In this excerpt from the report ‘COVID-19 Tax Issues For Businesses’, Sarah Bradford gives some advice for employers and employees in this current situation.
Coronavirus Statutory Sick Pay
Employers must pay statutory sick (SSP) pay to employees who are absent from work due to sickness or injury and who meet the qualifying conditions.
The Coronavirus outbreak and the requirements to self-isolate or shield has meant that more employees were absent from work than normal. To help employees and employers affected, some of the SSP rules have been relaxed in respect of ‘Coronavirus absences’.
Normally, an employee is not eligible to receive statutory sick pay until the three waiting days have been served. This requirement is relaxed temporarily to enable employees who are absent due to Coronavirus to receive SSP from the first qualifying day.
Employers are normally required to meet the cost of SSP; it is no longer possible to reclaim SSP from the Government. However, the SSP rebate scheme allows smaller employers to reclaim SSP paid to employees who are absent from work due to Coronavirus from the Government. The rebate scheme is open to employers who had fewer than 250 employees as at 28 February 2020. The claim is capped at two weeks’ SSP per employee.
Claims for rebate can only be made within the time frame specified in the Regulations. This is the later of one year from the later of:
- the last qualifying day of the period of incapacity for work to which rebate claim relates; and
- 26 May 2020.
SSP Eligibility For Coronavirus Absences
An employee could get SSP if they are unable to work as a result of Coronavirus if:
- they are self-isolating because they have symptoms of the virus or have tested positive or someone they live with has symptoms or has tested positive;
- they are self-isolating because they have been notified by the NHS or a public health authority that they have come into contact with someone who has Coronavirus;
- they have received a shielding letter and have to stay at home because they are at high risk of severe illness if they contract Coronavirus.
It should be noted that an employee cannot get SSP is they are self-isolating after entering or returning to the UK and do not need to self-isolate for one of the above reasons.
The employee must meet the normal eligibility tests for SSP, including:
- being classed as an employee and having done some work for the employee before the absence;
- having average weekly earnings at least equal to the lower earnings limit for National Insurance purposes (set at £120 per week for 2020/21 and at £118 per week for 2019/20);
- having been ill or shielding for at least four days (including non-working days), such that a period of incapacity for work (PIW) is established.
SSP is payable for qualifying days. These are the employee’s usual working days. Normally, an employee is required to serve three waiting days, which are the first three qualifying days, before SSP is payable. However, this requirement is lifted in relation to Coronavirus absences so that SSP is payable from the first waiting day where the Coronavirus absence started on or after:
- 13 March 2020 where the employee has Coronavirus or Coronavirus symptoms or is self-isolating because someone that they live with has symptoms;
- 16 April 2020 where the employee was shielding because of Coronavirus;
- 28 May 2020 where the employee has been notified by the NHS or a public health body that they have come into contact with someone who has tested positive for Coronavirus.
The weekly rate of SSP is £95.85 per week from 6 April 2020. It was set at £94.25 per week for 2019/20. The daily rate depends on the number of qualifying days in the week and is found by dividing the weekly rate by the number of qualifying days. Daily rate tables can be found on the Gov.uk website.
SSP Rebates For Coronavirus-related Absences
The Coronavirus Statutory Sick Pay Rebate Scheme enables employers who have paid SSP to employees who have been absent from work due to a Coronavirus absence (see 2.2.1) to reclaim SSP paid to those employees up to a maximum of two weeks’ SSP per employee.
The scheme is open to employers who:
- have already paid SSP to an employee;
- are claiming a rebate in respect of an employee who is eligible for sick pay due to Coronavirus;
- has a PAYE payroll scheme that was set up on or before 28 February 2020; and
- had fewer than 250 employees as at 28 February 2020.
The scheme covers all types of employment contracts, including full-time, part-time, employees on agency or zero-hours contracts and employees on fixed term contracts up to the end of their contract.
Claims for rebates need to be made via the online portal on the Gov.uk website.
To make a claim, the employer will need to work out the start and end dates of the claim period. The start date is the start date of the earliest pay period for which a claim is being made, or, if later, 13 March 2020. The end date is the last day of the most recent pay period to which the claim relates. This must be on or before the date on which the claim is made as SSP rebates are paid in arrears; the employer must pay the SSP then claim it back, rather than claiming money to pay the SSP.
