Statutory Sick Pay (SSP) is a vital component of employment law in the UK, designed to support employees during periods of illness. Calculating SSP accurately can be a daunting task for many employers, fraught with complexities and potential pitfalls.
What is SSP?
Statutory Sick Pay serves as a financial safety net for employees who are unable to work due to illness. It is a legal requirement for employers to provide SSP to eligible employees, ensuring they receive a minimum level of income when they are sick.
To qualify for SSP, an employee must meet several criteria:
- Employment Status: The individual must be an employee, and not a contractor or freelancer, under a formal contract of employment.
- Illness Duration: The sickness must last for at least four consecutive days, including non-working days. This period is known as the ‘Period of Incapacity for Work’ (PIW).
- Minimum Earnings: The employee must earn an average of at least £120 per week before tax.
The current rate for Statutory Sick Pay is £99.35 per week, effective from the 6th April 2022. This rate is subject to updates and changes based on annual reviews by the government. SSP is payable for up to a maximum of 28 weeks for each sickness episode. During this period, employers make payments in the same way and at the same time as normal wages, subject to standard tax and National Insurance deductions.
Starting and Ending SSP:
- Waiting Days: SSP is not paid for the first three ‘qualifying days’ of a sickness absence unless the employee has already received SSP within the last eight weeks for the same health condition.
- Continuous Claims: If an employee has multiple periods of sickness that are less than eight weeks apart, they are treated as a ‘linked period’ for Statutory Sick Pay purposes. This means the waiting days are not repeated if the linked sickness lasts more than four days.
Exceptions and Exclusions:
- Agency Workers: They are typically eligible for Statutory Sick Pay, provided they meet the other qualifying conditions.
- Self-employed Individuals: They do not qualify for Statutory Sick Pay but may be eligible for Employment and Support Allowance (ESA) or Universal Credit depending on their circumstances.
- Employees Earning Below the Lower Earnings Limit: If employees earn less than the minimum threshold, they will not qualify for Statutory Sick Pay but may have other support options available.
Statutory Sick Pay provides crucial support to employees during times of illness, ensuring they are not left without income. Employers are obligated to administer SSP fairly and consistently, adhering to the set guidelines to ensure all eligible employees receive their entitlements without unnecessary complications.
How to Calculate SSP: Step-by-Step
Calculating Statutory Sick Pay correctly is essential to ensure that employees receive the support they are entitled to during their illness, while also ensuring that employers meet their legal obligations. Here is a detailed, step-by-step guide on how to calculate SSP:
- Confirm Eligibility:
- Check that the employee has a contract of employment.
- Verify that the employee has been ill for at least four consecutive days (including non-working days).
- Ensure the employee earns an average of at least £120 per week before tax.
- Identify the Relevant Pay Periods:
- Determine the relevant pay period for calculating average weekly earnings. This is typically the eight weeks prior to the illness.
- Include all earnings that are subject to National Insurance contributions, such as wages, commission, and bonuses.
- Calculate Average Weekly Earnings:
- Total the gross earnings over the last eight weeks before the sickness began.
- Divide this total by eight to find the average weekly earnings.
- This average determines the employee’s eligibility for Statutory Sick Pay and ensures the calculation reflects their typical income.
- Determine Qualifying Days:
- Identify the days of the week the employee normally works—these are called ‘qualifying days’.
- Statutory Sick Pay is only payable for these qualifying days during which an employee would have worked but was absent due to illness.
- Calculate Daily Rate:
- Divide the weekly SSP rate (£99.35 for the tax year starting April 2022) by the number of qualifying days in a week. For example, if an employee works five days a week, the daily rate would be £19.87 (£99.35 divided by 5).
- Account for Waiting Days:
- SSP is not payable for the first three qualifying days in an employee’s first sickness absence, known as ‘waiting days’, unless they have been paid Statutory Sick Pay within the last eight weeks for the same health condition.
- Start SSP payment from the fourth qualifying day unless there is a link to a previous sickness period.
- Apply the Calculated SSP:
- Multiply the daily Statutory Sick Pay rate by the number of qualifying days the employee was sick beyond the waiting days within the SSP eligibility period.
- This amount should be added to the payroll and paid on the usual paydays, with tax and National Insurance deducted as normal.
- Document and Record Keeping:
- Keep records of all SSP payments and the employee’s sickness periods for at least three years.
- Maintain documentation of how each SSP amount was calculated in case of queries or audits by HMRC.
By following these steps, employers can ensure that they calculate SSP accurately and consistently, providing their employees with the financial support they need during periods of illness, and maintaining compliance with UK employment laws. This approach not only supports employee welfare but also protects businesses from potential legal issues related to incorrect SSP payments.
Common Scenarios and Questions about SSP
Statutory Sick Pay can raise several common questions and scenarios that employers need to navigate. Understanding these can help in managing SSP effectively and ensuring compliance with legal requirements.
Part-Time vs Full-Time Employees
- Question: Are part-time employees entitled to SSP?
- Answer: Yes, part-time employees are entitled to Statutory Sick Pay if they meet the eligibility criteria, including earning at least £120 per week on average. Their SSP should be calculated based on the number of days they usually work.
Overlapping Sickness Periods
- Scenario: An employee returns to work after a period of illness but falls sick again shortly afterwards.
- Guidance: If the second period of sickness starts within eight weeks of the last day of payment for the previous sickness, the periods are considered ‘linked’. In such cases, the waiting days are not served again, and SSP payments should continue from the first qualifying day of the new sickness period.
