an annual £500 tax exemption for any medical support an employer provides for an employee, introduced to replace the PTS, is not likely to help restore their financial position.

 

Additionally, this announcement comes at a time when such employers have surprisingly been specifically excluded from the new £2,000 employment allowance, which has been introduced from April 2014 to help small businesses and charities with their workforce costs.

 

LITRG would strongly encourage a complete rethink of the abolition of the PTS scheme for care and support employers, or at the very least granting them eligibility for the £2,000 employer allowance. It would be extremely unfair if this category of particularly vulnerable employers were made to suffer twice.