Temporary changes to statutory sick pay regime
Following the Prime Minister’s announcement last week, the Chancellor outlined a number of measures designed to contain the ongoing COVID-19 outbreak, including changes to the SSP regime.
Emergency legislation, to be introduced to Parliament shortly 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 Chancellor also announced further measures to extend the scope of 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.
The Chancellor also announced a temporary change to the medical evidence required to support a claim for SSP for absences related to COVID-19. 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 the NHS 111 helpline which they can use as evidence for absence from work, where necessary.
SSP will not be extended to cover self-employed people or employees whose earnings are below the Lower Earnings Limit. However, a number of measures were announced to Universal Credit and the Employment and Support Allowance, making it easier for those directly affected by COVID-19 or self-isolating according to government advice to claim these benefits.
Reimbursement of SSP for small and medium-sized businesses
Employers with fewer than 250 employees on 28 February 2020 will be able to claim reimbursement of their SSP costs for the first 14 days’ of sickness absence for each employee affected by COVID-19.
Those employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of the virus. Employers should maintain records of staff absences, but should not require employees to provide a GP fit note. The eligible period for this scheme will commence from the day on which the regulations extending SSP to self-isolators come into force.
National minimum wage
The Chancellor confirmed the increases to the National Living Wage (NLW) and National Minimum Wage (NMW) previously announced, which will take effect in April 2020. In addition, he announced a new target for the NLW to reach two-thirds of median earnings and be extended to workers aged 21 and over by 2024, provided economic conditions allow. The NLW currently applies to workers aged 25 or over, but this age threshold will be reduced to 23 from April 2021. Based on current economic forecasts, the rate of the NLW is expected to exceed £10.50 by 2024.
Introduction of neonatal leave and pay
The government will create a new statutory entitlement to neonatal leave and pay for employees whose babies spend an extended period of time in neonatal care, providing up to 12 weeks’ paid leave. No date has been given for the introduction of the new right but it appears from the government’s costings that it will not be implemented until 2023.
Introduction of carers’ leave
The government will consult on the design of a new form of statutory leave for employees with unpaid caring responsibilities, such as for a family member of dependants. There is no timescale given for the introduction of carers’ leave.
Off-payroll working rules
The government will proceed with the implementation of the off-payroll working rules on 6 April 2020, as previously announced.
Homeworking tax relief
The government announced that it will increase the maximum flat rate income tax deduction for employees to cover additional household expenses, from £4 per week to £6 per week, where they work at home under homeworking arrangements.
This measure will take effect from 6 April 2020.
Support for veterans
The government will introduce a National Insurance contributions (NICs) holiday for employers of veterans in the first year of civilian employment. The full relief will be available from April 2022, but transitional arrangements will allow employers of veterans to claim this holiday from April 2021. The holiday will exempt employers from any NICs liability on the veteran’s salary up to the Upper Earnings Limit. The government will consult on the design of this relief.
Welfare counselling provided by employers
The government has announced that it will extend the scope of non-taxable counselling services to include related medical treatment, such as cognitive behavioural therapy, when provided to an employee as part of an employer’s welfare counselling services. This measure will take effect from April 2020.
Review of the apprenticeship levy
The government will look at how to improve the working of the apprenticeship levy, to support large and small employers in meeting the long-term skills needs of the economy. In the meantime, the government will ensure that sufficient funding is made available in 2020-21 to support an increase in the number of new high-quality apprenticeships in small- and medium-sized businesses.
Support for self-employed parents
The government will make it easier for self-employed people to find the information and guidance that is relevant to them and their business. As well as introducing new interactive guidance in Summer 2020 which will make it easier for self-employed taxpayers to navigate the tax system, the government will consider how to provide appropriate support to self-employed parents so that they can continue to run their businesses, as part of its wider review of parental pay and leave.
National insurance threshold
The Chancellor confirmed the government’s commitment, as set out in the Conservative Party’s manifesto for the 2019 general election, to increase the thresholds at which employees and the self-employed start paying NICs to £9,500 from April 2020. This is the first step in meeting the government’s ambition to increase these thresholds to £12,500.
Summary
This Budget contained relatively few long-term employment measures and the Chancellor primarily focused on the immediate need to contain the COVID-19 pandemic. The extension of SSP eligibility to family members who are caring for those who are self-isolating is an extreme measure, given that those people would not meet the statutory definition of being incapable of work, but is a sensible precaution in these unusual circumstances.
The most notable developments are the introduction of neonatal leave and pay, and carers’ leave, both of which were mentioned in the Conservative Party’s manifesto for the 2019 general election. There is no mention of whether carers’ leave will attract any statutory pay, and it is likely that this will be a matter on which the government will consult.
