EXCLUSIVE

The government "piling" financial hardships onto contractors by preventing them from claiming back statutory sick pay, a finance expert has warned.

The new rules, which mean employers cannot claim back statutory pay for sick leave after April 5, were "grossly unfair" to contractors and would add additional staff costs at a time when the government was claiming to reduce unemployment, Umesh Modi, partner at accountancy firm Silver Levene, told C+D.

Previously, employers could claim back sick pay that amounted to more than 13 per cent of their monthly national insurance contributions.

Pharmacy accountant Umesh Modi says the government's decision is "grossly unfair" to contractors and will add additional staff costs	More on pharmacy finances Pharmacies to get £2,000 allowance after HMRC u-turn Pharmacists confident of business growth, finds Lloyds Bank survey Cat M clawbacks to hit contractors by £833 a month
	Mr Modi said he was considering writing to treasury minister David Gauke to query the "very disappointing" sick pay changes.

Contractors reacted to the new sick pay rules with anger. Linda Bracewell, owner of Baxenden Pharmacy in Lancashire, told C+D she was in a state of "complete and utter disbelief".

"I think we are all absolutely stressed out and challenged in community pharmacy. This is the last straw for some people," she said.

Sanjay Doegar, of Ruislip Manor Pharmacy in London, said the news was "riling" and the government should realise the harm it was doing to local communities.

"It's obviously unwelcome. I think they need to look at the implications of this [and] the fact that independent pharmacy is a core business in most localities," he told C+D.

In response to concerns from contractors, the Department of Work and Pensions (DWP) said the new system was designed to help UK employers save £70 million a year by cutting the time employees spent off work by 20 to 40 per cent.

"The previous system did little to reduce sickness absence. The change will better promote and support management of absences, helping create conditions that allow the economy to grow while still ensuring people who are unwell get the support they need," a DWP spokesperson told C+D.

Employers can still reclaim statutory sick pay from the previous tax year by using the payroll software on the government's website.

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