From 6th April 2014, the Percentage Threshold Scheme (PTS), which currently allows employers to reclaim any SSP paid to employees over and above the set percentage threshold of their National Insurance contributions, will be abolished.
This change will put an additional financial burden on firms that have high sickness absence rates – particularly SMEs that may struggle to bear the costs of long-term employee sick pay.
Department for Work and Pensions figures suggest one million employees were off sick for more than a month between October 2010 and September 2013. The cost of sickness absence to UK businesses is significant, with 130 million working days lost through sickness absence, costing employers around £9bn and the UK national economy in the region of £100 billion every year.
Canada Life Group Insurance marketing director Paul Avis says: “Effective sickness absence management is becoming increasingly important to UK employers. As the workforce ages, long-term sickness may become more commonplace, so it is crucial that businesses have the proper systems in place to monitor and even prevent absence due to illness. The removal of PTS means all employers will have to be prepared to wholly fund statutory sick pay. However, efficient management of absence and the use of Early Intervention Services can prevent illness from turning into a long-term absence and reduce SSP and occupational sick pay costs for employers.
“Although the government’s new Health and Work Service goes some way in addressing occupational health advice and support for employees, the tax exemption is limited to £500 a year for each employee on medical treatments recommended by the service. By promoting a 4-week intervention point it is clear that getting support earlier in an absence is the best way to mitigate prolonged periods away from the workplace. However, this may prove to be too limited a service. It would be wise for employers to assess their benefits package now, to ensure they are making the most of additional services provided by their income protection insurer, such as professional rehabilitation support, that can play a crucial role in managing long-term absence.”