2020-07-08
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Paying employees statutory sick pay (SSP)

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Posted by Suki Harrar on 08 July 2020

Suki Harrar - Employment Law Solicitor
Suki Harrar Partner

A common question asked to employment lawyers, is around the details of the statutory sick pay (“SSP”) scheme, which entitles employees absent from work due to illness to receive a minimum weekly payment for up to 28 weeks, provided they meet the relevant criteria set out below. 

Statutory sick pay is taxable and subject to national insurance contributions. The statutory sick pay rate is reviewed and altered annually, and this usually takes place in April. For reference, the statutory sick pay rate from April 2020 onwards is £95.85 per week. 

Eligibility

To be eligible to receive statutory sick pay, an employee must meet the following criteria:-

  • They must be working under a contract of employment;
  • They must be incapable, or deemed incapable, from doing work which they are reasonably contracted to complete under their contract; and
  • They must have average weekly earnings over the lower earnings limit, based on the previous eight weeks of employment. The current lower earnings limit is £118 per week.

Please note that due to the above criteria, there may be circumstances under which a “worker” is eligible to receive statutory sick pay. This is because the definition of “employee” is extended for eligibility to statutory sick pay to include all those whose earnings are liable for class 1 national insurance contributions, meaning some workers fall within this definition despite not being classed as an employee under the stricter Employment Rights Act 1996 definition.

Statutory sick pay is not payable to:- 

  • employees who have not yet commenced work;
  • employees who have already exhausted their 28-week entitlement;
  • employees who have been on a linked period of incapacity for work (see below) for more than three years;
  • employees who earn, on average less than the lower earnings limit, based on the previous eight weeks of employment. 

If an employee is not eligible to receive statutory sick pay or is no longer eligible, an employer must provide them with an SSP1 Form, and explain on this form why statutory sick pay is not being paid or is coming to an end and, if applicable, the last date of payment.  

Statutory sick pay entitlement will not arise, or will be brought to an end if already arisen if an employee is in legal custody or imprisoned. 

After 28 weeks, any entitlement to a sickness benefit will be paid directly by the Department for Work and Pensions. Any payments received by the employee should be notified to the employer so that any necessary deductions from company sick Pay entitlements which are being paid can be made. 

Period of incapacity for work (PIW)

In order to qualify for statutory sick pay, an employee must have a “qualifying day” of incapacity to work, which falls within a period of incapacity for work (“PIW”). Simply put, a period of incapacity for work is a period of 4 consecutive days where an employee is unwell and would technically be unable to work even if these days occurred over a weekend when the employee was not required to work anyway.  

Employees are entitled to receive up to 28 weeks statutory sick pay in any period of incapacity for work, or in any series of a linked period of incapacity for work. 

Periods of incapacity for work will be linked if they fall within 56 calendar days/8 weeks of one another. If a series of periods of incapacity for work last over a period of 3 years, the employees’ entitlement to statutory sick pay will cease at the three-year mark, regardless of whether the full 28 weeks has been paid. 

If a period of incapacity for work is not linked to a previous period of incapacity for work, then the clock will restart. The employee would then qualify for a further 28 weeks of statutory sick pay. 

Qualifying days and waiting days

Statutory sick pay is only payable for “qualifying days”. These are often set out in an employee’s contract of employment. The rule of thumb is that qualifying days are the days that an employee would usually be required to work. If there is no express statement of what an employee’s qualifying days are in the contract of employment, they will be determined in accordance with the statutory sick pay regulations. 

Under the statutory sick pay regulations, it is stated that qualifying days are those which an employer and employee agree are/were the working days for that week. If an employee is incapacitated for the whole week (following the waiting days), they are entitled to receive the full weekly amount of statutory sick pay. However, if the employee is incapacitated for only part of the week, the statutory sick pay is apportioned based on how many qualifying days there are in the week, and how many of those are days of incapacity.  

If there is an agreement that there are no working days in any week, then the Wednesday of that week is deemed to be a qualifying day. This enables an employee to receive an appointed amount of the weekly statutory sick pay allowance during a week in which they would not ordinarily have worked. If there is no agreement as to which days are working days, every day is deemed to be a qualifying day (this excludes days on which it is agreed that no employees would be working, for example, weekends). 

Statutory sick pay is not payable for the first three qualifying days in any period of incapacity for work. These are known as “waiting days”. It is important to note that waiting days do not necessarily correspond to the first three calendar days of sickness, as an employee may have been sick on “non-qualifying days” (i.e. a day the employee would not be required to work). This means that if there is only one qualifying day in each week, statutory sick pay may not become payable until the fourth week of absence. 

Remember that if after the waiting days an employee is incapacitated for the whole week and the whole week is qualifying days, the whole weekly amount of statutory sick pay becomes payable.

Claiming statutory sick pay, notification and evidence of incapacity

In order for an employee to receive statutory sick pay, employees must notify their employer of their absence and submit evidence of their incapacity. 

In terms of notification, an employee must inform their employer of any date on which they are unfit for work within seven calendar days of that date. Where notification is provided more than seven calendar days after the first day of incapacity, an employer can withhold payment of statutory sick pay if they deem there was no good cause for a delay. 

After the first seven days of sickness absence, employers are entitled to ask for “reasonable evidence” of incapacity. Evidence can be in the form of a self-certification form, or a doctor’s fit note. The employer may accept alternatives to a fit note if they determine that it is reasonable evidence. 

Employers cannot insist on a doctor’s statement for the first seven days of sickness absence as a condition for payment of statutory sick pay. In addition, unlike where there is a late notification, payment of statutory sick pay cannot be withheld for late receipt of evidence. 

If all criteria for the payment of statutory sick pay are met, statutory sick pay can be paid without the receipt of medical evidence. 

It is important to note that an employer can set stricter notification and evidence requirements for company sick pay. 

End of statutory sick pay entitlement

Entitlement to statutory sick pay will end when:-

  • The employee returns to work; or
  • A fit note expires without a further fit note being obtained and no other “reasonable evidence” being supplied; or
  • An employee uses their full statutory sick pay entitlement of 28 weeks
  • An employees’ contract is terminated; or
  • The day immediately before an employee who is, or has been, pregnant begins a maternity pay or maternity allowance period.  

Where an employee’s contract of employment is terminated solely for the employer to avoid payment of statutory sick pay, an employee’s entitlement will continue until one of the alternative events above brings liability to an end. 

Records

Employers are required to maintain records of statutory sick pay payments for PAYE purposes, and to evidence that they are meeting their obligations should HMRC require them to do so. 

About the author

Suki advises on all employment law issues, including unfair dismissal, redundancy, TUPE, appointments of senior executives and contract documentation.

Suki Harrar

Suki advises on all employment law issues, including unfair dismissal, redundancy, TUPE, appointments of senior executives and contract documentation.

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