Statutory sick pay (SSP)
Visit our Coronavirus (COVID-19) hub for updates, REC guidance, sector specific guidance and government guidance.
This section explains who is entitled to SSP, what the entitlement is, when it should be paid, when the entitlement ceases and how a business can reclaim the SSP it has paid out.
Temporary reintroduction of Statutory Sick Pay Rebate Scheme
Government has announced that the Statutory Sick Pay Rebate Scheme (SSPRS) for small and medium-sized employers has been temporarily reintroduced due to the increase of COVID-related (coronavirus) sickness absence. The scheme is available to employers with fewer than 250 employees for COVID-related sickness absences occurring from 21 December 2021 onwards.
The new temporary SSPRS will refund employers up to two week’s worth of coronavirus-related costs for each employee absent with the virus. To be eligible for the scheme, employers must:
- Be based in the UK
- Have employed less than 250 employees as of 30 November 2021
- Have used a PAYE payroll scheme as of 30 November 2021
- Have previously paid employees' coronavirus-related statutory sick pay.
Employers will be able to claim the costs for up to two weeks of SSP per employee that has to take time off because of COVID-19. Employers will still be able to claim for employees where they have previously made a claim for the same employee and the preceding scheme.
Further guidance can be found in the Government’s SSPRS factsheet.
The re-introduction of the SSPRS will commence from 14 January 2022 and will close on 17 March 2022.
After 17 March 2022, employers can no longer make a claim under the SSPRS for self isolation or coronavirus-related absences. Employers have until 24 March 2022 to submit any new claims for absence periods up to 17 March 2022, or to amend claims they have previously submitted. The PM has announced that the Covid provisions for SSP will remain for a further month (24 March 2022)
See the Government guidance for further information.
Coronavirus and SSP - when do I have to pay it?
The REC's guide to SSP related to Coronavirus
The special coronavirus provisions for Statutory Sick Pay (SSP) will end on 24 March 2022. This means that from 24 March, when an individual is ill due to coronavirus or they are self-isolating, they will no longer be deemed automatically incapacitated and will not be entitled to Statutory Sick Pay from day one of their illness or isolation.
Do I have to pay sick pay?
Statutory Sick Pay (SSP) was introduced in 1982. Payment is made by employers although the HM Revenue & Customs (HMRC) ensures compliance. Most employees are entitled to claim Statutory Sick Pay for the first 28 weeks of sickness after which time they are transferred to Invalidity Benefit or State Sickness Benefit (SSB) which may be available earlier if the employee is not able to claim SSP. Temporary workers who are paid subject to PAYE and NI contributions are also entitled to Statutory Sick pay provided they meet the statutory criteria applicable to all employees.
Where SSP is not payable employers are not obliged to pay employees when they are off sick but may have company sick pay schemes run by employers which are typically more generous than the statutory scheme and will probably be a top up of the difference between SSP or SSB and their normal wages for a specified period. However, such schemes will rarely be extended to temporary workers.
The legal obligation to pay SSP is contained in the Social Security Contributions and Benefits Act 1992 (the 1992 Act and the Statutory Sick Pay Scheme are the Statutory Sick Pay (General) Regulations 1982) (The 1982 Regulations).
What is the amount of SSP?
This rate is subject to change in each tax year.
The Statutory Sick Pay (SSP) calculator will help you to work out if you have to pay SSP and if so how much you must pay to your employee for an absence from work due to sickness for four, or more, days in a row. It will also help you to work out how much SSP you can recover for each tax month.
Who is entitled to SSP?
Statutory sick pay is payable to all employees, and agency workers paid PAYE even though they may be engaged on contracts for services. For ease, any reference in this section to employers and employees shall also include employment businesses and agency workers.
An employer is liable to make a payment to an employee who has a day’s incapacity for work in relation to his/her contract provided all other considerations of the scheme are satisfied.
The definition of an employee under the 1992 Act includes anyone who is over the age of 16, employed in Great Britain and subject to income tax under Schedule E. This is extended by Regulations to include “employed earners” and this category includes temporary workers supplied by an employment business to provide a “personal service subject to the supervision direction or control” as to the way in which they provide their service of the person to whom they are supplied.
