Introduction
The employment contract may set out what sick pay an employee is entitled to. This will vary from job to job. Company sick pay cannot offer an employee less than they are entitled to through Statutory Sick Pay.
When an employee takes time off from work due to illness, they might be entitled to sick pay. There are two types of sick pay:
- company sick pay (also called
- contractual or occupational sick pay)
- Statutory Sick Pay
If an employer runs their own sick pay scheme it is a 'company sick pay scheme' and an employee should be paid what they are due under that. This will depend on what is included in their employment contract.
Where an employee isn’t entitled to anything under a company scheme, their employer should still pay them Statutory Sick Pay (SSP) if they are eligible.
Company Sick Pay
An employer may offer a sick pay scheme that is more generous than SSP. The
employer can offer any scheme that does not fall below the legal minimum.
Details of any company sick pay entitlement should be included in the written statement of employment particulars, which the employee should be given within two months of starting work. Where a company doesn't offer a scheme, the written statement should say so.
If an employee is sick after 28 weeks of company sick pay, or if this ends earlier and
they are not entitled to SSP, the employer must give the employee form SSP1 so they can claim Employment and Support Allowance. More information is available at:
A typical company sick pay scheme
Company sick pay schemes vary from employer to employer. A typical sick pay
scheme usually starts after a minimum period of service (e.g., a three month probationary period). An employee would then receive their normal pay during any period that they are off work due to illness, up to a specified number of weeks. After this, they are likely to receive half-pay for a further period before any sick leave they take becomes unpaid.
Proof of sickness
An employer may set out how an employee should tell them that they are sick (e.g. ring in before a certain time of the day). Usually they will be able to self-certify for a week of illness, beyond that a doctor's note is normally needed.
Discretion
An employer can choose to make an exception and pay an employee sick pay even
if they don't qualify under the company rules. Also, some sick pay schemes say that
payments are 'at the employer's discretion', which means an employer can refuse
payment if they think the absence is unjustified. However, in doing so they must
ensure that their decision is free from discrimination (that is, they are not favouring
one category of employee over another when they are required not to).
If an employer has chosen to pay discretionary sick pay in the past this does
not automatically mean they have to in the future. However, it is sometimes possible for a discretionary arrangement to become a part of an employee’s contract through 'custom and practice'.
Work related sickness
The amount of sick pay an employee gets isn't usually affected by the cause of their sickness. An employer may have a special scheme in place for workplace injuries.
If an employer is responsible for an employee’s incapacity they may have a legal right to make a personal injury claim. This applies to both a physical or psychological injuries (e.g., stress).
Time off to care for a sick dependant
An employee might be able to take time off to care for a sick dependant. However, their employer does not have to pay them for this time unless their contract says they should.
If an employer refuses to pay an employee sick pay that they are due, this is classed as an 'unlawful deduction from wages'. The employee might be able to make a claim to an Employment Tribunal.
Fit Note
A new medical 'fit note' to replace the current 'sick note' and help more people stay in work rather than drift into long term sickness was unveiled on 28 May 2009 along with a twelve week consultation on its design.
The new 'fit note' will enable people to get the best possible advice about staying in work, and if they can't work what their employer can do to help them return to work sooner. For example, if the employee has a problem with mobility, suggesting a job where they can work sitting down rather than standing up.
Statutory Sick Pay
An employee who is unable to work because they are ill may be able to get Statutory Sick Pay. It is paid by the employer and can be paid for up to 28 weeks.
Who can get Statutory Sick Pay
An employee working for an employer under a contract of service (even if they’ve only just started) is entitled to Statutory Sick Pay (SSP) if the following apply:
- they're sick for at least four days in a
- row (including weekends and bank
- holidays and days that they do not
- normally work)
- they're earning at least £95 a week
An employee who has more than one job, may get SSP from each employer.
The days SSP is paid for
SSP is only paid for qualifying days. These are the days on which an employee would normally work for their employer under a contract of employment. However it is not paid for the first three qualifying days, these days are known as waiting days.
A part-time employee must still serve their three waiting days before they can get paid.
This means they may not receive a payment at the start of their period of illness.
Employees with a varied work pattern may have different qualifying days in each week that they work.
