Abolition of the Percentage Threshold Scheme

17 April 2014

Over recent months we have posted several news items discussing the abolition of the Percentage Threshold Scheme (PTS) which took effect from 6 April 2014.

We are aware of the impact this will have on small employers, and have continually highlighted the associated problems with the DWP ever since the announcement was made. This continued at the most recent meeting of the Statutory Payments Consultation Group (SPCG) on 26 March 2014 (which coincided with the issue being discussed in the House of Commons), where we stressed the impact this would have on very small employers and those employing carers.

We have today received the following response to the point raised by the CIPP at the SPCG meeting:

The Department of Health 2009 guidelines to Local Authorities states:

“In estimating the reasonable cost of securing the support required, councils should include associated costs that are necessarily incurred in securing provision, without which the service could not be provided or could not lawfully be provided. The particular costs involved will vary depending on the way in which the service is secured, but such costs might include recruitment costs, National Insurance, statutory holiday pay, sick pay, maternity pay, employers’ liability insurance, public liability insurance and VAT. Some councils have found it helpful to include a one-off start-up fund within the direct payments to meet these costs as well as other forms of support that might be required, such as brokerage, payroll services and Criminal Records Bureau checks on employees.

Local authorities also have a duty of care towards the person receiving direct payments. The Local Authority must ensure the person is coping; administering the payments appropriately and is not at risk. Therefore, if a carer becomes ill, the Local Authority should consider stepping in to arrange emergency cover for an absent carer to ensure care and support needs continue to be met. Where a direct payment holder is aware that their regular carer will be unable to provide contracted care, they should make alternate arrangements or, failing this, make contact with their local authority and request that the authority meets their care needs.

Therefore, the abolition of reimbursement of Statutory Sick Pay costs through the Percentage Threshold Scheme should not disproportionately disadvantage direct payment holders.”

This response only focusses on those employing carers – the “accidental” employers and does not mention those very small employers who will be hit hard by this legislation. Nor does it seem to adequately address the needs of those who do employ a carer, and how they will cope if the carer is on long term sick.

To help us understand how often Local Authorities will step in when a carer is on a long term sickness absence we have created a very quick survey aimed at Local Authorities. There are only three questions and whilst we appreciate that these questions are not directly payroll related, we would be very grateful if those working for a Local Authority could take just a couple of minutes to help give us a clearer picture. The survey will close on 7 May 2014.

In the meantime we will continue to lobby for a consideration to be made for very small employers with employees off on long term sick leave, however so far there has been absolutely no movement from the government on this issue. We will keep you updated of any progress.