Small employers paying people when sick thanks alot!

Small employers paying people when sick thanks...

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Small employers paying people when sick thanks alot! That is statement a client has made this morning, when he found out he could not recover SSP anymore! Interesting advert on TV about employment allowance last night!

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Euan's picture
By Euan MacLennan
01st Apr 2014 11:01

And the question is ... ?

Perhaps, your client does not think that small employers should pay people when they are on holiday?

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Replying to Ian McTernan CTA:
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By User deleted
02nd Apr 2014 17:18

You don't really anyway ...

Euan MacLennan wrote:

Perhaps, your client does not think that small employers should pay people when they are on holiday?

... the annual wages includes holidays so basically, for example, you employ for £30k pa for 1800 hours pa, paid holiday is just an illusion, unless Aeroflot is your holiday carrier, in which case it is an Ilyushin :o)

Or is that an allusion ;o)

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Replying to Ian McTernan CTA:
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By TamsinM
16th Apr 2014 23:35

Sick Pay

Hardly likely and not the same thing at all. Small employers know they have to pay a fixed amount of holiday pay but the unknown sick pay is very scary for the small employer. Up to now if they employed one or two people on a part time basis they would have paid the sick but recovered it or most of it. Now they might find themselves in a situation of having no employees working but a bill of £87 a week per employee for many many weeks. This could ruin a small business very fast. THe larger businesses could not usually get this back as their NI bill was too high, so this change is totally aimed at the person who employs a few people or several part time employees etc. I think this is totally unfair and the £2000 Emp Ni saving, which a lot of small business owners wont see that amount back as they do not have that high a bill, yet they are hit by this SP issue. Do not agree with it at all

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By Andywho is fed up
01st Apr 2014 11:46

But surely, the test as to whether an employee is entitled to SSP is still their NI contribution history.

As the SSP is now entirely employer funded, what relevance does the NIC (paid to HMRC) history have to the payment made by the employer to the employee?

The point about holiday pay is well founded, but this has never been funded by the government.   What we have now is a half-way house where payment of a governement tax dictates how much sick pay your employer pays you out of their own funds!

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By User deleted
01st Apr 2014 12:31

The more worrying part ...

... is whether it is the tip of the iceberg - is SMP next in their sights?

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By Andywho is fed up
01st Apr 2014 12:43

SMP

..................and whyy not?.   The link between contributions and entitlement has now been broken so loigically everything else will follow.

After that, the case for keeping a separate NIC charge disappears and so we can look forward to a combined NIC/Tax rate?

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By User deleted
01st Apr 2014 13:07

I think, working Mum's ...

... would become an endangered species - no small business owner in their right mind would contemplate employing women of child bearing age if so, imho!

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By 3569787
03rd May 2016 16:39

And they wonder why..

.

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Replying to Red Leader:
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By WhichTyler
01st Apr 2014 15:14

Basic principle...

3569787 wrote:

 

It no longer pays for the SME to expand the workforce, unless the revenue created far exceeds the cost of employing that 1 extra person.

 

It has never paid for anyone to expand the workforce unless the revenue created exceeds the cost of employment, has it?

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By airgeadagam
01st Apr 2014 14:29

NI threshold

I wonder if some directors will consider paying themselves below the SSP qualifying NI threshold to avoid being eligible for SSP. This might qualify them for other state handouts if ill rather than making their own company liable. The tax allowance could be made up with benefits in kind, and voluntary class 3 NI payments could be paid in later years to ensure state pension entitlement. Seems a bit of a faff right enough.

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Replying to Tyr:
Stepurhan
By stepurhan
01st Apr 2014 17:22

April Fools?

airgeadagam wrote:
I wonder if some directors will consider paying themselves below the SSP qualifying NI threshold to avoid being eligible for SSP. This might qualify them for other state handouts if ill rather than making their own company liable. The tax allowance could be made up with benefits in kind, and voluntary class 3 NI payments could be paid in later years to ensure state pension entitlement. Seems a bit of a faff right enough.
I do hope so.

Have you considered that, even at the salary figures recommended this year, having to pay SSP at the statutory level is not going to be mucking up anyone's salary planning any time soon?

