Recruitment firms urge government to extend sick pay rebate scheme

25 Jun 2020 By Siobhan Palmer

Sector bosses tell Treasury the financial burden of coronavirus-related SSP could become a ‘solvency issue’  

Trade bodies for the UK’s recruitment industry have written to the financial secretary to the Treasury, Jesse Norman, calling for an expansion of the rebate scheme helping employers meet statutory sick pay (SSP) costs during the coronavirus pandemic. 

In a letter to Norman, bosses at the Recruitment & Employment Confederation, the Association of Labour Providers, the Association of Professional Staffing Companies and recruitment network Team have urged the government to extend the SSP rebate scheme to cover organisations with more than 250 staff.

Under the scheme, introduced to support businesses through the outbreak, businesses employing fewer than 250 people can claim back up to two weeks’ SSP for employees who have taken time off as a result of being ill with coronavirus.

However, signatories to the letter argued recruitment and agency firms, which tended to retain a large number of staff, lacked the cash flow to pay for the high numbers of SSP claims they were exposed to. “Our largest members have agency worker payrolls running into the tens of thousands, dwarfing their direct employee numbers,” the letter said.

“Some of our members, particularly those with very large agency worker payrolls, run their businesses on very tight margins, which are likely to get even tighter as the economy struggles to recover.

“They simply do not have the cashflow to finance high numbers of SSP payments and this could become a solvency issue.”

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The letter goes on to warn the problem could be exacerbated by the introduction of the government’s test and trace system, which could require many individuals to self-isolate, and that SSP claims could also increase as the furlough scheme winds down.

If extending the scheme to larger employers was too financially onerous for the Treasury, the letter suggested that recruitment businesses in particular should instead be recognised as requiring specific government support on SSP payments for coronavirus-related absence. 

The Treasury has not yet responded to the letter. 

The letter followed the announcement that the government planned to start winding down support for individuals shielding because of coronavirus. While the SSP rebate scheme can currently be used to claim up to two weeks’ sick pay for an employee required to shield, this will no longer be the case from the end of July. 

After this point, those shielding will no longer be eligible for sick pay and, if they cannot work from home, will be encouraged to return to the workplace, providing the environment is ‘Covid secure’. 

Earlier this week, health secretary Matt Hancock said it was “critical” that employers worked with staff and the government to ensure the safety of those in the shielding group. But Caroline Abrahams, director of Age UK, said “much more detailed guidance” was needed to manage the process effectively.

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