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COVID-19: HMRC working on statutory sick pay delivery

19 March 2020: funds for small employers and a dedicated statutory sick pay for coronavirus may be needed to deliver the government’s pledge of pay from day one.

HMRC is working with the payroll industry to develop a mechanism for delivering statutory sick pay (SSP) from the first day of absence for employees whose inability to work is related to the coronavirus outbreak, as announced in the Spring Budget.

While legislation is pending, the new rules are set to apply from 13 March 2020. Small employers may find themselves without the finances to pay SSP to their employees. Although there will eventually be a refund mechanism for small employers, ICAEW’s Tax Faculty understands that HMRC is not considering advance funding for small employers at the present time.

In terms of a delivery mechanism, one method might be to have separate COVID-19 related SSP to run alongside the existing SSP. Sickness unrelated to COVID-19 will still be subject to the ‘old’ or ‘existing’ rules and SSP will remain payable from day four.

Until the mechanism is agreed upon, however, there will be no distinction in the payroll software to determine what the SSP relates to. Employers should consider setting up a separate pay element for COVID-19 related SSP and should initiate discussions with their provider or outsourced payroll agents to this end.

The faculty understands that entitlement to SSP under either the ‘existing’ or ‘new’ rules generally remains unchanged, ie:

  • the person must be classed as an employee or a worker for employment law purposes and have done some work for the employer;
  • they must earn an average of at least £118 per week (£120 per week from 6 April 2020) (the national insurance lower earnings limit) over the 8 weeks prior to the start of the absence;
  • they must not have received the maximum SSP (28 weeks) – both sets of rules count towards this limit (ie, what has been announced is not a new entitlement to an additional 14 days of SSP if the employee has
  • already received 28 weeks SSP in this absence or a linked absence);
  • they must not be in receipt of statutory maternity pay (SMP);
  • the person must have earnings subject to class 1 NI (ie, they are not based outside the UK with no Class 1 liability);
  • the person is not in legal custody; and
  • the person is not off work as a result of a trade dispute.

Previous announcements stated that employers with fewer than 250 employees on 28 February 2020, will be eligible to reclaim the ‘new’ SSP. There has been no further clarification but the faculty thinks that the test will be applied ‘per employer’ (it will not be per PAYE scheme), similar to the connected companies/charities rules for the employment allowance.

For employers looking to reclaim COVID-19 SSP, it is not expected that this will be handled via RTI with HMRC, although the payment to the employee will be reported as normal via RTI.

Clarification has been received on the interaction with Statutory Maternity Pay. Where a pregnant woman stays at home due to government guidance relating to coronavirus, it will not be classed as a pregnancy related illness. This means normal rules will apply in that SSP will cover this and the woman will not have to bring her maternity pay period forward.