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Replying to Glennzy:
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By airgeadagam
01st Apr 2014 16:34

April Fool's

Perhaps I should have posted that one before 12 o'clock.

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RLI
By lionofludesch
01st Apr 2014 19:22

Not much change

I can't remember the last time I actually reclaimed any SSP.  Since the "threshold test" came in, you've always needed one of your few employees to be off all month.

The figures never stack up, really.

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By refs8
02nd Apr 2014 12:15

The point I was trying to make....!

I posted this to start a debate.....! I agree with my clients view thus why I posted this.

As a small employer myself, we can not afford to pay people people when they are off sick. Euan Holiday pay we can budget for and control on most occassions, there are acceptations of course.

But SSP by as a small employer not being able to recover this means if say two of our employees are off for a long period, then we are incurring a cost to the business and can mean other staff could lose there jobs as we try to cut costs. I accept that this is worst case scenario.

You can cope with short term sickness long term would be a nightmare IMO

 

 

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Replying to DJKL:
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By B Roberts
02nd Apr 2014 15:15

SSP

refs8 wrote:

I posted this to start a debate.....! I agree with my clients view thus why I posted this.

As a small employer myself, we can not afford to pay people people when they are off sick. Euan Holiday pay we can budget for and control on most occassions, there are acceptations of course.

But SSP by as a small employer not being able to recover this means if say two of our employees are off for a long period, then we are incurring a cost to the business and can mean other staff could lose there jobs as we try to cut costs. I accept that this is worst case scenario.

You can cope with short term sickness long term would be a nightmare IMO

 

 

SSP is payable at the rate of £87.55 per week / £17.51 per day.

If an employee is off sick for a week, then after 3 unpaid waiting days they would be entitled to the princely sum of £35.02 for the week.

I will not comment further for fear of ranting and increasing my blood pressure, other than to say if you would find it a "nightmare" to have an employee on long term sick ..... on second thoughts ......

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RLI
By lionofludesch
02nd Apr 2014 13:14

Yes but

Yes, but have things really changed ?

If you've got a few employees, what's 13% of your monthly NI bill ?

That's when the real change came in - when the threshold system came in.  Yet I don't recall a big fuss at the time.

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By Democratus
02nd Apr 2014 13:47

I recall back in the dark distant pass when SSP was changed to be generally irrecoverable against NIC the government of the day gave employers a 1% reduction in their NICs to compensate. So there you have it - pay SSP or pay higher NICs and offset.

 

I am of course completely ignoring all of the changes in NIC since the 90's when the reduction only lasted for a short while. 

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RLI
By lionofludesch
02nd Apr 2014 16:23

To be fair ....

To be fair, OGA, the cost of sick pay seems to be the least of your problems.

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By User deleted
02nd Apr 2014 16:32

I don't have staff ...

... If I am sick it causes big problems, just saying a small business has enough problems if an employee is sick: as a tax payer I would rather pay the sick pay of an employee in that situation than for someone to sit at home doing sweet FA at my expense, and like I say, If they decide SMP is down to the small employer, which is to me inevitable, that will really cause problems.

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By Sherman Holter
02nd Apr 2014 18:48

Advert ?

 

I didn't see the interesting TV advert about employment allowance.

What did it say that was interesting?

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
09th Apr 2014 09:59

Just catching up with you all

Like refs8's client I had missed the significance of announcements back in November and have come across this development only since the turn of the new tax year.

I've done a brief update on the issue for our news page that links back to previous threads and comments, but doesn't quite explore the administrative and financial impacts, nor members' reactions quite as vigorously as you have done here.

Keep up the good work - and we'll try to pay closer attention in future.

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RLI
By lionofludesch
09th Apr 2014 10:09

Threshold

I still think the big change came in with the threshold scheme.

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By Sarah Newland
09th Apr 2014 12:52

Long Term Sick

 

We can cope with the short term sick, odd days and weeks here and there.  It's the long term abscences that are really costly.

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By The Black Knight
09th Apr 2014 15:03

simples

Make all the employees become limited companies.

Problem gone.

or perhaps MP's have shares in umbrella companies.

either that or don't employ anyone.

Having squandered and stolen the money we give them in tax we have now got to pay for secondary government layabouts.