Examples
If an employee works Monday to Friday and becomes sick on a Friday their waiting days will be Friday, Monday and Tuesday.
If they continue to be sick, SSP will be paid from Wednesday.
If an employee works Thursday and Friday and becomes sick on a Friday their waiting days will be the Friday of the week that they are first sick and the Thursday and Friday of the next week. If they continue to be sick, SSP will only be paid from the Thursday of the following week.
How earnings are calculated
An employee must have average earnings of £95 a week before tax and National
Insurance contributions are deducted. This level of earnings is called the Lower
Earnings Limit for National Insurance Contributions (NIC) and is reviewed every year. This is lower than the amount an employee would need to earn before they start paying National Insurance Contributions.
Average weekly earnings are calculated over an eight week period before the employee’s sickness began. This period may vary slightly depending on whether the employee is paid weekly, monthly or has other pay patterns. If an employee has just started their job the calculation may be different.
Only earnings actually paid in this eight week period can be used for the average earnings calculation. These earnings must be subject to National Insurance Contributions or would be if the employee’s earnings were high enough and may include:
- normal earnings
- bonuses
- holiday pay
- overtime
- other Statutory Payments
Salary Sacrifice scheme and SSP
If an employee has a salary sacrifice arrangement in place during the period used to work out their SSP, the average weekly earnings calculation will be based on their contractual earnings which count for National Insurance contributions. This could mean that their average weekly earnings may not reach the Lower Earnings Limit for payment.
Linking with a previous period of SSP
If an employee has received SSP for a previous period of illness within the last eight weeks, their new period of illness will link to this and be treated as one continuous period. SSP will be paid for the new period, without the employee having to serve the three waiting days.
How to get Statutory Sick Pay
To get SSP an employee must:
- tell their employer that they are sick
- provide their employer with some form
- of medical evidence
Informing an employer of sickness
An employer should tell their employees if they have their own rules about when and how they should be told about an employee’s sickness. The employer does not have to pay SSP for any days before the employee informs them of their sickness if they do not stick to these rules.
Where an employer does not have their own rules, the employee should tell their employer within seven days of the first day that they are sick. If the employer delays telling their employer the employer does not have to pay SSP for any days before the employee informs them that they are sick.
However an employer cannot insist that an employee tells them:
- in person earlier than the first qualifying day or by a set time
- on a special form
- on a doctor’s statement, which is normally called a fit note
- more than once a week during their sickness
Evidence of sickness
An employer will ask an employee for evidence that they are sick. This will be in
the form of a medical statement from the employee’s doctor, which is normally called
a sick note. An employer cannot ask an employee to provide a sick note for the first seven days that they are sick. They may ask the employee to fill in a self-certificate of their own design or form SC2 which the employee can get from their GP's surgery, or from the HM Revenue and Customs (HMRC) website at
https://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=fFzyi5pYcLQ&formId=927
Where an employee is sick for more than seven days, they will need to ask their doctor for a sick note to give to the employer.
Accepting medical evidence
It is up to an employer to decide whether an employee is incapable of work. A sick note from their doctor is strong evidence that they are sick and would normally be accepted, unless there is evidence to prove otherwise.
An employee could also provide a sick note from someone who is not a medical practitioner, e.g. a dentist. The employer will decide whether or not this evidence is acceptable. If the employer has any doubts, they may still ask for a note from the employee’s GP.
How much is SSP?
The standard rate for SSP is CLICK HERE . The employer will work out a daily rate of SSP if necessary by dividing the weekly rate by the number of days the employee would normally work in that week. For working out SSP the week begins with a Sunday.
Statutory payment rates:
https://www.hmrc.gov.uk/paye/employees/statutory-pay/ssp-overview.htm
How SSP is paid
SSP is usually paid on the employee’s normal payday in the same way as their normal earnings. SSP is subject to tax and National Insurance contributions. However if the employee only receives SSP their earnings may not be high enough to pay tax unless they get other payments on top of their SSP.
What happens if SSP is not payable or it comes to an end?
Where an employee cannot get SSP or SSP has ended the employer must fill in form SSP1 and give this to the employee. On the form, the employer must say why SSP has not been paid or why it is ending and the last date of payment. Form SSP1 is used to support a claim for Employment and Support Allowance.