The description of an “employed earner” includes a temporary worker who is engaged by an employment business under a contract for services and who is supplied to a client. Therefore, temporary workers are deemed to be “employed earners” and consequently are to be treated as “employees” for the purposes of the Statutory Sick Pay Scheme.
Prior to 27 October 2008 agency workers only qualified if they worked on an assignment or a series of assignments totalling 13 weeks or more. The case of HMRC v Thorn Baker Limited and others determined that Agency workers whose contracts are for a specified period of three calendar months or less are not entitled to SSP with the result that an agency worker on a fixed-term contract for less than three months is not entitled to SSP.
Since 27 October 2008 the Fixed Term Employees (Prevention of Less favourable Treatment) (Amendment) Regulations 2008 has entitled all agency workers to claim SSP from day one and without any qualifying period.
To summarise, a person will be eligible for SSP if they are either:
- An employee with a contract of service; or
- to be treated as an employee if they are an “employed earner” who renders a personal service and is subject to supervision, direction or control and who is paid by a third party or where fees are charged by a third party for the continued employment of the person employed i.e. an agency worker.
In the following circumstances an “employee” will not be entitled to claim SSP:
- Normal weekly earnings of the “employee” are less than the lower earnings limit for NI contributions which is subject to change in each tax year. If there are no normal weekly earnings, then an average must be calculated from gross earnings that attract National Insurance contributions before any deductions. The period of calculation is eight weeks ending with the last payday before the period of incapacity for work began
- During a period of 57 days ending immediately before the relevant date, the “employee” had at least one day on which he/she was entitled to invalidity pension, sickness benefit or maternity allowance. The receipt of benefits during any absence will normally be notified to you on a form that the “employee” will be given by the Department for Work and Pensions
- The “employee” has done no work for his employer under his contract (e.g. a temporary worker has not started an assignment with an employment business)
- the “employee” is away from work because of participation in a trade dispute
- The “employee” is, or has been, pregnant and the relevant date for ascertaining liability for SSP falls during maternity leave
- the “employee” is in police custody or is in prison on the first day of their incapacity for work.
- In certain circumstances, if the “employee” is outside the EU/EEA area on their first day of the period of incapacity for work or they go outside of the UK during their period of incapacity for work. Please contact us for clarification on when this applies.
The 1992 Act lays down certain circumstances in which the exclusions cannot apply and reference should be made to Schedule 11 of the Act if there is any question as to whether someone is excluded from liability.
If an “employee” is not entitled to Statutory Sick Pay by law, a Form SSP 1 should be completed by the employer, which will enable the “employee” to claim Social Security Benefit.The form must be given or sent to the “employee” no later than seven days after they have notified the employer of sickness. Any doctor’s notes and other documentation relating to the period of incapacity for work should be returned to the employee with the SSP 1.
Who is liable to pay SSP?
Employment businesses, as well as other organisations that employ staff, fall within the definition of “employer” under the 1992 Act if they are liable to pay Secondary Class 1 National Insurance Contributions in relation to any earnings of their “employees” under a contract.
How does a worker qualify?
There are three qualifying conditions for entitlement to SSP. Entitlement can only arise if all these conditions are satisfied. They are:
- That the day of sickness falls within a period of at least 4 consecutive days known as the “period of incapacity for work”;
- That they are employed at the time and it falls within the “period of entitlement”; and
- It falls on a “qualifying day” i.e. in practice a day on which they would normally work.
Period of Incapacity for Work (“PIW”)
An employer is liable to pay SSP provided the “employee” is off sick on a day on which they would normally work as part of a “period of incapacity for work”(PIW). That period must be four or more consecutive days of sickness and can include Saturdays and Sundays if they normally work on those days. If there are less than four consecutive days there is no PIW and you need take no action.
SSP is not payable for the first three Qualifying Days (QDs) in a Period of Incapacity for Work (PIW). These are called Waiting Days (WD).
If an “employee” has more than one period of sickness, each of which lasts for four or more calendar days in a row, and those two periods of incapacity for work are separated by periods of no more than eight weeks, i.e. 56 days, they will be treated as one single PIW. The effect of this is that if Statutory Sick Pay is payable in respect of the first PIW, it will automatically be payable for the second PIW. A series of periods of incapacity for work will therefore be linked if the breaks in between are no more than eight weeks in duration. The maximum entitlement is still 28 weeks. However, if there is a break of more than eight weeks between periods of incapacity for work, the maximum liability of 28 weeks will begin again. For example, Worker X is absent for 2 weeks but returns to work for 12 weeks and is then absent again for a further period of 28 weeks. In that case, the employer’s liability for that worker will be 30 weeks.
