Statutory sick pay rebate: how to prepare your payroll


Small firms are now able to make a claim for a rebate for coronavirus-related Statutory Sick Pay, but do they have a suitable payroll system to do so? Anne Stapleton takes a look at what’s required.

Since last month, organisations with fewer than 250 staff have been able to apply to recover the costs of coronavirus-related Statutory Sick Pay (SSP) via a rebate from HM Revenue & Customs.

While welcomed by SMEs, this won’t, of course, ease the burden for every business. Large employers with more than 250 employees, still need to process SSP for employees off sick with coronavirus, shielding or self-isolating. That entails recording the new absence type in the appropriate section of the payroll system.

However, even smaller businesses will not necessarily be eligible for the SSP rebate. Employers are only eligible if they meet all the following criteria:

  • they’re claiming for an employee who’s eligible for sick pay due to coronavirus
  • they had a PAYE payroll scheme in operation before 28 February 2020
  • they had fewer than 250 employees across all PAYE schemes on 28 February 2020
  • they’re eligible to receive state aid under the EU Commission Temporary Framework.

Employers should be aware that the repayment will cover up to two weeks at the applicable rate of SSP, and is payable if a current or former employee was unable to work on or after 13 March 2020 and entitled to SSP, because they either:

  • had or have coronavirus
  • could not or cannot work because they were/are self-isolating at home
  • were/are shielding in line with public health guidance.

Employers must keep the following records for three years after the date they receive the payment for their claim:

  • the dates the employee was off sick
  • which of those dates were qualifying days
  • the reason they said they were off work – if they had symptoms, someone they lived with had symptoms or they were shielding
  • the employee’s National Insurance number.

Employers can choose how they keep records of their employees’ sickness absence. HMRC may need to see these records if there’s a dispute over payment of SSP.

 Is  your payroll system up to the task?

Even those businesses that are eligible for SSP rebates and that receive good advice on how to manage the process will not necessarily have payroll systems designed to support these transactions. Furthermore, it is unclear as to how they can prepare their systems to facilitate such employer refunds. These changes to SSP are, after all, part of a range of challenges that can be a nightmare to deal with if HR and payroll don’t have the right processes and technologies in place.

Organisations are advantaged if they have already moved to a cloud-based system, as that will likely give them a strong security and governance infrastructure and the ability to remotely work in an agile manner – but they still need to set up their cloud approach properly. Many organisations have cloud payroll engines but if they are fed by another HR, time and labour and recruitment system (HCM) the data will originate in that system and that can cause efficiency problems. In contrast, a single cloud-based HCM and payroll system removes the requirement for data transfer from other systems to payroll and the need for manual interventions.

By moving to such a system, businesses can reduce risk and administrative burden, and achieve enhanced security. They can also add to the agility and flexibility of payroll. By embracing the combined capability of payroll and HCM operating as one, businesses can get more immediate access to the HCM and payroll data at their disposal and more quickly make adjustments.

Even those businesses that are eligible for SSP rebates and that receive good advice on how to manage the process will not necessarily have payroll systems designed to support these transactions.”

Managed services can also have a key role. The benefit of outsourcing HCM and payroll to an expert partner is that rather than focusing on just delivering a payroll service, HR professionals can instead concentrate on being the positive contributors to both the HR and organisation strategy. If the third party has the capability to deliver HCM and payroll outsourcing as one solution on a single platform, then they have an opportunity to drive reduction of risks, significant efficiencies and automation into an organisation.

The key point, however, is that a single HCM and payroll system delivered in the cloud, is a driver for increased security; less risk and enhanced agility. It is interesting to note that the current period of lockdown has also been one of the busiest for financial processes and activities. On top of all that they will also have had to deal with a range of administrative challenges, of which the changes to SSP regulations is just one, albeit compelling, example.

It will have been stressful for every payroll team but for businesses operating in the cloud, with a single HCM and payroll system, that process is likely to have been just a little less concerning.

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