Partner Sue Dowling, head of our Employment Law team, reflects on today’s Budget and its impact on employees and employers in light of the Coronavirus (COVID-19) outbreak, and no U-turn on IR35 reforms.
The Chancellor, Rishi Sunak, today moved to reassure smaller businesses, among those most likely to be affected by the Coronavirus (Covid-19) outbreak, by confirming that small and medium-sized enterprises (SMEs) with fewer than 250 employees will receive a full refund of any statutory sick pay (“SSP”) for employees who are required to self-isolate for a period of up to 14 days. This includes employees not displaying symptoms of COVID-19.
Last week, the government introduced emergency legislation meaning that employees will receive statutory sick pay immediately, should they contract Coronavirus (COVID19) or be required to self-isolate for a period of up to two weeks. The change was introduced as and could result in eligible employees receiving an extra £40 per week.
Employess have to be earning at least £118 a week to qualify for SSP, which is currently set at £94.25 a week, although employers may of course pay a higher rate should they have opted to. Under previous laws, employees were not entitled to statutory sick pay for the first three days of sickness absence.
The Prime Minister, Boris Johnson, said that people should not be "penalised for doing the right thing", while Mr Sunak warned the UK to expect "temporary disruption" in the coming weeks, following suggestions from medical experts that up to 20% of the country’s workforce could be absent at any one time.
Trades Union Congress (TUC) general secretary, Frances O'Grady, recently highlighted that around two million workers in the UK do not qualify for statutory sick pay, while a number of unions have pinpointed that freelance and self-employed workers, alongside those on zero hours contracts, will be faced with the prospect of not earning for a period.
In response, the Chancellor has said: "of course, not everyone is eligible for statutory sick pay. There are millions of people working hard, who are self-employed or in the “gig economy”. They will need our help too. So to support them, during this period, we’ll make it quicker and easier to get benefits.”
“Gig economy” workers on zero hour contracts and those who are self-employed will have access to benefits from day one, with the minimum floor in universal credit temporarily removed and quicker payments available for employment and support allowance (ESA) claimants.
The Chancellor also announced as part of today’s budget that National Insurance Contributions (“NICs”) will be raised from 1 April £8,632 to £9,500, saving an average employee up to £104 a year.
Having listened to the budget speech, whilst there was much mention of the significant amounts of money to be invested in the NHS, Education (particularly in relation to Further Education for 16 to 19 year olds), transport (including HS2) and in short term initiatives to support our economy through the Coronovirus implications, the speech was scant on how the huge investments will be funded. Those waiting for any ‘turn around’ in terms of the planned IR35 Reforms for private sector organisations and off-payroll contractors will be disappointed. Indeed whilst the Chancellor did not make any specific reference to the planned reforms (due to come in on 6 April) he made specific mention to the HMRC receiving funding to ensure that it could secure additional revenues of £4.4bn currently being lost through tax avoidance.
Please also see our earlier blog article, 'Coronavirus (COVID-19) - Advice for Employers and Employees'.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
