§ Mr. Gryllsasked the Secretary of State for Social Services what considerations were examined prior to the agreement of the level of earnings subject to national insurance contributions in respect of the definition of a small firm for purposes of compensating employers under the proposed statutory sick payment scheme; how many small firms are estimated to be within the definition on the 108W basis of fewer than 10 employees on average full-time male wage; and how many small firms are estimated to be within a similar basis of definition which would increase the average of nine to 15.
§ Mr. RossiFor the purposes of the mark II and mark IV compensation schemes described in the consultative document "Compensating Employers for Statutory Sick Pay" published on 17 June, small employers are to be defined by reference to the total amount of earning on which they paid national insurance contributions in a recent past year. The proposal is to include firms employing the equivalent of nine or fewer people earning the average wage for full-time male employees.
Contribution liability is preferred as the basis for the definition, partly because it would be relatively simple to operate and administer and partly because larger, low wage firms would be included. Representatives of small businesses were consulted by the Department of Industry in the latter part of 1980 in formulating the proposals for reimbursing them under a mark II scheme. The Government would welcome the view of small businesses on the definition in the light of the new proposals in the consultative document. If a higher level of earnings were to be chosen, any special arrangements for compensating small employers would be more expensive, and such a change could be accommodated only by less generous help for those small employers or for other sectors of industry.
Our best estimates, based on new earnings survey data and the 1977 Department of Employment census, are that, of around one million employers in Great Britain, about 80 per cent. would be designated small under the proposed definition. If the definition were extended to include firms employing up to 15 people earning the average wage for full-time male employees, the proportion of all employers included might be nearer 90 per cent.