Statutory Payments Consultation Group

Meeting Thursday 3 July 2008

1.00 pm - 4.30 pm
Room 102 The Adelphi, 1-11 John Adam Street, London, WC2N 6HT.

Attendees

Employer Representatives (Reps)

Chris Hind (BCC)
Elaine Gibson (IPP)
David Harris (ICAEW)
Linda Pullan (Payroll Alliance)
Simon Parsons (IREEN)

Statutory Payments Government Departments (SPGDs)

Lindsay Croucher (BERR)
Ann-Maria Loughman (DWP)
Kate Wheeler (DWP)
Simon Clark (HMRC)
Des McKnight (HMRC) - Chairman

Apologies

Dianne Spruit (Private Sector Payroll Group)
Norman Green (BCS)
Tom Ridge (BERR)
Shelley Fuller (DWP)
Lynsey Groom (FSB)
Karen Haseldine (BERR)
Connie Hera (HMRC)


1) Introductions and background

a) Changed venue for this meeting – agenda heavily DWP matters. Thanks to DWP for hosting.

b) BASDA (Business Application Software Developers’ Association) has asked to become member. Nomination to come.

2) Notes of last meeting - and matters arising

a) As promised, drafts of 2009 Employer Helpbooks had been sent to Reps for review – apologies were due for late arrival of E15 (Maternity) and E14 (Sick) on 2 July. Comments from Reps would be welcomed by email up to Fri 11 July direct to Dawn Davison. Reps made various suggestions for improvement which were noted.

i) In response to one such suggestion Helpbooks will make clear that the new penalty regime for PAYE employer end of year returns will apply to returns covering period from April 2008 and submitted from April 2009. So an error in such a return leading to a loss of PAYE tax or NICs could lead to a penalty under the new regime. Such an error could arise from entries for Statutory Payments during 2008-09.

ii) However there will be no change yet in the penalty regime for other Statutory Payments penalties - eg for offences mentioned in last year’s Employer Bulletin:

(a) not paying what’s due to the employee
(b) not being entitled to Statutory Payment or funding claimed
(c) not giving HMRC information formally required
(d) not giving employees information required by law
(e) not providing records as required

b) Helpbooks for all the Statutory Payments are to be renamed. For example instead of “What to do if your employee is sick” the E14 will be called “Employer Helpbook for Statutory Sick Pay”.

c) Duplicated penalties – still to be a separate agenda item at future meeting when the context is right.

d) Separate Practitioner Zone on HMRC’s website for SP matters with more statements of the law and less interpretation – no spare HMRC resource for this now but HMRC will continue to keep under review.

e) HMRC will consult again in due course and in more depth on pandemic flu communications to employers.

f) If employers find the new electronic SSP2 calculator and sick absence recorder on Employer CD-ROM useful Reps should tell HMRC so it can consider how strong is the case for extending it to SMP and SAP. But this is subject to funding availability.

3) APL&P update from BERR

a) Timing

  • No change from previously publicised position. Still a goal that it should be introduced before end of this Parliament along with extension of SMP from 39 to 52 weeks. But no decision taken on when it will be introduced – although April 2009 has been ruled out.

b) Detail

  • To introduce APL&P for cases where babies are due from April 2010 would require detailed Technical Specifications for Additional Statutory Paternity Pay to be available to software developers by summer 2009. Early drafts have already been shared with software developers, and a suggestion was made that this be re-issued for more comment when a Government decision on implementing APL&P has been made. Further draft is being worked up, but in the absence of Regulations progress is limited. Again the suggestion was made that this should be released as early as possible, even if some of the material is still subject to caveat, pending final Regulations.

c) External consultation

  • Final consultation on the detail would be appropriate – possibly late 2008 or early 2009.

4) SSP update from DWP

a) Changes to form SSP1 – this form is given by employers to employees when SSP stops or is not payable. Subject to Parliamentary approval it was to be slimmed down from 27 October 2008. This was recommended following the recent SSP Review. Also ESA (the Employment and Support Allowance which from 27 October 2008 will replace Incapacity Benefit and Income Support) will require less information about SSP from the employer. So:

  • some wording removed
  • some slight wording changes
  • but no changes to:
    • the list of reasons for not paying SSP
    • the order of those reasons
    • the category letters

b) Communications about SSP1 changes from 27 October 2008 - Reps expressed concern that the final version of the form was not yet available - and therefore asked that guidance should be provided urgently on the above and the switchover from the old version to the new version SSP1, with access to a copy of the new version. Reps would then be able to spread this message to their members.