To make a claim, the following information is required:
- the number of employees in respect of whom a SSP rebate is being claimed;
- the start and end dates of the claim;
- the total amount of SSP being claimed (this is capped at two weeks’ SSP per employee);
- Government gateway User ID and password;
- employer PAYE reference;
- a contact name and phone number in case of queries;
- UK bank or building society details of the account into which the rebate is to be paid.
Where the employer pays contractual sick pay above the statutory rate, a claim can only be made for sick pay up to the statutory rate. For 2020/21 the maximum claim is £191.70 (2 weeks @ £95.85 per week). More than one claim can be made per employee is the employee has more than one Coronavirus-related absence. However, the claims cannot exceed two weeks’ SSP in total.
Where an employee is required to shield, the employer can instead furlough the employee rather than pay SSP. This will generally be beneficial for the employee.
Relaxation of Evidence Requirements
An employee can self-certify for sickness absences of up to seven days. For absences of more than seven days, a Fit Note is usually required. However, for Coronavirus absences, an employer does not need a Fit Note to claim a rebate of SSP paid. If the employer requires evidence to support the absence, they can ask the employee to provide either an isolation note from NHS111 where the employee cannot work because they are isolating due to Covid-19 or, where the employee is shielding, the NHS or GP letter telling the employee to stay at home for 12 weeks.
Records That Must Be Kept
Where a SSP rebate is claimed for a Coronavirus-related absence, the following records must be kept for three years from the date that payment is received in respect of the claim:
- the dates that the employee was off sick;
- which of those dates were qualifying dates;
- the reason why the employee was absent from work, i.e whether they had Coronavirus symptoms, were isolating because they lived with someone who has symptoms or whether they were shielding.
The employer must also print or save the state aid declaration from the claim summary and retain this until 31 December 2024.
Coronavirus Statutory Leave and Payments
During the Covid-19 pandemic, employees may be on statutory leave, may return from statutory leave or may go on statutory leave. This may raise particular issues when an employee has been furloughed or where the employer wishes to place the employee on furlough when they return to work.
Furloughed Employees and Average Weekly Earnings Calculation
The calculation of average weekly earnings is important in determining whether an employee is entitled to statutory pay (e.g. statutory maternity, paternity, adoption, shared parental or parental bereavement pay). To qualify, the employee must have average weekly earnings of at least £120 per week for 2020/21.
Statutory maternity and adoption pay is paid at the rate of 90% of the employee’s average weekly earnings for the first six weeks and at the statutory amount of £151.20 (2020/21 rate) or, if less, 90% of average weekly earnings for the remainder of the pay period. Other statutory payments are paid at the statutory rate of £151.20 per week or, if less, at the rate of 90% of average earnings.
Where an employee is on furlough during the relevant 8-week period by reference to which average weekly earnings are calculated, they only be receiving 80% of their usual pay (or less where 80% of their pay is more than £2,500 per month).
To prevent employees losing out, where an employee’s period of family-related statutory pay begins on or after 25 April 2020 and the employee was furloughed for all or part of the relevant period, the earnings that should be used to calculate their average weekly earnings are the higher of:
- the earnings actually received from their employer; and
- the earnings they would have received had they not been on furlough.
Where this is not clear, the reference salary for the purposes of the Coronavirus Job Retention Scheme (see 2.1) should be used as a starting point. Any other payments that the employee was due to receive in the relevant period should also be taken into account, for example, bonus or commission payments.
If the employer has topped up the employee’s while on furlough the normal rules apply to calculate average weekly earnings. The normal rules also apply without adjustment if the employer has agreed a reduction in pay and hours with the employee and the employee has not been furloughed.
Employees Returning From Statutory Leave and Furloughing
Under the Coronavirus Job Retention Scheme, from 1 July 2020 a grant can only be claimed for an employee who has been furloughed for at least three consecutive weeks between 1 March 2020 and 30 June 2020 and in respect of whom a grant has previously been claimed. To meet this condition, the latest date that an employee can be placed on furlough for the first time was 10 June 2020.
However, HMRC have confirmed that this date does not apply to employees who return from statutory family leave after this date and such employees can be furloughed on their return.
To download the whole Covid-19 Tax issues for Businesses Report visit this page here.