Sick pay reforms could see some small firms forced to shut down

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REFORMS to statutory sick pay could force micro-businesses to close, accountancy firm Baker Tilly has warned.

Currently, employers pay a worker who has been signed off as sick £86.70 per week in statutory sick pay (SSP), and may pay a replacement worker to cover the absence.

Once the SSP exceeds 13 per cent 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 April 6, employers will have to pay the SSP, as well as a replacement worker’s wage where applicable, with no right of recovery, as the PTS is being abolished.

Lesley Fidler, associate director at Baker Tilly in Leeds, said: “From April, statutory sick pay will go up to £87.55 per week, so if one employee is on long-term sick, employers will have to pay a maximum of £2,450 for 28 weeks or more of absence.

“For a micro-business such as a hairdresser or a corner shop, this is a huge burden and could put some out of business.”

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.

The service will identify the issues preventing an employee from returning to work and draw up a plan for them, their employer and GP, recommending how the employee can be helped back to work more quickly.

The Government described the PTS as “an outdated system which does nothing to promote or support active management of sickness absences by either the employer or employee”.

It claims that any 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 out- put.