Statutory Sick Pay by DAVID DRYDEN

T his year’s major headache for the UK business sector will be in the introduction of Statutory

Sick Pay (SSP) regulations, which became law on June 28th 1982 as part of the Social Security and Housing Benefits Bill.

The principle governing the legisla- tion is simple: employers are to take responsibility for the payment of sickness benefit from the Department of Health and Social Security from the 6th April 1983. Implement~g this change, however, may not be quite so straightforward, and it is reading between the lines of small print that is most likely to cause the headaches.

Areas of change

Payroll, whether manual or a computer system, is the obvious target, particularly as sick pay will now be liable for National Insurance and PAYE deductions, so that the payroll system must contain enough SSP information to be able to produce P60,

Abstract: In the UK, new government ie~lation on ~tatuto~ Sick Pay means that personneE and payroll systems wiiI have to undergo changes. If further changes in benefit payment also occur, personnel departments will need flexible systems to accomodate them.

Keywords: data processingj application, legiislation, personnel management.

David Dryden is a manager of Peterborough Software.

P14 and P35 forms at the end ofthe tax year.

Rates of sickness benefit are to be on a sliding scale based on average earnings over the eight weeks prior to the first day of incapacity, and the payroll system must either hold the exact historical data or a means by which to calculate it. Many existing computer systems will be unable to expand to cope with extra fields without a hefty rewrite, and those that have continually been patched to struggle through successive bouts of legislation, may well find this to be the last straw.

Theoretically, implementing SSP should cost employers nothing, as they claim monies paid out back from the government by deducting it from their remittance ofN1 contributions. Ifthere is something like a flu epidemic, and NI contributions do not cover the amount of SSP paid out, further deductions can be made from the PAYE remittance, or a claim submitted to the collecter.

Companies that have had experience of handling VAT returns will know that this type of exercise is never easy, and often subject to delays. Output returns from computer systems will have to be designed to suit receiving government departments, and there are bound to be holdups in refunds via a claim to the PAYE inspector because Inland Revenue departments are rarely near their area of administration.

Apart from the recording of financial information, there is also a

20 0011-684W82/090020-02$03.00 0 1982 Butterworth & Co (Publishers) Ltd.

need for an accurate medical history for each employee, because periods of sickness can be linked to determine the payment of ‘quailing days’.

Although probably all personnel systems have in the past kept records of absence and the reason for it, few have been set up with the idea of extracting instant information because there has been little demand for it. Some designers of computerized personnel systems provide an online enquiry facility for making ad hoc enquiries to satisfy the ‘small print’ requirements of SSP.

Day to day problems

As with all government legislation, it is the day to day execution of the rules and establishing the exceptions to them that cause the greatest problems.

An employer is only liable to pay sickness benefit for up to eight weeks per year, or up to eight weeks within any one incapacity for each employee. This means that there must be some method of recording medical history and an automatic check performed at the start of each illness to see that the time limit has not been exceeded. An early warning mechanism must also be included to inform both the employee and the DHSS when the eight week period is coming to an end, so that the claim can be transferred to govern- ment funds without loss of money to the claimant.

Before any sort ofsystem is set up, a company has to agree with its staff, particularly those working shifts or irregular hours, on what exactly constitutes a working week, as all sickness payments are handled in denominations or fractions of a week. A method of notifying illness also has to be fixed, because the employer is not liable to pay if the employee does not comply.

Workers with short term contracts present some of the most complex problems, unless contracts are linked within the prescribed eight week

data processing

applications

period and are within a specified duration. New recruits also pose an administrative problem, because they must have done some work before falling ill to qualify for any payment at all.

SSP regulations will certainly bring the personnel department to the fore, because they necessitate delving more thoroughly into an employee’s private life.

Changes in sickness benefit rules will bring new headaches to

DP and personnel departments.

Pregnant women, for example, may not receive payments after the eleventh week before the expected week of confinement, or during the six weeks following it, so that there must

be some method of recording pregnancy in the system and of encouraging women to inform the company in good time.

Employees with an interest in a trade dispute are not entitled to sick pay for the duration of the dispute, unless their incapacity had started first, and those working outside the EEC can also claim nothing. Some method has to be found of recording all this on the payroll system, or of linking up the personnel system, which does take note of all these facts.

Flexible personnel systems

The company will now be required by law to keep records of SSP payments for each tax year, with dates ofabsence for each employee and with dates when

SSP was not payable, together with the reason. This will probably mean setting up a separate history file to cater exclusively for SSP, unless a flexible personnel system has been installed, with a range of meaningful codes that can readily be adopted.

Looking on the bright side ofSSP, it could be just the catalyst that personnel departments need to revolutionize their role within a com- pany and turn them into useful manage- ment tools.

Rising labour costs have made companies examine the use of human resources far more closely during the recession, and in many cases to stream- line the workforce, but in order to do this lthey have needed to know exactly where the skills of their employees lie and where they can best be deployed.

An active personnel system, such as Unipersonnel developed by Peter- borough Software to interface with its Unipay payroll system, can analyse the talents, experience and potential of staff from a wide variety of aspects, keeping within the confines of a strict security system. Now that the record- ing of medical history is compulsory, a com,prehensive security system will

become more important than ever, so that only those authorized have access to personal information.

Judging from other government actions to transfer responsibility from the public sector to the private one in order to cut public spending, SSP can be seen as the thin end of the wedge. It is but a short step towards handing over the payment of maternity and disablement benefits, and retirement pemions to the employer with unemployment benefit possibly the only obligation he will not be expected to meet.

This being the case, the only thing a company can do to prepare itself for the future is to be as flexible as possible in the choice of payroll and personnel systems. They must not only comply with1 current legislation and be implemented in time, but also be extendable when the time comes to shoulder any other governmental tasks without incurring expensive changes.

Personnel departments are overdue for the sort of changes that have been sweeping through the rest of the company, and 1982 could be the year of the personnel system revolution. It’s just possible that the accruing benefits could be sufficient asprin to cure the SW headaches. 0

-.___--..__ ~___ Peterborough Software, Borough House, Newark Road, Peterborough, I!K. Tel: (0733) 41010.

vol 24 no 9 november 1982 21