Coronavirus Bill: Statutory Sick Pay & National Insurance Contributions
This Commons Library briefing paper provides information the provisions relating to statutory sick pay and National Insurance Contributions in the Coronavirus Bill, which was introduced in the House of Commons on 19 March 2020 (Bill 122).
This briefing paper is one of a collection of Commons Library briefings on the Coronavirus Bill (the Bill). It deals with the sections of the Bill relating to education and childcare. The other briefing papers, dealing with other parts of the Bill and general background, are available on the Commons Library website (Coronavirus Bill (Overview).
Statutory Sick Pay
The spread of coronavirus across the UK and the increasing number of people being asked to to self-isolate has given rise to concerns about the suitability of the statutory sick pay (SSP) system.
On 4 March, the Prime Minister announced that the Government will be making a number of reforms to SSP, saying "Nobody should be punished for doing the right thing."
On 12 March, the Government made the Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020. The regulations make clear it clear in law that employees who are unable to work because they are self-isolating are entitled to SSP.
The Bill will reform SSP in two key ways.
Clauses 37 and 40 give the Commissioner for HMRC the power to make regulations to provide funding to employers for SSP payments made in relation to coronavirus. Funding can be provided in advance as well as in arrears and can be made in the form of deductions from the employer's existing National Insurance liabilities.
Clauses 38 and 41 give the Secretary of State the power to make regulations to disapply the 'waiting days' rule for SSP payments made in relation to coronavirus. This would mean that employees would receive SSP from the first day of absence, rather than the fourth.
In addition, Clauses 7 and 8 and Schedule 6 make provision for a new form of emergency volunteering leave. Workers who obtain an emergency volunteering certificate from a relevant authority can take two, three or four consecutive weeks of leave to volunteer in health or social care. The Secretary of State must make arrangements for compensating volunteers for loss of earnings and expenses.
Schedule 6 is covered in detail in the Library Briefing Paper, Coronavirus Bill: health and social care measures.
The provisions of the Bill apply to Northern Ireland, where employment law is devolved, as well as to Great Britain.
The Bill does not change the eligibility conditions for SSP - which has been a major point of contention. The Government has reiterated that workers who are not eligible for SSP should claim Universal Credit or new-style Employment Support Allowance.
National Insurance Contributions
National Insurance contributions – NICs, for short – are paid by employees and employers (primary and secondary Class 1 NICs), and the self-employed (Class 2 and Class 4 NICs). Receipts from NICs are used to fund contributory benefits (principally, the state pension). In turn entitlement to contributory benefits is based on someone’s National Insurance payment record. Individuals who are not automatically paying NICs on their employee earnings or income from self-employment have the option to pay ‘voluntary’ NICs (Class 3), to protect their entitlement to contributory benefits.
Generally the rates and thresholds of the different ‘classes’ of NICs are set annually by means of secondary legislation. In addition changes to NI rates may be made outside the normal annual cycle, although the procedure sets certain limits on how such changes can be made, and how large those changes may be.
The Bill includes provision to modify these procedures, to allow the Government to make changes to NI rates as a response to the covid-19 outbreak, should that be deemed necessary.
Further information is available in the Explanatory Notes (Bill 122-EN) and Impact Assessment for the Coronavirus Bill, which were published on 19 March 2020.
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