It is not necessary for the sickness to start on a QD, for example where the sickness began on a day when they would not be working. Where PIWs are linked and not all of the three WDs have been served in the first PIW, the remaining WDs must be served at the beginning of the next linked PIW. But once served there is no need for them to be served in any further linked PIWs.
Period of Entitlement
Any day of incapacity for work must fall within a period of entitlement. This begins with the commencement of a PIW, i.e. the first day of sickness, and ends when the employer’s liability towards that “employee” ceases, when the first of the following occur:
- Termination of that PIW, i.e. the employee is no longer ill;
- the day on which the employee reaches his maximum entitlement to statutory sick pay (a total of 28 weeks);
- The day on which the “employee’s” contract with the employer concerned expires or is brought to an end;
- In the case of an “employee” who is or has been pregnant the day immediately preceding the maternity pay or maternity allowance period.
Qualifying Days
The third condition for SSP eligibility is that the day of incapacity for work is a “qualifying day”. A qualifying day is a day of the week when the employee is required by his contract with that employer to be available for work or a day or days which is/are chosen to reflect the terms of that contract. Where qualifying days are determined by agreement between an employee and his employer, there shall be at least one qualifying day in each week (beginning with a Sunday). So a contract should specify which day or days of the week are to be qualifying days.
Where the contract does not specify a qualifying day or the days on which the employee must be available for work, the 1982 Regulations provide that the qualifying days will be either:
- The day or days on which an “employee” is or was required to work for that employer; or
- If the employer and “employee” agree that there are no specific days on which an employee is required to work, the qualifying day will be the Wednesday in any week;
- If the employer and “employee” cannot reach agreement about the days on which an employee is or is not required to work, the qualifying days will be days that none of the employees are or were required to work, e.g. Saturdays and Sundays.
On the basis that temporary workers are generally free to work when they wish and cannot be “required” to work on any particular day of the week, it is open to an employment business to argue that the qualifying day will be the Wednesday in each week worked in accordance with paragraph (b) above. This would have the effect of reducing liability to those cases where a worker is absent due to sickness for a period of at least four weeks.
However this argument should be used with caution and only in relation to the truly casual worker who works intermittently with no set pattern of work.
When is SSP payable?
An employer is required to pay SSP on the usual payday, i.e. the first day on which the employee would have been remunerated for his work on the day for which he/she is claiming SSP.
Statutory Sick Pay is only paid for qualifying days. The daily rate is the weekly rate divided by the number of qualifying days in the week for which you are paying SSP. If there is only one qualifying day a week, the entire weekly rate is payable for absence on that day. For SSP purposes, weeks begin on a Sunday.
SSP is treated like pay and so deductions for PAYE, Income Tax and National Insurance Contributions must be made before payment.
An employer can treat any payment which counts as earnings for National Insurance Contribution purposes, e.g. wages or Occupational Sick Pay Scheme payments, as payments towards SSP for the same day, or vice versa.
SSP is not payable for the first three qualifying days in any period of entitlement. These are called “waiting days”. Therefore, if an employee agrees with his employer that he is required to work Monday to Friday and he falls sick so that he is unable to work on Tuesday, he will only be able to claim SSP if he remains off work through sickness Tuesday to Friday inclusive.
If an employment business can argue that the only qualifying day is Wednesday, there will be no SSP due until the worker has been away sick for four consecutive Wednesdays.
How long is statutory sick pay payable for?
Liability for SSP will end when:
- The employee returns to work;
- The employee has received 28 weeks SSP;
- The employee’s contract expires or is brought to an end (for reasons other than avoiding SSP);
- The employee becomes entitled to Statutory Maternity Pay or maternity allowance
It is important to note that although an employer can dismiss an employee who is off sick the 1982 regulations provide that an employer shall continue to be liable to pay SSP if the contract is terminated by the employer solely or mainly for the purpose of avoiding liability for SSP.
In other words, the Regulations prevent an employer from ending a contract solely or mainly to avoid SSP.