[Update: Parliamentary approval has been given so the changes and date proposed have been finalised. Guidance has been provided in DWP’s website, HMRC’s website What’s New, Notes for Payroll Software Developers, Employer Bulletin, at presentations including EmployerTalk and will be provided in Employer Helpbook E14.]

c) SSP1 – list of reasons for SSP not being payable/no longer being paid:

i) Reps had previously expressed concern that the process and guidance were unclear, making it unsatisfactory for employers and employees.

ii) Current process provides for the employer to confirm for the employee the reasons for non-payment/cessation of payment of SSP using form SSP1 which includes a pick-list of reasons. That list of reasons, however, is not comprehensive. The plan is for an example letter to be made available on E14 Helpbook and on the Employer CD-ROM that employers could use to record reasons outside the scope of SSP1.

iii) Draft model letters were provided for Reps to view. Their observations included:

(1) They did not want form SSP1 enlarged so as to include the full range of reasons. Their view was that this would not be a simplification.

(2) Obliging the employer to identify when SSP1 or letter should be used was viewed as acceptable, but only so long as clear guidance on this was provided by HMRC. (The guidance should not be provided on the SSP1 which was already lengthy enough.)

(3) It was suggested that the model letters should be accessible electronically and should be made interactive so the employer could complete them onscreen and print them out. HMRC will investigate this.

(4) The model letters should have the same text, whether accessed from Helpbook E14 or from Employer CD-ROM – unless there was an overriding reason for a difference.

(5) Textual amendments were suggested to the draft model letters –

(a) one of the conditions for sending the letters should be that none of the SSP1 reasons apply
(b) instructions should make clear that the employer should send the letter, and not complete SSP1
(c) the letter should make clear the employee’s right to initiate the disputes process with HMRC
iv) The issue will be brought back to the Consultation Group, preferably with revised model letters and some guidance.

d) SSP and Agency Workers on short term contracts:

i) It has been Government policy that agency workers should be entitled to SSP in the same way as all other employees. The decision of the Courts in the recent Thorn Baker case was that agency workers on short-term contracts (less than three months) are not entitled to SSP.

ii) Govt had therefore laid amending Regulations before Parliament to restore their original policy intention.

iii) So, from 27 October 2008 and subject to Parliament, all employees and agency workers who meet the conditions for SSP, whether they are directly or indirectly employed and regardless of the length of their contract, will be entitled to it. Ultimately this should make the SSP rules simpler for employers - one less exception to provide for.

iv) DWP confirmed there was no proposal for this change to be retrospective.

v) HMRC would provide confirmation of the implementation date and the operation of this change on its website under What’s New.

e) Plans for major revision to Medical Certificate

i) This was one of the major recommendations from recent SSP Review.

ii) The existing Medical Statement (form FMed 3) is unhelpful when it comes to absence management. So the aim is to alter it so it is more user-focussed and helps GPs provide employers with better back-to-work advice (and advice on when SSP can stop) – less of a sick note more of a fit note.

iii) Altering the form is subject to on-going consultation over autumn 2008.

iv) Three things to remember:

(1) No change is involved to the SSP process as such.
(2) It is just the content of the Medical Statement that will change.
(3) It was too early to show Reps a new-version Med Cert – HMRC will provide a link to one as soon as they can on HMRC’s internet on What’s New. It will be too late to include the new certificate in the E14 Helpbook for 2009.

v) Timing was not certain – it may be some time in 2009.

5) Guidance on salary sacrifice and non-cash benefits during Statutory Maternity Leave [SML]

a) There was warm support for the recent guidance published on HMRC’s internet site on 20 May What’s New – and a suggestion there should be more of same. Des McKnight thanked the Reps for their key part in shaping that guidance and ensuring it was customer-focussed.

b) Maternity and Parental Leave Regulations had been laid before Parliament shortly before this meeting and were available on BERR’s website. The changes to the rules on providing non-cash benefits during Statutory Maternity Leave would apply to mothers whose babies were due on or after 5 October 2008. The Regulations would apply to England, Scotland and Wales. N Ireland would produce its own legislation, but this was not expected to differ.

c) Reps had already suggested further guidance was needed on record-keeping, end of year reporting and paying tax and NICs on non-cash benefits during the later stages of SML when many employees would be receiving no SMP and no other pay. The topic was explored to identify the main area of difficulty (Class 1 NICs), and will be raised again at a future meeting.

6) AOB

A query was raised on the change to the technical specification to the 56 day window for SPP, and inconsistency with SAP. HMRC will investigate and report back.

7) Dates of future meetings

i) Thursday 9 October 2008 - 1.00 to 4.00 pm
ii) Thursday 22 January 2009 - 1.00 to 4.00 pm.