Budget announcements for employers

11 March, 2020

The Chancellor made a number of announcements in today’s Budget which are relevant to employers and their obligations and liabilities in respect of their employees. While the measures introduced against the impact of the coronavirus outbreak will hit the headlines, other more general and longer-term measures were also announced.

Changes to Statutory Sick Pay (SSP)

SSP will now be available for eligible individuals who are diagnosed with COVID-19 (novel coronavirus) or unable to work because they are self-isolating in line with Government advice. Until now, there was uncertainty whether SSP was strictly payable in the case of employees self-isolating, although many employers were as best practice treating these cases as “deemed incapacity” and so paying SSP in this situation. In addition, as announced earlier this week, SSP will be payable from day 1 instead of day 4 of the employee’s absence.

Those advised to self-isolate for COVID-19 will soon be able to use NHS 111 advice as an alternative to obtaining a fit note from a doctor. Further details are promised to be confirmed shortly.

The Chancellor did not take the wider step of extending SSP eligibility to the self-employed, and those earning less than the Lower Earnings Limit (£118 per week). Instead he announced measures to facilitate their making claims for Universal Credit and other state benefits.

Funding support for SMEs affected by sickness absence

The Chancellor promised legislation to allow SMEs – employers with fewer than 250 employees – to reclaim SSP paid for sickness absence due to COVID-19. This scheme will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19.

This scheme may take some time to implement however. According to HM Treasury, the government will work with employers over the coming months to set up the necessary repayment mechanism as soon as possible, as existing systems are not designed to facilitate employer refunds. The eligible period for the refund scheme will start as soon as the new regulations extending SSP eligibility to those self-isolating comes into force.

National Insurance

The National Insurance contributions threshold will rise from £8,632 to £9,500, with effect from April 2020. This is described as the first step towards meeting the ambition to increase the threshold to £12,500.

National living wage

The National Living Wage (NLW) increases from £8.21 to £8.72 from April 2020, meeting the current target of 60% of median earnings. The Chancellor announced a fresh target to reach two-thirds of median earnings, and extending this to workers aged 21 and over, by 2024, provided economic conditions allow.

Neonatal leave and pay

The Chancellor announced that the government will create an entitlement to Neonatal Leave and Pay, for employees whose babies spend an extended period of time in neonatal care. This would provide up to 12 weeks’ paid leave, with the intention that parents in these circumstances are not forced to decide between returning to work and taking care of their vulnerable new-born baby.

Carers’ Leave

It was also announced that the Government would consult on the design of a new in-work entitlement for employees with unpaid caring responsibilities, typically caring for a family member or dependents.

Employment Allowance and the employment of veterans

The Government will increase the Employment Allowance to £4,000, from April 2020. This would allow a business to employ four full-time employees on the National Living Wage without paying employer NI contributions.

The Government will also introduce a National Insurance holiday for employers of veterans in their first year of civilian employment.

Welfare counselling

The Government will extend the scope of non-taxable counselling services to include related medical treatment, such as cognitive behavioural therapy (CBT), when provided as part of the employer’s welfare counselling services.

Off-payroll working (IR35)

The Budget confirms that the reforms to the off-payroll working rules will go ahead, the Government having recently concluded its review of the reforms and promised to make a number of changes to support its smooth and successful implementation. The Government’s position is that it is right to address the fundamental unfairness of the non-compliance with the existing rules, and therefore the reforms will be legislated in the Finance Bill 2020 and implemented on 6th April 2020.