In such circumstances, the liability will continue until one of the other events listed in above arises or, if earlier, until the date on which the contract would have expired, for example, the end of a fixed term contract or, in the case of an agency worker the end of an assignment.
Do I have to pay SSP to a temporary worker after their assignment has ended?
It is questionable whether you, as an employment business can terminate a temporary worker’s contract by giving notice to a worker who is unable to work through sickness, which effect will limit your liability for SSP, without the termination being considered solely or mainly for the purposes of avoiding SSP.
Any notice to terminate should be motivated by reasons other than the intention to avoid liability for SSP. The most obvious reason will be that the work is no longer available because the absent worker has been replaced in an assignment or the assignment has come to an end. If ill health is the reason for termination, you must have received medical evidence sufficient to enable you to enquire into the nature of the illness, the likelihood of it recurring and the length of likely absence, and there must be a requirement to find a replacement to carry out the work of the temporary worker who is absent.
REC recommends that notice to terminate be given at the earliest opportunity provided the work is no longer available i.e. the client has requested a replacement and does not want the sick worker back, or some enquiry is made of the medical condition of the temporary worker and the decision is taken in the light of that information. Notice should be communicated by telephone, where possible, and confirmed in writing, and the reasons for termination should be stated.
NB: Whilst temporary workers do not necessarily have a right to claim Unfair Dismissal, they may be able to bring a claim for discrimination. For instance:
- A temporary worker may be able to claim they have been subjected to disability discrimination under the Equality Act 2010. Members should take this into consideration in relation to a dismissal for ill health by reason of a “mental or physical impairment which has a substantial and long-term adverse effect on a person’s ability to carry out normal day to day activities”, i.e. disability as defined by the 2010 Act.
- A pregnant worker could have a claim for direct sex discrimination if you dismiss her because she is absent due to a pregnancy related illness, as this type of dismissal would only be applicable to a woman.
In order to avoid a discrimination claim, in such cases, on receipt of a medical certificate, you should continue to pay SSP until they are fit for work or their period of eligibility for SSP ends.
Does a worker have to notify me of their absence?
Notification of absence through sickness is not a requirement for SSP purposes as it is not evidence of incapacity. However many employers have rules about notifying absence and the Regulations state that you cannot insist that your employees tell you:
- In person
- Earlier than the first qualifying day in a period of sickness
- By a specific time on the first qualifying day
- More frequently than once a week
- On a special form
- On a medical certificate.
If you insist that notification is made in writing this must be treated as having been made on the day it was posted. If it is not possible to tell the date it was posted then one must assume it was posted two days earlier or three days if received on a Monday or a Tuesday. Allowances must be made for public holidays and any known local variations in postal arrangements.
If you make no rules about notification the Regulations state that the employees must tell you of any date they are unfit for work no later than seven calendar days after that day.
If notification is made later than the rules specified, or later than the seventh calendar day and you consider there was no good cause for the delay in notification, you can withhold statutory sick pay.
Can I require a doctor’s note?
In addition to notifying the employer of their absence, employees must provide reasonable evidence of incapacity.
Incapacity for work is defined as being “incapable by reason of some specific disease or bodily or mental disablement, of doing work which he can reasonably be expected to do under the contract”.
Employers have a duty to make “employees” aware of what is required of them although the method of notification is limited by the Regulations. During the first seven days of a spell of sickness, you cannot insist upon a doctor’s statement. Form SC2 is available for employees to certify themselves as sick for SSP purposes for the first seven days of illness. Thereafter, you can require evidence in the form of a doctor’s statement or a statement of fitness to work (fit note). A doctor’s statement is strong evidence of incapacity and should usually be accepted as conclusive unless there is evidence to the contrary.
If there are reasons to doubt a person’s incapacity, advice is available from the Benefits Agency medical advisers and you should contact your local office.
What is a fit note?
On 6 April 2010 the ‘statement of fitness to work’ (also known as a fit note) was introduced in England, Wales and Scotland to replace the previous ‘sick notes’.
The fit note indicates whether:
- The patient is unfit for work; or
- The patient may be fit for some work based on an assessment of their condition and advice and support given to them in order to aid a possible return to work.
The advice may be:
- a phased return
- working altered hours;
- amending duties; and / or
- making adaptations to the workplace.
