Small business may have to close as businesses lose the right to reclaim statutory sick pay (SSP) from 6 April 2014, warns accountancy firm Baker Tilly.
Currently, workers who have been signed off as sick are paid £86.70 per week in SSP by employers, who pay replacement workers to cover the absence.
Under the Percentage Threshold Scheme (PTS), employers can recover the SSP once it exceed 13% of the total National Insurance bill for the period.
The PTS was designed to protect small businesses that could not afford to bear the SSP cost when too many workers were off sick.
As the regime is being abolished, employers will have to pay the replacement worker’s wages and the SSP with no right of recovery.
David Heaton, tax partner at Baker Tilly, said: “From April, statutory sick pay will be £87.55 per week, so if one employee is absent for a long period, the bill will be a maximum of £2,450 for 28 weeks or more of absence.
“This is a huge burden for a small business to bear and I fear this will make some businesses uneconomic.”
The abolition of the PTS will fund a new Health & Work Service, an occupational health service for small business to which any worker off sick for four weeks must be referred, once it is up and running, in late 2014 or early 2015.