New sick pay measures today: Employers hope increased burden will be lifted next year

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The Independent Online
THE Government's changes to statutory sick pay come into force today with the rest of the deferred measures from last year's budgets.

Employers' organisations hope the increased burden on businesses will be lifted by new legislation on sick pay next year.

The Treasury also put forward proposals yesterday to make it easier for companies to set up employee share ownership plans, or Esops.

The budget measures will prevent employers claiming back 80 per cent of statutory sick pay from the Department of Social Security.

However, small firms may claim if a worker is off for four weeks or more.

Jim Yuill, director of social security services at Ernst & Young, the accountant, warned that there would be 'winners and losers'.

Although the pounds 675m in sick pay, formerly claimed back by businesses as a whole, has been been balanced by an equal cut in National Insurance contributions, companies with comparatively low levels of sick leave will benefit.

'Shops and banks will do well out of the changes, while heavy industry, where there are more injuries, will lose out,' Mr Yuill said.

Other big losers are the supermarket chains, which have significantly higher-than-average sickness rates - something neither they nor Mr Yuill can explain.

The Confederation of British Industry and the Institute of Directors lobbied against the changes, and have wrung two concessions from the Government: a fundamental review that will reduce sickness compliance costs to employers, and a proposal to enable companies to opt out of the DSS statutory scheme.

In a separate move, Anthony Nelson, Economic Secretary to the Treasury, invited comments on proposals to extend the exemption for certain Esops from the regime for collective investment schemes in the Financial Services Act 1986.

The changes proposed will:

bring tax and FSA provisions into line, provide clarity and certainty for companies establishing Esops, and cut start-up costs without compromising levels of employee protection;

permit an Esop to qualify for exemption from the FSA regime when cash awaiting investment is temporarily deposited in an interest-bearing account.