The form SSP1 can be downloaded here
Information for agency workers
SSP is payable to agency workers in exactly the same way as it is payable to others who are classified as employees, if they meet the qualifying conditions for payment.
It remains payable while the worker is working on an assignment or under contract with the agency. The employer can't end the contract of service to avoid paying the employee SSP.
How benefits and Statutory Payments affect SSP
SSP can affect some other benefits and payments that an employee may be entitled to.
For example, an employee may not get the following benefits if they are receiving SSP:
- Employment and Support Allowance
- Incapacity Benefit (IB)
- Statutory Maternity Pay
- Maternity Allowance
- Statutory Paternity Pay
- Statutory Adoption Pay
For more information visit: DirectGov
What else employees should know
If an employee goes into hospital, SSP isn't affected. If an employee works abroad, they may be able to get SSP if their employer pays National Insurance contributions for them. If an employee goes abroad to visit, they may still claim SSP if they can prove they’re still sick. Serving members of the Armed Forces cannot get SSP, but members of their families may be able to get it.
More information on claiming benefits in Europe is available here
SSP and insolvency
If an employer does not pay an employee SSP because they are insolvent, payment will be made by Her Majesty’s Revenue and Customs (HMRC). They will only do this when the employer has been formally declared insolvent. HMRC will take over the payment from and including the week of insolvency. Any payments before that date must be paid by the employer.
They will need to know:
- the employee’s name and address
- the date the employer became insolvent
- details from the employee’s payslips of any payments received and the period covered by the last payment
- the date the statutory sick payment ends or the date the employee intends to go back to work
The employee may also be asked to provide some of this information in writing.
A Guide to Sick Pay
Age range for eligibility
Over 16 years of age
Qualifying period of employment
None
Payable from
4th Qualifying Day onwards (including weekends and bank holidays and days that the employee does not normally work)
SSP recovery
In any month if SSP is more than 13% of gross Class 1 NIC liability, the difference can be recovered
Maximum entitlement
28 weeks in any period of entitlement of 3 years, in respect of any one period of sick leave
How to appeal
If an employer doesn't pay an employee SSP, or pays them less than they think they should, and cannot resolve the matter with their employer they can contact the HM Revenue and Customs Employees helpline on 0845 302 14 79 for advice and information.
Calculating and Recovering Statutory Sick Pay
SSP is paid to employees who are unable to work because of illness. An employer is responsible for paying SSP to employees who meet certain ‘qualifying conditions’.
HM Revenue & Customs (HMRC) provide free SSP calculators so that employers can calculate how much SSP to pay an employee and to see if they can recover any of it.
Alternatively SSP can be calculated manually.
Information needed to work out SSP
The following information is needed to calculate how much SSP is payable:
- the date of the employee's first full day of sick leave
- the date the employee first told the employer they'd be off sick
- the date of the employee's last day of sick leave - if it's ended
- medical evidence for any sick leave that lasted more than seven days
- full details of any sick leave the employee had that ended during the 57 days before the current sick leave started - and the number of weeks and days the employer paid SSP for
- details of the employee's gross earnings during a period of at least eight weeks just before they were first absent - unless they've had a previous period of sick leave (see above) or they're a new employee
- the days that the employer and employee agree are 'qualifying days' - normal working days - for SSP
- if the employee has one, form SSP1(L) from a previous employer or a 'linking
If the employer and the employee haven't agreed on their normal working days take whichever days they're contracted to work. If they don't have a contract, take the days on which they normally work.
Information needed to work out if SSP is recoverable
If a high proportion of a workforce is off sick at the same time the employer may be able to recover some or all of the SSP you pay.
The following information is needed to determine how much SSP is recoverable:
- all the SSP the employer paid to their employees in the tax month – or months - for which the employer wants to try to recover SSP
- the total amount of Class 1 National Insurance contributions (NICs) the employer paid in each of the tax months for which they want to try to recover SSP
SSP is not automatically recoverable. It can only be recovered where an employer has paid an amount in SSP in a tax month that's over and above 13 per cent of their Class 1NICs liability for that month. This is known as the 'Percentage Threshold Scheme' (PTS).
