Recruitment firms supplying key workers are being penalised under the government’s coronavirus statutory sick pay (SSP) rebate scheme, the Recruitment & Employment Confederation (REC) has warned.
Under the scheme, only small and medium enterprises (SMEs) – businesses with fewer than 250 staff – can have their SSP payments reimbursed if their staff cannot work because of Covid-19. This means that the vast majority of businesses supplying temporary workers are excluded from the support on offer, the think tank said.
Recruitment companies in particular were missing out on the rebate because, although they are SMEs, they place large numbers of temporary staff in other businesses – including sectors such as logistics, care and education – and are regarded as having more than 250 staff.
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The risk of having to pay SSP for temporary workers who have to self-isolate or are ill with Covid-19 means firms are less willing to place temps in jobs, the REC claimed, calling on the government to extend its support so that it funds SSP for all workers.
Neil Carberry, REC chief executive, said: “The fight against the virus is being compromised by the failure to fund SSP for every worker if they need to self-isolate. That's why extending it so that people on temporary contracts are not left behind is so important.
“This support is needed now to get businesses and workers through the pandemic.”
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Tania Bowers, legal counsel and head of public policy at the Association of Professional Staffing Companies, added that while staffing companies tended to have a large number of agency workers on payroll, they usually had a smaller number of direct employees: “As their payroll is over the allocation for SME size, they are unable to be reimbursed for SSP,” she explained.
“These businesses – which are vital to supporting key sectors across the UK – simply don’t have the cash flow to finance high numbers of SSP payments and this could quickly become a solvency issue. This in turn will have a knock-on effect for the end clients that these recruiters place agency workers with, which could be facing a loss of critical staff.”
Alan Price, chief executive of BrightHR, said that while the SSP rebate scheme had been of significant assistance to the companies that can make use of it, “this does highlight that other businesses may have slipped through the cracks”.
While the government has not indicated it will extend the scheme, “maybe it will be more willing to offer further funding to assist businesses in these situations”, he said.
And Rhian Radia, partner at Bishop & Sewell, said: “Recruiters are a visible, reliable and crucial source of key workers. Damaging this pipeline through a cost burden produces laws of unintended consequences where the protection for SMEs in terms of the SSP bill falls away.”
This comes at a time when the government is under mounting pressure to reform SSP, which is set at just £95.85 per week – an amount that health secretary Matt Hancock has previously admitted he would not be able to live on.
Ben Willmott, head of public policy at the CIPD, was among those calling for a reform of SSP. “We are calling for eligibility to be widened by removing the lower earnings limit and the rate to be raised closer to the equivalent of someone earning the national living wage – £327 for a 37.5-hour working week,” he said.
“The very low level of SSP currently means many people who do receive the payment cannot afford to take time off when they are ill or are required to self-isolate. This critically undermines the test and trace system and there is a real risk that many people will fall into genuine financial hardship unless the government reforms SSP to support all workers during this critical time – and beyond the current health crisis as well.”
The concerns were shared by TUC general secretary Frances O’Grady, who said: “Asking workers to self-isolate on £96 a week is not viable – especially when many don’t have savings to fall back on. Until the government provides decent sick pay, people will be forced to choose between following the health advice and paying their bills.”