Staff costs represent a substantial portion of your expenditure as a business owner, so it’s important that you understand what payments you have to make and how to plan for them.
Many employers fail to consider statutory payments in addition to regular staff pay. This is particularly significant in the 2024/25 financial year, as statutory payment rates have increased.
Stay up to date with current rates of statutory payments in order to remain compliant with regulations and maintain relationships with staff and other partners.
Statutory payments – current rates
If you employ an individual or team, you will be expected to offer statutory payments to employees under certain circumstances when they cannot work for a sustained period of time, such as maternity or adoption leave.
Statutory payments have received a small boost for 2024/25, covering all types of parental pay and sick pay.
Most significantly, rates of pay for parental leave and leave due to illness have risen.
The Statutory Sick Pay (SSP) rate has increased to £116.75 per week.
A new parental pay rate of £184.03 (up from £172.48) has also been introduced and applies to:
- Statutory Maternity Pay (SMP)
- Statutory Adoption Pay (SAP)
- Statutory Paternity Pay (SPP)
- Statutory Shared Parental Pay (ShPP)
- Statutory Parental Bereavement Pay (SPBP)
You must make these payments to qualifying employees for the duration of the time they are entitled to them, or you could face a financial penalty.
If an employee is away for a long time, or you rely on their skill set, you may also face additional costs to recruit temporary cover.
Managing cash flow when making statutory payments
As an employer, you’ll be responsible for paying statutory payments to employees as well as paying for any additional staff to cover absences.
This can result in challenges to your cash flow, particularly if your business is relatively small or lacks cash reserves to meet additional costs.
As you know, statutory payments are mandatory for qualifying employees, so it’s important that you plan ahead and build a strategy to support your cash flow during times when you are making these payments.
This could include:
- Improving invoicing processes – By streamlining your billing system, you can reduce the time between performing a service and receiving payment with more frequent billing cycles, using automated billing software, or implementing stricter follow-up procedures for late payments.
- Reviewing expenditures – Controlling your operating expenses can significantly improve your cash flow, such as through negotiations with suppliers, adopting energy-efficient practices and reducing non-essential costs.
- Optimising necessary cover – Managing your workflows and reallocating work may mean that you can bring in cover staff on a part-time basis.
What is most important is that you ensure you are able to meet the requirements of statutory payments before the need arises, as this could land you in some hot water!
We can help you to plan your cash flow around your payroll obligations and ensure that your employees are remunerated in line with current legislation.
Please speak to a member of our expert team to discuss your needs.
