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News - 25 November 2013

The Percentage Threshold Scheme for SSP

On 17 January 2013, a report jointly sponsored by the Department of Work and Pensions (DWP) and the Department for Business Innovation and Skills (BIS) entitled ‘Health at Work – Independent Review of Sickness’ was published.

Its remit was to look at ways of reducing the administration and operational burden of sickness in the workplace on employers, whilst looking at reducing costs for employers and taxpayers.

It made two important announcements. Firstly, was that the Government would establish a free state funded Health and Work Assessment and Advisory Service that will be available to all, after the employee has had four weeks’ sickness absence.

The second was that the Government intends to abolish the Percentage Threshold Scheme (PTS). This Scheme allows an employer to recover Statutory Sick Pay (SSP) if the total SSP paid in the tax month is greater than 13% of gross National Insurance Contributions for the same tax month.

The Government said that the Scheme was used by 100,000 employers, was cumbersome and involved complex administration, costing the employer between £2.5 and £5 million a year.  In addition, the Scheme cost the Exchequer £50 million a year.  Abolition of the Scheme would allow the £50 million savings to be used to fund the Assessment and Advisory Service which, in turn, would save employers over £80 million a year in reduced sickness costs.

This planned abolition caused great concern, particularly among smaller employers who are most likely to use the Scheme, recovering SSP that they are obliged to pay for by law which, otherwise, would pose a significant cost implication on them.

In response to this concern the DWP said in a statement:
We understand your concerns about the impact of the abolition of the PTS on small and medium-sized employers.  However, the Government response introduces a range of measures specifically intended to address employer concerns around sickness absence management, particularly through the introduction of a new occupational health assessment and advice service.

It carried on to say that the Government would re-cycle the money saved, around £50 million, into a new assessment and advice service to ensure a more effective and targeted use of funds and that employers will also benefit from a reduction in administration costs and getting their employees back to work faster.

Lavinia Newman, founder of ABDS comments:
“The DWP says that the new health and work assessment and advisory service which will be launched in 2014, will not only offer a cost effective management of sickness absence, but it will also benefit the individuals concerned in that GPs will have access to work related support for their patients.”

For those who are looking for a more personal approach on a range of issues, including SSP, contact us at ABDS.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

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