Calculating and recovering SSP using the SSP calculator
There are two SSP calculators - one for working out how much SSP is payable and one for checking if any SSP paid is recoverable. Visit the HMRC website by clicking here
The daily rate of SSP is the weekly rate divided by the number of agreed Qualifying Days (QDs) in that week.
For SSP purposes the week always begins with a Sunday. The amount payable that week is the daily rate multiplied by the number of QDs the employee is sick in that week, not including Waiting Days.
The calculator for working out SSP on the Employer CD-ROM provides full guidance and includes links to E14, Employer Helpbook for Statutory Sick Pay.
The online SSP calculator asks more questions than the CD-ROM version and can help confirm that an employee is eligible for SSP. The calculator that works out how much SSP is payable is available here
The calculator that checks if any SSP paid is recoverable is available here
Both versions provide weekly breakdowns of the SSP payable and how many 'waiting days' have passed (days on which the employee would normally have worked but was off sick – an employer can only start paying SSP after three waiting days have passed).
The SSP figure should be recorded on the employee's P11 Deductions Working Sheet or equivalent - either using the P11 Calculator tool on the Employer CD-ROM or by adding the figures onto a paper P11.
If the employer is due a recovery the P11 Calculator (or the payroll software, if relevant) will automatically work this out and take it into account when working out the employer’s monthly or quarterly payment to HMRC.
If the employer will have insufficient money to recover the payments from the next payment due or there are no further payments due in the tax year, they can apply for advance funding (see later section).
Calculating SSP manually
The following action is needed to calculate how much SSP is payable:
- decide if there's a 'period of incapacity for work' (PIW) - and if it's linked to an earlier PIW
- work out the number of qualifying days in the PIW
- take into account any waiting days
- work out the number of qualifying days to be paid
- work out the amount of SSP payable for the qualifying days
SSP rates
https://www.hmrc.gov.uk/paye/employees/statutory-pay/ssp-calc.htm
Calculating SSP recovery manually
The following action is needed to determine how much SSP is recoverable:
- add up all the SSP the employer paid during the tax month
- work out the employer’s total Class 1 NICs liability for the tax month
- work out how much 13 per cent of the month's NIcs liability comes to
- see if the SSP the employer paid is more than 13 per cent of their NICs liability
This method is called the Percentage Threshold Scheme. If the total SSP an employer pays in a tax month comes to more than 13 per cent of their Class 1 NIcs liability for the month, you can recover the excess.
Enter the amount of recovery in column 5 of the P32 Employer Payment Record and offset any recoverable SSP against PAYE (Pay As You Earn), NIcs and student loan deductions due to HMRC. If the recoverable amount is more than the monthly or quarterly payment due, carry the balance over to when the next payment is due.
Where there is insufficient money to recover the payments from the next payment due or there are no further payments due in the tax year, the employer should contact their HMRC Accounts Office to request the balance.
A blank form P32 Employer Payment Record is available here
Avoiding common mistakes
Where an employer qualifies in one tax month they do not automatically qualify in others - they will have to make separate calculations for each tax month.
Where an employer pays their tax and NICs quarterly, although they will recover the money quarterly they must calculate the amount they’re entitled to recover monthly.
A tax month starts on the sixth of the month and ends on the fifth of the following month.
Recovering SSP for a previous tax year
To recover SSP paid in a previous tax year, the employer will need to fill in form SP32. This is available on the Employer CD-ROM or can be downloaded by clicking here
How to correct SSP mistakes
Where SSP has been underpaid or overpaid during the current tax year, the employer must put the error right and correct their records.
Overpaid SSP is recoverable from the employee and should be treated as an overpayment of wages or salary – the correction should be recorded as wages or salary not SSP. Check if the error affects any later SSP payments.
If the error is not discovered until after the end of the tax year, contact HMRC for advice.
Advance funding for SSP
Where an employer does not have sufficient payroll deductions available to cover the SSP they’re entitled to recover, they may be able to apply for funding from HMRC. More information is available here
This guide is for general interest - it is always essential to take advice on specific issues. We believe that the facts are correct as at the date of publication, but there may be certain errors and omissions for which we cannot be responsible.