Following an independent review of sickness absence in 2011 the Government has decided to abolish the employers rebate on payments of statutory sick pay (Percentage Threshold Scheme) from the end of the 2013/14 tax year.
This rebate is very welcome by many small employers who often have quite low National Insurance costs. Unfortunately from now on the total cost of SSP will fall on the employer. However, employers will be able to reclaim 2014 SSP payments up to the end of the 2015/2016 tax year.
The review, which was conducted by Dame Carol Black and David Frost CBE, resulted in the Department for Work and Pensions report entitled Fitness for work: the Government response to ‘Health at work – an independent review of sickness absence “. It concluded that the abolition of the SSP rebate will “remove the administrative burden” on employers and that “employers find the scheme cumbersome and complex to administer”.
This publication can be accessed online at: www.dwp.gov.uk/sickness-absence-review
From 6th April 2014 the SSP rebate will no longer be available to employers. Instead the Government intends to spend this money on a health and work assessment advisory service “providing better value for the taxpayer as this will benefit more employers and their employees, as well as increasing tax revenue and productivity within the workplace. The Government believes a health and work assessment and advisory service could save employers more than £80 million per year in reduced sickness absence costs”.
The report states that “To minimise any negative impact on employers, the Government will not remove the existing scheme in isolation. Any timescale for abolition of the Percentage Threshold Scheme would be linked to the introduction of a health and work assessment and advisory service”. If this is still the case, then the new Health and Work Service should be operational by April 2016.
The Report also found that a lack of access to occupational health advice was a barrier to people returning to work. The new Health and Work service will provide this advice and support to employers, employees and GPs.
Whilst the advice service will be fully funded by the savings from SSP rebates, employers will still have to fund any occupational health services themselves. They may however be entitled to tax relief on costs of up to £500 per employee per year. Employees will not incur any “benefit in kind” tax charges for receiving any of these services.
It remains to be seen how effective the new Health and Work Service will be and this will depend largely on how beneficial it appears to small business owners. If it is to have any real chance of success it needs to be publicised a lot better than it has to date.