Is it any wonder vast numbers are black market or treated as self employed.

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Glenn Martin
By Glenn Martin
17th Apr 2014 00:43

Will lead to brutal treatment of regular sick offenders.
IMO this will lead to harsh treatment of regular sick staff by small employers. There is nothing like having to fund the SSP to focus the mind of the guy owning the business.

I think you will find more people are sacked for poor attendance either fairly or more likely unfairly, and as the ex staff member now have to pay fees to take tribunal they will have little recourse against the employers treatment if them.

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By TamsinM
17th Apr 2014 01:11

I actually think that small business owners are currently unaware of the new change. I think they are in for a big shock and will not be happy bunnies at all when they discover what they thought was a good year with the Emp NI allowance, turns out to be a horror year. Those above who comment that it unlikely you claim back anyway etc etc. well try being a very small business and having a few staff on part time hours, such as small cleaning businesses where this is common. Now find that your cleaners are off sick and not only do you have nobody earning anything you have to find the £87 a week to pay them with no reclaim. The rest of the year you are lucky to be making a pound or so per hour on their work and so hey ho suddenly profits go to nil. Now imagine this happens for 28 weeks of your life. 

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By User deleted
18th Apr 2014 00:42

May be ...

... zero-hours contracts will get more popular!

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RLI
By lionofludesch
18th Apr 2014 10:45

How many ?

Is it just me ?   How many people on this forum have actually reclaimed some SSP, for themselves or clients, since the threshold scheme came in donkeys' years ago ?  What percentage of the SSP paid does that represent ?

The introduction of the 13% threshold was the big watershed - but I don't recall any great outcry at the time.

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By coolmanwithbeard
18th Apr 2014 13:29

I have reclaimed SSP on behalf of clients under the last 13% scheme - the very smallest of employers with just one or two staff. I have a client who has received a double whammy - she is disabled and employs staff to look after her under direct payments. She does not qualify for the £2k allowance and now this month is paying SSP that last month would have been reclaimed and paying someone else to do the hours.

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RLI
By lionofludesch
18th Apr 2014 14:41

So ......

 ........ once then ?

 

Now ..... how many claimed SSP before the 13% threshold came in ?

Dozens ?

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By refs8
19th Apr 2014 13:19

This all started because.....!

My client had two long term sick employees in a business of employing just 4 people and given the issues last year it meant he would have had 2 employees covering 4 peoples work paying sick pay.out, last year was stressful had it been this year the business would have closed down because of the sick pay. Thankfully it was last year because he could at least afford to pay for the cover this year he would not. In additional the client has other issues due to road works issues all adding up "problems" from outside issues.

So it was based on a true client!

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Replying to david.bransbury:
RLI
By lionofludesch
20th Apr 2014 09:27

Happen it was - but

refs8 wrote:

This all started because.....!

My client had two long term sick employees in a business of employing just 4 people and given the issues last year it meant he would have had 2 employees covering 4 peoples work paying sick pay.out, last year was stressful had it been this year the business would have closed down because of the sick pay. Thankfully it was last year because he could at least afford to pay for the cover this year he would not. In additional the client has other issues due to road works issues all adding up "problems" from outside issues.

So it was based on a true client!

It might have been refs8, I don't deny that.  All I'm saying is that this change is a lot less vicious than the introduction of the 13% threshold - which nobody seemed to notice at the time.

Very clever politics - don't actually abolish something, just make it virtually impossible to claim. 

We all fell for it.

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By TamsinM
19th Apr 2014 15:55

I have claimed it for many businesses

I have claimed it for businesses, some almost in full. Some only have one or two employees or some have several part timers, each working at over the £100 a week needed to qualify but NOT giving an NI bill to have any of the sick pay stopped. All of these businesses will now struggle in the new climate, and may have to think hard if they can continue employing as the risk may be too great.

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RLI
By lionofludesch
21st Apr 2014 08:59

Maybe it's because it's Easter ...

Don't know why I bothered to do this, I obviously have too much time on my hands, but, since the threshold system came in, 93% of the SSP paid by my payroll clients has been covered by the threshold.

So the last 7% is pretty small beer.

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