Statutory Payments Consultation Group

Meeting Thursday 9 July 2009

1.00 pm - 4.00 pm
Caxton House, Level 2, Tothill Street, London SW1H 9NA

Attendees

Employer Representatives [Reps]

Chris Hind (BCC)
Norman Green (BCS)
David Harris (ICAEW)
Brad Chick (Payroll Alliance)
Elaine Gibson (IPP)
Simon Parsons (IREEN)
Statutory Payments Government Departments (SPGDs)
Ann-Maria Loughman (DWP)
Karuna Chandel (DWP)
Karen Haseldine (BIS)
Simon Clark (HMRC) Government Departments
Dee Allcock (HMRC)
Des McKnight (HMRC) - Chairman
Mason Mangan (work experience with HMRC)

Apologies

Lynsey Groom (FSB)
Linda Pullan (Payroll Alliance)
Dianne Spruit (Private Sector Payroll Group)
Jackie Petherbridge (FSB and Private Sector Payroll Group)
Shelley Fuller (DWP)
Kate Wheeler (DWP)
Nicola Dissem (BIS)
Connie Hera (HMRC)

1) Introductions

Welcome extended to Dee Allcock who had recently joined HMRC Statutory Payments technical team, and Mason Mangan who was with HMRC on work experience.

2) Notes of meeting on 22/1/2009 – these notes were produced late; electronic copies of these notes were promised.

[Update: electronic copies of notes were circulated by email to members with apologies for lateness on 10/7/2009.]

3) Update from DWP

a) Changes to medical certificate & impacts for SSP -

  • Feedback on the consultation (closing date 31 August 2009) – biggest issue emerging was the need for guidance on the changes. Reps were concerned it should be consistent at a national level and across all affected groups including GPs.
  • Implementation due April 2010.
  • Practical concern for employers – what to do if GP considers employee fit for some work but not normal work. This should open up a two-way dialogue between employer and employee. The employer is not obliged to make adjustments to cater for the employee’s new needs, but may wish to. In this case if the employee’s job is altered and they return to work, then SSP would no longer be payable. If the employee returns to work on a part-time basis, then SSP is not due when the employee is at work, but may sometimes be due when the employee is off work recuperating. Clear and simple guidance must be provided for this scenario. If the employer decides to make no adjustments and the employee remains unfit for the normal job, the SSP will remain payable subject to the normal rules.

b) Revised SMP1

  • A revised version was scrutinised - Reps made various suggestions for improvement.
  • The basic aim behind the changes was to make the SMP1 consistent with the SSP1 which was recently changed. Employers will be notified of the changes so they will know to use the new version SMP1.
  • The SMP1 changes will be relatively minor, and in particular there will be no changes to:
    1. The list of reasons for not paying SSP;
    2. The order of those reasons;
    3. The category letters.
  • If any employer has paper copies of the 'old' SMP1 they can still use them if they want to.
  • SAP1 and SPP1 will be changed by BIS in due course.

[Update - The revised SMP1 will be introduced from 5 October 2009.]

c) Swine flu Pandemic and SSP

  • Employer impacts and possible responses by Government were discussed.
  • Plans for future publicity to employers were explored, including the need to keep payroll software developers and agents informed. Such publicity would be part of a wider campaign aimed also at employees and GPs. Media to be used would include press, TV and radio, as well as key websites - Directgov and NHS Choices for employees and individuals; Businesslink for employers; and Department of Health for health professionals.
  • Reps queried if it was a benefit in kind for an employer to supply anti-viral drugs such as Tamiflu to employees during the pandemic. HMRC promised to find out.

[Update - in brief the cost of anti viral drugs provided by an employer for an employee is a taxable employment-related benefit in the hands of the employee, and is subject to Class 1A NICs in the normal way. However, if the application is correctly made and in time, HMRC may agree to a request by an employer to include this benefit in a PAYE Settlement Agreement.]

  • Reps also asked if the pandemic would lead to a relaxation in time-limits and penalties for Statutory Payments. No such relaxation was planned. Such an issue would be considered across HMRC, and not confined to SPs.
  • Reps asked HMRC to emphasise that SSP recoveries under the Percentage Threshold Scheme were due, not to PAYE schemes, but only to 'employers'. This is already reflected in the 2009 Helpbook for SSP.

4) Update from BIS

a) EU proposals to amend Pregnant Workers Directive

  • Consultation closed in June 2009 and a Government response would be issued in due course.

b) Additional Paternity Leave and Pay

  • There was no decision on implementation date, but BIS promised to publicize any decision promptly.

5) Stringer v HMRC

a) This case had been referred to the European Court regarding entitlement to holiday during sickness absence.

b) The decision had been that there was nothing to preclude payment of holiday pay during a period of SSP – the SSP entitlement would still continue provided the sickness absence was continuous.

c) Government was still considering the implications of this judgement.

d) Reps raised various questions on leave. Guidance will be provided in due course.

e) Questions arose about the offset between holiday pay and SSP, and the effect on entitlement to recovery under the Percentage Scheme. Guidance will be provided on this.

6) Re-styled Helpbooks for Statutory Payments

a) These were being re-styled particularly to improve the navigation and make it easier for employers to find what they needed.

b) Reps took the opportunity to comment on the current drafts. They felt the changes were a step in the right direction and made various suggestions. One major suggestion which HMRC agreed to research further was to abandon the use of two columns per page – a practice of value in a paper document, but less user-friendly for electronic formats.

7) Payrolling benefits in kind

a) potential impacts for Statutory Payments were identified and will need to be explored. These included:

  • The increase in AWE that would result for SP purposes from including benefits in kind currently subject to Class 1A NICs in gross earnings (i.e. if they were made subject to Class 1). This could mean greater SPs being payable and greater recoveries and compensation.
  • How to deal with tax and NICs liabilities on benefits in kind when there was no other pay – as can happen towards end of Statutory Maternity Leave when SMP has ended?

8) AOB

a) SMP calculator errors – Reps had identified some errors and these were being investigated with a view to rectifying them when possible.

b) Further issues were raised, and to be explored further:

  • Changes in EU cross-border NICs liability - non-resident employer to be subject to Class 1 NICs and therefore also Statutory Payments.
  • New pension reform changes – will pensions have to be deducted from Statutory Payments? Currently there is a limit to such deductions.

9) Next meetings:

Tues 6 October 2009 - 1.00 to 4.00 pm at BERR offices 1 Victoria Street.

Thurs 28 January 2010 - 1.00 to 4.00 pm at HMRC offices 100 Parliament St.