COVID-19 Practical Guidance for Employers' - Questions and Answers

Statutory Sick Pay (SSP)

Q) When can COVID – 19 related SSP be paid from?

A) 13th March 2020 

Q) Waiting days apply before SSP can be paid. Does COVID – 19 SSP follow the same rules?

A) No. COVID – 19 SSP is paid from day one of sickness or self-isolation.

Q) Under what circumstances can SSP be paid for self-isolation?

A) There are three possible scenarios:

1. If a member of the household has the infection the whole household should self-isolate for 14 days. The first 7 days are self-certificated, and the remaining 7 days require a doctor’s note or NHS 111 virtual sick note. 14 days sick pay is payable.
2. If an employee contracts the virus, up to 14 days sick pay is payable. Self-certification and an NHS 111 certificate are required to cover the period of sickness.
3. An employee is in self-isolation but has no signs of the virus either personally or in the household. This is NOT sickness and SSP is NOT payable. Unless they are working from home such absences must be covered by either unpaid leave, holiday,  time off in lieu or lay off pay. See section on lay off pay below

Q) An employee is working from home but not self-isolating. Do they qualify for SSP?

A) No, they are neither sick nor self-isolating.

Q) How will coronavirus sickness/self-isolation be differentiated form normal sickness?

A)  The employer must retain evidence that the absence was coronavirus related to enable recovery of the SSP. This will be in the form of the 111 NHS isolation note or self-certificated sick note.

Q) What amounts of SSP are payable?

A) Up to 5th April £94.25 per week, from 6th April 2020 this increases to £95.85

Q) The employee’s contract of employment states that full pay will be paid for a specified period of sickness. Should I pay just SSP for a COVID-19 related absence?

A) No, that would be in breach of the contract of employment. If the contract states full pay then full pay must be paid unless the employer comes to an agreement with the employee.

Q) Can the SSP be recovered as I am aware that SSP recovery has not been possible since 2014?

A) Yes, this was changed as part of the recent Coronavirus Bill.

Q) Can all employers recover the SSP?

A) No. The Government is targeting the relief at smaller employers; those with less than 250 employees paid on the payroll as at 28th February 2020.

Q) Can employers claim all SSP during the COVID-19 outbreak?

A) No, only SSP directly linked to COVID-19.

Q) The employee’s contract provides for full pay during a period of sickness. Can the employer recover the SSP element of occupational sick pay?

A) Yes, assuming that the necessary self-certification and if necessary the NHS 111 sick note is held as proof of sickness.

Q) What records are required for the employee to receive SSP?

A) The first 7 days for COVID-19 related SSP can be self-certificated. If 14 days are required because someone in the household has the virus, a virtual sick note must be obtained from NHS 111 which can be done via the 111 NHS website .

Q) How do employers get relief from HMRC for the SSP?

A) Very good question! There are no mechanisms within any payroll software for employers to recover SSP in 2019/2020. SSP has not been recoverable since 2014. Due to the late notification, 2020/2021 will also be a problem. This is causing a major challenge to HMRC and may take weeks to resolve.

We will provide further updates on the mechanism for the recovery as we get further news. HMRC must decide how the relief can be given before software providers look at their systems. No doubt the Employer Payment Summary (EPS) will be involved, but how this will work we are yet to find out.

Q) There is general concern for pregnant ladies from the coronavirus. What is covered for sickness absence?

A) The normal SSP rules apply as set out above if there are symptoms of COVID-19 or the employee has to self-isolate, sickness can be extended with a doctor’s sick note if a doctor considers that the employee should be in continued isolation, however the employer can only recover the 14 days SSP.

Employer Finances

Q) What help if there is an employer is having cash flow problems?

A) HMRC has set up a phone helpline to support businesses. Payment deferment or instalment arrangements can and will be agreed by HMRC. Telephone the official helpline on 0800 0159 559 for assistance.

Q) Is there any other assistance?

A) This is very much a fluid situation and affected by the daily tea time briefings given by the Prime Minister. However additional financial assistance provided to date can be found on the Gov.uk website.

Q) What if I can’t pay my employees?

A) Unprecedented times call for unprecedented measures. The Chancellor has announced that the Government will pay 80% (The Coronavirus Job Retention Scheme) of wages for employees who are unable to work because the Government has either asked that business to close, or the business has closed and is in danger of folding. The maximum wage covered is £2500 a month.

Q) Do all businesses qualify for the Job Retention Scheme?

A) Yes

Q) Do I need to notify the employees?

A) Yes, you cannot just pay them 80% of their salary. Unless there are specific pre existing conditions in the contract of employment you will need to obtain consent from your employee for a change of status to ‘furloughed worker.’

Q) How are furloughed workers affected if they have a salary sacrifice?

A) A salary sacrifice requires an amendment to the contract of employment. This should already be in place. As the employee is still being paid, the salary sacrifice will still apply. However, one word of caution; a salary sacrifice cannot take the employees’ wages below National Minimum Wage.

Q) I have already laid off some workers, what can I do for them?

A) A long as the worker is brought back into the work force the government will cover 80% of the wages. The worker will be granted a leave of absence for the period of not working.

Q) What about the 20% shortfall in the wages, does the employer have to pay this?

A) This is not for us to answer and is down to the employer and the employers finances. However it is hoped that the employer would top up the wages to bring the employees’ wages back to the normal amount.

Q) Is the 80% taxable through payroll?

A) Yes. However, the current guidance is unclear on whether NI contributions and pension deductions should be made. We will provide full details when the rules are released by the Government.

Q) How is the 80% to be recovered from the Government?

A) At the moment this is the million dollar question. It is anticipated to be through the PAYE system but the exact details are not yet known. In the meantime there are the other financial aids made available as highlighted above.

VAT

Q) What about the VAT change?

A) VAT payments can be deferred for 3 months, and deferral applies from 20th March 2020 to 30th June 2020. Please bear in mind the VAT will still be payable but you will have until the end of the 2020/2021 tax year to pay the deferred amount. This will happen automatically for all businesses as HMRC will not claim the Direct Debit. Unless a business is in a refund position, all direct debits should be cancelled. Business’ should remember to reinstate the direct debit after 30th June 2020. VAT returns must still be submitted to HMRC during this period.

Lay Off payments

Q) If a period of lay off is required what must the employer pay?

A) The employee is entitled to £29 a day for a maximum of 5 days in any 3 month period. This is a maximum of £145. However, the contract of employment should be the first port of call to ascertain if there are any specific provisions for lay off pay.

Q) What if the employee is part time and say only works 2 days?

A) Then £58 is payable.

Q) Are these amounts taxable?

A) They are effectively pay from employment and therefore are processed through the payroll as normal. Tax and National Insurance will be deductible if the payments exceed the relevant thresholds.

Q) Is this paid to all employees laid off?

A) No, they must have been employed continuously for 1 month and reasonably available for work.

Q) Are the lay off payments pensionable?

A) Yes as they are statutory payments however, whether a deduction is appropriate depends on the level of qualifying earnings in the period of payment.

Q) Can I reclaim lay off pay from the Government?

A) No, the payment is designed to cover short periods when an employer doesn’t have enough work for the employee.

Q) Are there any other possibilities to cover time when the employer hasn’t got any work for the employee or is closed?

A) The 80% guarantee announced by the Chancellor on 20th March will be a game changer for many struggling employers. However other possibilities are the employee taking holiday, agreeing a reduction on pay, unpaid leave or time off in lieu.