Statutory Pay entitlement: how to deal with disagreements

What to do if you and your employee disagree with a formal decision about entitlement, how to appeal and who decides.

HMRC decisions

If your employee doesn’t agree with your decision about their Statutory Pay (SP) entitlement, they can ask HM Revenue and Customs (HMRC) to make a formal decision.

HMRC is the first of the authorities who decide questions on entitlement to SP and such decisions are given by authorised officers of HMRC. Their decisions are given strictly in accordance with the facts and the law.

As an employer you cannot ask HMRC to make a formal decision on your behalf but you can ask for an informal opinion with regard to your employee’s entitlement to SP by contacting the Statutory Payments Disputes Team on Telephone: 03000 560630.

Before asking for a formal decision from HMRC, your employee will be expected to have asked you for a written statement about their SP position. They may also have discussed the problem with you.

Both you and your employee will be asked for observations in writing. Neither of you will be asked to appear before the officer making the decision. You can both give supporting evidence. In the event of an appeal, your evidence will be copied to your employee and vice versa.

The officer making the decision will send the formal decision to both of you. If the decision is that your employee is entitled to SP, the decision will give the time limit by which you must pay the SP. You will be given full details of your appeal rights with the notice of decision.

If new facts come to light which affect the decision, the decision will be reviewed and, if appropriate, a revised decision will be issued. There are then new appeal rights against this decision. It’s in everyone’s interest to put all the facts before the officer making the decision in the first place.

If either of you appeals, HMRC will notify the other party. If you appeal, the officer making the decision will try to discuss the case with you so that the appeal can be decided by agreement between you, the officer and your employee.

Any agreement reached must comply with the appropriate legislation.

If all parties are unable to agree you’ll be offered a review. Reviews are carried out by an officer not involved in the original decision. If you accept the offer of review, but don’t agree with the review conclusion, you will have a further 30 days within which to notify the appeal to the independent Tribunal.

Tribunal decisions

Once you have notified the appeal to the Tribunal, they will consider the appeal. You both have the right to appear in person and/or be represented at the hearing.

Tribunal decisions are final, except that you can appeal on a point of law, with leave, to the Upper Tribunal (in Scotland to the Court of Session or in Northern Ireland the Court of Appeal (NI)).

Making payment after a decision

Following a decision that SP is due by any of the following:

  • HMRC and you don’t appeal or the appeal period has expired
  • HMRC Courts and Tribunals Service and you don’t apply for leave to appeal to the Upper Tribunal
  • the Upper Tribunal

you must make payment within the legal time limit. This is no later than the first payday after the decision (or the second pay day where the first is not practicable). If you fail to make payment within this legal time limit, you may incur a civil penalty.

Published 18 March 2014