The rates have risen for statutory pay such as maternity or sick pay, so ensuring that your business can cover them is vital.
Whilst staff receive statutory pay instead of their normal salary, their absence may cause your business additional expenses such as paying for temporary staff to cover their work.
Therefore, it is important to plan your business’ cash flow to ensure that you are able to cover these expenses.
Adjusting to the new rates
When an employee cannot work for an extended period of time, employers must offer pay at statutory rates or above. The rate of this pay depends on the cause of the absence, such as parental leave or leave or long-term illnesses.
You must ensure that your payroll has been updated with the 2024/25 rates, which are:
- Statutory Sick Pay (SSP) at £116.75 per week
- All types of parental leave paid at £184.03 per week
There are multiple types of parental leave available to employees, split into the following:
- Statutory Maternity Pay (SMP)
- Statutory Adoption Pay (SAP)
- Statutory Paternity Pay (SPP)
- Statutory Shared Parental Pay (ShPP)
- Statutory Parental Bereavement Pay (SPBP)
Each of these has a different length of time that employees are entitled to take off. Pay must be offered at the statutory rate above for the entire period that staff are entitled to.
Adjusting your finances
As part of your core staffing costs, you are required to cover statutory pay. If you fail to do so, you could face a penalty.
To avoid this, getting your cash flow in order is vital.
Some steps you could introduce include regular spending reviews. These allow you to identify inefficiencies in your finances that can be quickly resolved for cost savings.
You should also consider optimising your workflows, from improving your invoicing processes to reducing the amount of cover that you will need to source.
An accountant can also help identify tax reliefs that your business should be taking advantage of. Doing this could give you access to extra cash for covering expenses whilst your employees are off.
Getting in touch with an accountant also provides access to key cash flow advice. They can help you find better ways to cover the costs, as well as supporting your payroll.
Get in touch with our team today to find out how we can help.