Statutory Sick Pay During Different Types of Leave
- Question: What happens if an employee falls sick during a holiday or other type of leave?
- Answer: If an employee falls ill before they go on holiday or during their holiday, they can take this time as sick leave instead of annual leave. They will need to provide proof of illness (such as a doctor’s note) if the sickness lasts for more than seven days. They are then eligible for Statutory Sick Pay, and they can take their holiday at a later date.
Adjusting SSP for Part-Time Return to Work
- Scenario: An employee returns to work on a part-time basis as part of a phased return following a period of sickness.
- Guidance: Employers might need to adjust SSP payments during a phased return. If the employee is still eligible for SSP and earns less than their normal earnings due to reduced hours, they can receive SSP in addition to their wages for the days they are still sick.
Handling Sickness that Spans Over a Pay Rate Increase
- Question: How do you calculate SSP if there is an increase in the SSP rate during a period of sickness?
- Answer: If the Statutory Sick Pay rate increases while an employee is off sick, adjust the SSP payments from the effective date of the new rate. The new rate applies to the entire qualifying day on or after the rate change.
Employees with Multiple Employers
- Scenario: An employee has more than one job with different employers.
- Guidance: Each employment is treated separately for SSP purposes. The employee could be eligible for Statutory Sick Pay from each employer, provided they meet the eligibility requirements with each employer separately.
Sickness Following Parental Leave
- Question: Does parental leave affect Statutory Sick Pay eligibility?
- Answer: Employees retain their eligibility for SSP after parental leave if they meet the usual SSP eligibility requirements. Their Statutory Sick Pay should be calculated based on their average weekly earnings before they took the leave.
By addressing these common scenarios and questions, employers can better manage Statutory Sick Pay, ensuring that both they and their employees understand the rights and responsibilities involved. This knowledge helps in maintaining fair practices and compliance with UK employment legislation, while also supporting employee wellbeing during periods of illness.
Legal Obligations and Employer Responsibilities
Handling Statutory Sick Pay appropriately is not just a matter of employee welfare—it is also a legal requirement. Employers must adhere to various obligations under UK law to ensure they are compliant and avoid potential penalties. Here’s a detailed look at these responsibilities:
- Understanding SSP Eligibility: Employers must correctly determine the eligibility of their employees for Statutory Sick Pay. This involves assessing whether employees meet the criteria regarding their employment status, earnings, and the length and frequency of their sickness.
- Accurate and Timely Payments: Employers are required to pay SSP at the correct rate and on the usual payday, using the same method as they would for paying wages. This ensures consistency and helps employees manage their finances during periods of illness.
- Record Keeping: Employers must keep records of all sickness absences that qualify for Statutory Sick Pay for at least three years after the end of the tax year in which the sickness occurred. This documentation should include details of the sickness periods and payments made. Keeping accurate records is crucial not only for compliance but also for defending any claims made against the employer regarding SSP.
- Providing Information: It is the employer’s responsibility to inform employees if they are not eligible for SSP and provide reasons in writing if requested. This communication should be clear and timely, helping to manage expectations and potentially mitigate disputes.
- Compliance with Data Protection: When handling any employee information related to sickness and SSP, employers must comply with data protection laws. This means ensuring that any personal data collected is handled securely and used only for lawful purposes.
- Dealing with Disputes: Employers should have a clear procedure in place for dealing with disputes related to SSP. This includes addressing any disagreements over eligibility, payment amounts, or timing. Having a procedure helps to resolve issues efficiently and fairly.
- Staying Updated with Changes in Legislation: SSP rates and regulations can change. Employers must stay informed about any updates to SSP legislation to ensure ongoing compliance. This might involve regular reviews of government communications or consultations with legal or HR professionals.
- Penalties for Non-compliance: Failure to comply with SSP regulations can result in financial penalties and legal challenges. Employers who do not pay SSP when they should can be ordered to pay the arrears and may face additional fines.
By fulfilling these obligations, employers not only comply with the law but also contribute to a supportive working environment. This can enhance employee satisfaction and retention, which are beneficial for the overall productivity and reputation of the business.
FAQs about Statutory Sick Pay
- What if an employee has irregular hours? Calculate their average weekly earnings based on the last eight weeks before they fell sick.
- Does SSP need to be paid if the sickness starts just before a planned holiday? Yes, Statutory Sick Pay takes precedence, and the holiday can be rescheduled.
- Can an employee work part-time while on SSP? Yes, but any earnings might affect their SSP amount.
Conclusion
Accurate and timely calculation of Statutory Sick Pay is crucial for supporting employees during their times of illness, ensuring they receive the financial assistance they are entitled to without undue delay. For employers, understanding and adhering to the legal requirements surrounding SSP is not just about compliance; it’s about fostering a respectful and caring workplace culture that values the well-being of its workforce.
Employers must stay vigilant and proactive in their approach to managing SSP, from maintaining detailed and accurate records to ensuring all payments are made promptly and correctly. Keeping abreast of any changes in legislation is also vital to avoid potential penalties and to ensure that both employer and employee rights are upheld.
Ultimately, handling Statutory Sick Pay effectively reflects an organisation’s commitment to its employees’ health and its dedication to fulfilling its legal and ethical responsibilities. By prioritising transparency and fairness in the administration of SSP, businesses can build stronger, more trusting relationships with their employees, contributing to higher morale and a more positive working environment.
