On 4 March, UK Prime Minister Boris Johnson announced that legislation would be introduced to help the country deal with the coronavirus outbreak. As part of a range of measures, the legislation will change the rules for the payment of statutory sick pay (SSP), enabling employees who fall ill because of the virus to claim sick pay from the first day of their absence.
While the measure has not yet come into effect, it is set to be included in a proposed COVID-19 Emergency Bill: employers should ensure their payroll is set-up to facilitate the adjustment when the legislation is passed.
Statutory Sick Pay from Day 1
Under current sick pay rules, employees may only begin taking SSP on the fourth day of their absence - after serving 3 waiting days. By paying SSP from day 1, employees will receive an extra £40, on top of the normal rate of £94.25 per week, up to a maximum of 28 weeks.
The Prime Minister announced the SPP measure to Parliament, stating that “the Health Secretary will bring forward, as part of our emergency legislation measures... the payment of Statutory Sick Pay from the very first day you are sick instead of four days under the current rules.”
The move is part of the UK’s wider strategy which has moved onto a ‘delay’ phase to prevent the rapid spread of COVID-19. The Prime Minister has pointed out that “No-one should be penalised for doing the right thing” accordingly, by paying sick pay from day 1, the government is hoping that employees with mild symptoms of the virus will be encouraged to self-isolate, reducing the risk of infection and further slowing the pace of the UK outbreak.
What Do Employers Need to Do Now?
UK employers must ensure their payroll is set up to accommodate the emergency legislation and the changes to the way SSP is paid. It is possible to pay more than the basic SSP amount and most payroll systems can be adjusted to cover any extra due. With that in mind, employers should:
- Review their payroll to ensure they can facilitate the new SSP entitlement
- Add a temporary override to a pay period for employees claiming SSP
Bear in mind that, employees may have linked periods of sickness, which occur when an employee has a subsequent period of sickness of 4 days or more within 56 days of the end of a previous period of sickness (of 4 days or more). In this situation, any of the 3 ‘waiting days’ in the first period of sickness count towards the subsequent period.
The COVID-19 Bill has still not gone through parliament, however, following yesterday’s Budget 2020 the points outlined below are what is likely to be included:
Support for Individuals
The Budget announces measures to support people who are unable to work because of COVID-19.
Eligibility for Statutory Sick Pay (SSP) – The Prime Minister has already announced that the forthcoming COVID-19 Bill will temporarily allow SSP to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or have to self‑isolate, in accordance with government guidelines. The Budget sets out a further package to widen the scope of SSP and make it more accessible. The government will temporarily extend SSP to cover:
- individuals who are unable to work because they have been advised to self-isolate
- people caring for those within the same household who display COVID-19 symptoms and have been told to self-isolate
Medical Evidence for SSP
The government has already issued guidance to employers, advising them to use their discretion not to require a GP fit note for COVID-19 related absences. This Budget announces that the government and the NHS will bring forward a temporary alternative to the fit note in the coming weeks which can be used for the duration of the COVID-19 outbreak. This system will enable people who are advised to self-isolate to obtain a notification via NHS111 which they can use as evidence for absence from work, where necessary. This notification would meet employers’ need for evidence, whilst taking pressure away from General Practices.
Support for Those Ineligible for SSP
The government recognises that self-employed people and employees below the Lower Earnings Limit are not entitled to SSP. The best system of financial support for these people is the welfare system and, in particular, ‘new style’ Employment and Support Allowance and Universal Credit. The government is committed to supporting these groups, and the Budget announces further support by making it quicker and easier to receive benefits:
- ‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice for from the first day of sickness, rather than the eighth day
- people will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a jobcentre
- for the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by COVID-19 or self-isolating according to government advice for duration of the outbreak, ensuring self‑employed claimants will be compensated for losses in income
The government will provide local authorities in England with £500 million of new grant funding to support economically vulnerable people and households in their local area. The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through complementary reliefs.
Support for Businesses
Some businesses may experience increased costs or disruptions to their cash flow as a result of COVID-19. The Budget announces a set of measures to provide support to businesses during this temporary period by either reducing their costs or bridging cashflow problems arising from the outbreak, and to protect people’s jobs.
Statutory Sick Pay – The government will support small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related SSP by refunding eligible SSP costs. The eligibility criteria for the scheme are as follows:
- this refund will be limited to two weeks per employee
- employers with fewer than 250 employees will be eligible. The size of an employer will be determined by the number of people they employed as of 28 February 2020
- employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- employers should maintain records of staff absences, but should not require employees to provide a GP fit note
- the eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force
- while existing systems are not designed to facilitate such employer refunds for SSP, the government will work with employers over the coming months to set up a repayment mechanism for employers as soon as possible
Business Rates Reliefs
The government has already announced the Business Rates retail discount will be increased to 50% in 2020-21. To support small businesses affected by COVID-19 the government is increasing it further to 100% for 2020-21. The relief will also be expanded to the leisure and hospitality sectors. These temporary measures, taken together with existing Small Business Rates Relief, mean that around 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21. The government has also already announced the introduction of a £1,000 Business Rates discount for pubs with a rateable value below £100,000 in England for one year from 1 April 2020. To support pubs in response to COVID-19 the discount will be increased to £5,000. Local authorities will be fully compensated for these Business Rates measures.
Small Business Grant Funding
The government recognises that many small businesses pay little or no business rates because of Small Business Rate Relief (SBRR). To support those businesses, the government will provide £2.2 billion of funding for Local authorities in England. This will provide £3,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent. Most properties that are eligible for SBRR will have a lower rateable value, and so this will represent an even greater proportion of their annual rent.
Time to Pay
The government will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Her Majesty’s Revenue and Customs (HMRC) has set up a dedicated COVID-19 helpline to help those in need, and they may be able to agree a bespoke Time to Pay arrangement. Time to Pay was successfully used in response to flooding and the financial crisis, giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back. These tailored arrangements will give a business the time it needs to pay HMRC to support their recovery while operating through any temporary financial challenges that occur. To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms when needed. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.
Coronavirus Business Interruption Loan Scheme
The government will launch a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.
The government has already committed £91 million to the international response. The Budget makes available £150 million from the UK’s ODA budget to the International Monetary Fund’s Catastrophe Containment and Relief Trust (CCRT), of which £75 million is an immediate commitment. This demonstrates that the UK can use its ODA budget to directly support our national interest. The government stands ready to provide further support as the situation develops, playing our full part in a well-coordinated global response.
Alongside the Budget, the government has published information about the support available to individuals and businesses whose finances are affected by COVID-19. This information, which will be regularly updated as the situation develops, can be found at: https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19.
If you use a payroll provider, consult with them to ensure your payroll system will facilitate the SSP override.
For more information on sick pay in the UK, browse activapyroll’s UK Global Insight Guide.