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by Greville Janner, QC, MP
Sick pay: be ready by April
THE SOCIAL SECURITY and Housing Benefits Act, 1982 comes into force on April 6, 1983. No employer or employee in commercial motoring can avoid the effect not only of the Act, but of the stream of Regulations made under its powers.
I outlined the likely rules in February. Now they are published in all their complexity; the lead-in period to prepare for their effects is fast evaporating; so here are the basic legal routes to complying with the new law. Follow them and you have a reasonable chance of avoiding trouble. Ignore them and an expensive legal collision is certain.
State Sickness Benefit is subject neither to tax nor to national insurance contributions. When (from April 6,1983) employers will pay (broadly) the first eight weeks of such benefit (to be known as Statutory Sick Pay — or SSP), it will be subject to both. Therefore almost all sick employees will be worse off than at present. So negotiations for improvement of sick-pay terms have already begun.
Question 1: What (if anything) will you do to adjust your own Occupational Sick Pay scheme, so as to make good at least some of your employees' loss through both the taxation and the lower rates of SSP? Also: What about your own OSF?
An employee will qualify for SSP only if he has at least four consecutive days of illness, any day of the week counting whether or not he would have worked on that day. A "day of incapacity for work" is one when he is sick; a "period of incapacity for work" (or PIW) is a period of four or more consecutive sick days — and two or more PIWs may be "linked" by a return to work of not more than fourteen days between each. Next: There must be a "period • of entitlement" (POE). During this period, the employee may be entitled to SSP — outside the period, he would get none. A POE begins with the sickness and normally terminates with the end of the sickness or with the employment, or when a woman may be entitled to maternity benefit or when the employee has reached his maximum eight weeks SSP entitlement for the tax year or for the spell of illness concerned.
If your employee has a period of incapacity for work in a period of entitlement, then you must check the exclusions. These include people sick outside the EEC — which, of course, includes long-distance lorry drivers; employees "in legal custody" or (broadly) involved in a trade dispute; pensioners; part-timers who earn less than the current lower earnings limit (at present: £29.50 — but by April 6 to be £32.50); and employees who were in receipt of invalidity benefit, sickness benefit, etc, and who remain "linked" to such benefit and hence still entitled to it, by an interval back at work of not more than eight weeks.
The third "qualifying condition" — the day of incapacity must be a "qualifying day". This means a day which you have agreed with your employee shall qualify for SSP and which should normally reflect his working day. You should set about agreeing "qualifying days" now.
For each week when an employee is sick, you will have to work out the number of "qualifying days" — and strike out the first three in any "period of incapacity" which is not linked to a previous one. These are "waiting days" in respect of which no SSP is payable.
You will have to decide when and whether and to whom SSP gets paid. You will arrange your own systems under which your employee is required to "notify" you that he is or has been absent through sickness, but within the limits laid down for "notification" by Regulations; and for the employee's "certification" that illness was the cause of the absence — which may be by a medical or by a "self certificate".
Please remember: Your arrangements for your own Occupational Sick Pay scheme (OSP) are and will remain for you; the ground rules for SSP are laid down by the state; and you should do your best to dovetail the requirements for notification, certification, documentation, record keeping and computerisation so as not to have to operate two separate systems. And the rules apply to the smallest outfits, as they do to the largest.
Once an employee has a "day of incapacity" in a "period of entitlement"; and he is not excluded from SSP; and the day is a "qualifying day", but not one of the first three "waiting days", he will then get the appropriate proportion of the week's maximum SSP, dependent upon the number of qualifying days and which of the three fixed scales is his. At present, these scales are: For a person earning £60 or more — £37; £45 or more, but not as much as £60 — £31; and below £45 but above the Lower Earnings Limit — £25. The scale depends upon the employee's "normal weekly earnings" — calculated (once again) on a complex basis set out by the new Regulations.
For instance: Suppose that you employ a manager on a five-day week; you agree that his "qualifying days" will be from Monday to Friday; and he is ill for a full week. You will pay him no SSP for the first three days, which are "waiting days", and he will get two-fifths of the top scale for the remaining two days — that is, two days out of five.
SSP must be paid on the next ordinary pay day or the one after that; it will be subject to tax and to deduction of national insurance contributions, and also to any other normal deductions. But you may deduct any SSP payments from your next remission of national insurance or tax money to the Revenue.
Naturally, failure to pay SSP when you should will be a breach of the law; and if you pay when you should not and recover the money from public funds, then you could be in trouble. If the mistake was deliberate or fraudulent, you could be prosecuted; and otherwise you could run into problems with the DHSS Inspector, who could not merely require "counter-deductions" but order a full inquiry and investigation into your SSP payments for the previous three years.
This, then, is a summary only of the most crucial and complex arrangements. You and your payroll staff must know and operate them — neither you nor your employees will be permitted to contract out of the scheme. Good luck, then, and if you need further guidance, do not wait until April to get it!
One way to study and understand the new rules is through using a new cassette on Sick Pay, made by Greville -tanner, and available from: JS Associates, 2 Abbey Orchard Street, London SW1 1E10 ± E1.$6 including VAT and p&p). Details of public and incompany seminars by Greville Janner on Sick Pay from: Industrial Relations Services 67 Maygrove Road, London NW6. Telephone: 01-328 4751.