The Percentage Threshold Scheme (PTS) offered no incentives to employers with high staff sickness levels and so will be replaced, the government has announced.
As many as 100,000 companies could be affected by the government’s decision to end the Statutory Sickness Pay (SSP) reimbursement scheme with the Health and Work Service.
Employers paying more than 13% of their National Insurance contributions a month in SSP have until the end of 2015/16 to recover any payments made before April 6 this year.
Current SSP record-keeping requirements connected with PTS will also end but employers will still be required to maintain SSP records for PAYE obligations.
HMRC figures estimate the average PTS payment is £500 a year with additional administrative burdens costing employers between £2.5m and £5m a year.
The new service will offer voluntary medical assessments and treatment plans for employees and is intended to deliver savings to employers by reducing days lost to sickness absence.
An HMRC spokesman said: “The independent review of sickness absence showed PTS has not encouraged employers to actively manage sickness absence in the workplace and, as a result, the government is to abolish the scheme and reinvest the money into funding the new Health and Work Service.”