Sick pay rebate scheme set to closeby
The Coronavirus Statutory Sick Pay Rebate Scheme will close on 30 September 2021. Ian Holloway explains what will be retained from the scheme that employers need to be aware of.
How it started
In March 2020, two announcements were made that would help employees with the payment of Statutory Sick Pay (SSP) and help employers with recovery from the pandemic:
- On 3 March 2020, the Prime Minister announced that Covid-19 related SSP would be payable from the first qualifying day rather than after three waiting days (that still applies with ‘normal SSP’). This factor of ‘Coronavirus SSP’ is being retained. Employees will continue to remain entitled to SSP from day one of the period of incapacity for work (PIW) but only if the absence is for a coronavirus-related reasons.
- Rishi Sunak confirmed at Budget 2020 that reimbursement of SSP would be for employers with fewer than 250 employees.
What it meant
Helping employees by paying ‘Coronavirus SSP’ from day one of absence impacted payroll and software developer professionals. It required the differential to be made between an absence that was Covid-related and an absence that was not, for example, a broken arm. For the first time, employers were policing an individual’s eligibility to SSP from the first qualifying day or the fourth. Whilst this was probably never the intention, it was the reality.
The following two pieces of legislation bought us the Coronavirus Statutory Sick Pay Rebate Scheme (CSSPRS):
- The Statutory Sick Pay (Coronavirus) (Funding of Employers’ Liabilities) Regulations 2020
- The Statutory Sick Pay (Coronavirus) (Funding of Employers’ Liabilities) (Northern Ireland) Regulations 2020
These came into force on 26 May 2020, applicable to any employee with a Covid SSP period of PIW starting on or after 13 March 2020. The reclaims portal opened on the same day as the legislation came into force.
An employer had to meet three conditions:
- Fewer than 250 employees in all PAYE schemes operated on 28th February 2020.
- The PAYE schemes must have been created and started on or before 28 February 2020, so a RTI submission must have been received at HMRC by this date.
- The employer was not ‘in difficulty’ on 31 December 2019.
The ‘in difficulty’ terminology relates to the fact that the CSSPRS is operated under the Temporary EU Framework granting state aid to small and medium employers. Importantly, the amount of state aid received under the support scheme must not exceed the threshold relevant for their industry sector.
An employee also had to be eligible for SSP payment as normal, for example, meeting the PIW and earnings criteria.
A single piece of legislation amended both pieces of legislation, with the confusing effects for employers.
- The definition of an employer ‘in difficulty’ for PIWs starting on or after 29 June 2020 was amended. It is worth looking at the explanatory note to see how more employers may be eligible.
- It changed how employers can correct a claim submitted via the online portal. Employers are required to contact the HMRC helpline to provide details of the overpaid amount rather than report through the SSP employer rebate online application.
- The eligibility was widened to include employees required to shield and formed part of an extended or linked household.
If the employer was eligible and the employee had a Covid SSP PIW, this can be claimed for the first 14 days, with waiting days suspended, in the below circumstances:
- Absence through Covid-19 related sickness or self-isolation starting on or after 13 March 2020.
- Absence through Covid-19 related shielding, following public health advice and where the employee is in receipt of a letter from the GP or the NHS.
HMRC’s online reclaims portal opened on 26 May 2020, accessible via a government gateway user ID. When reclaiming the SSP, the employer must provide the PAYE scheme reference number and the total amount of Covid-19 SSP paid for the claim period. It must also make these declarations:
- That the employer was not ‘in difficulty’ on 31 December 2019 or 29 June 2020 depending on the dates of sickness.
- Confirm the amount claimed will not result in the amount of state aid received making them exceed the allowable cap for their sector.
- That the information stated in the claim is true and accurate
Operating the CSSP scheme is far from simple for employers and far removed from the simple statements made back in March 2020. However, it has been a very important financial lifeline for eligible employers.
Closing the scheme
On 9 September 2021, the SSPC funding closure regulations were laid. This legislation means that eligible employers cannot use the scheme (and make reclaims) for any Covid SSP absence occurring after 30 September 2021.
However, the legislation allows for a transitional administrative arrangement that is in place until 31 December 2021 allowing employers the time to either:
- Submit any claims, or
- Amend any claims
What is NOT removed is the Covid SSP suspension of waiting days powers. Employees will continue to remain entitled to SSP from day one of the PIW if the absence is for a coronavirus-related reasons.
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Ian Holloway is a highly respected payroll practitioner, writer, advisor and trainer. He has worked in the payroll profession for over 30 years and is now Payroll Consultant at i-Realise, an independent change management business operating in the payroll space. Ian has hands-on experience processing payrolls from all sectors, large and small....