Is your cash flow ready for new statutory payment rates?

If you’re an employer, you need to understand the latest statutory pay entitlements and how to ensure you can cover them.

Although paid in lieu of normal salary, Statutory pay such as Maternity Pay is often an additional cost as you also bring in temporary staff to cover work.

For this reason, you need to plan your cash flow carefully to ensure you can cover operating costs as well as statutory pay, as failing to do so could result in debts or financial penalties.

This is particularly important now as rates have risen for statutory payments.

What are the current rates?

Employers must offer pay at statutory rates or above when an employee cannot work for an extended period of time, depending on the cause of the absence.

The most common types of absence which incur statutory pay entitlement are parental leave and leave for prolonged illness.

Statutory payments have risen for 2024/25, covering all types of parental pay and sick pay – so make sure your payroll is ready!

Statutory Sick Pay (SSP) has increased to £116.75 per week.

Statutory pay for parental leave is now £184.03 (up from £172.48) 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. 

Getting your cash flow fighting fit

You must cover statutory pay as part of your core staffing costs – this is the law.

However, we understand that your cash flow can be seriously impacted by additional operating costs, particularly if you run an SME which lacks cash reserves.

To avoid this issue, make sure to plan your cash flow now and make sure you have a plan in place for the future.

You might consider introducing:

·        Regular spending reviews to identify financial inefficiencies

·        Better invoicing processes such as more frequent payment cycles

·        Optimising workflows to reduce the amount of cover you need

·        Reducing unnecessary expenditure

·        Making the most of tax reliefs

·        Streamlining your business’ investments

·        Adopting energy-efficient practices

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.

For further guidance, please get in touch with the team at Iceberg Accounting.