The fit note will not state that the individual is fit to work as the doctor is not in a position to know enough about each individual workplace.
The idea behind the introduction of the fit note is to ensure that employers consider return-to-work options so that employees return as soon as is possible. This is due to the fact that it is known that the longer a person is off work, the less likely it is that they will return.
The fit note cannot be requested until after the employee has been off absent for 7 days.
Changes to who can certify fit notes
The Department for Work and Pensions (DWP) has announced new legislation that will allow multiple healthcare professionals to certify ‘fit notes’. The legislation is due to come into force on 1 July 2022 and will allow medical professionals such as physiotherapists, pharmacists, and occupational therapists to certify and issue fit notes. It is hoped that this will make it easier to obtain the evidence an employer requires regarding absence as well as easing pressure on doctors.
Can I reclaim SSP?
Employers are now only able to reclaim SSP in limited circumstances as the system previously place, the ‘Percentage Threshold Scheme’, was abolished from 6 April 2014. If you are eligible, you will only be able to reclaim SSP for sickness absences that occurred before 6 April 2014 and only have until 5 April 2016 to do so.
You may be able to reclaim SSP for sickness absences that occurred before 6 April 2014 if a high proportion of your employees were sick at the same time. If SSP was more than 13% of your Class 1 National Insurance contributions in a tax month, you can reclaim the difference.
How you reclaim the payments depends on how you reported payroll in the relevant tax year: if you were reporting via Real Time Information, include the amount you’re reclaiming in an Employment Payment Summary. Otherwise you must complete an SP32 form and send it to HMRC.
What happens if I dispute a worker’s claim?
If you decide not to pay SSP for a qualifying day, for whatever reason, you should explain your decision to the “employee”.
If they do not accept this, they have the right to ask for a written statement indicating which, if any, days are regarded as days for which SSP is payable and how much SSP is payable for each of those days. Alternatively, you must state why you do not consider yourself liable to pay SSP.
Such a statement must be supplied within seven days of the employee’s request. They can then ask the Adjudication Officer for a formal decision. The Adjudication Officer in the local Benefits Agency will consider the case and their decisions are independent and given strictly in accordance with the law. You will have an opportunity to provide written observations to the Adjudication Officer together with supporting evidence.
If the decision is that you are liable for SSP, the decision will give a time limit in which to pay. Both you and the employee will have the right of appeal to the Social Security Appeal Tribunal. At that stage there is a right to appear in person or be represented at a hearing before the Tribunal.
In some cases, there is a further right of appeal to the Social Security Commissioner whose decision is final, save that you can appeal on a point of law with leave to the High Court.
What are the practical steps to be followed on receipt of a claim from a temporary worker?
If you are notified of a worker’s absence through illness during an ongoing assignment you should first consider whether the worker has met the qualifying conditions to receive SSP:
- They are genuinely absent due to illness
- The period of illness they are claiming for falls during the course of an assignment or after they have accepted an assignment if they have received SSP from you during an earlier assignment within the last 8 days
- They have been absent from work for 4 or more days when they would normally be expected to work
- They are not excluded from claiming SSP
- They have notified you correctly of their absence
Secondly you should contact the client to establish whether the client requires a replacement or intends to wait for the absent worker to return.
If the worker is in an assignment for a fixed period of time e.g. one week, your liability will end when the assignment was due to end.
If the worker is in an assignment which is simply ongoing and:
- The client ends the assignment in the light of the worker’s absence you should take immediate steps to contact the absent worker, preferably in writing, to inform them that their contract has terminated “because the work is no longer available for them” and issue a P45.
A copy of the letter notifying the worker of termination should be provided to the DSS on receipt of any claim for SSP as proof of termination of the contract and the end of the employment business’ liability for SSP payments. - However if the client requests a replacement worker the DSS take the view that as it is an ongoing assignment, the temp would have continued in the booking but for their illness. They do accept though that if the client does not want the absent worker to return to the assignment that the agency has the right to end the contract. Again a letter should be sent together with a P45.
If the client intends to wait for the worker’s return you will be liable for SSP during their absence subject to any other event, which may bring liability to an end.
What is the Fit For Work service?
The Government has launched an occupational health service aimed at reducing the number of employees on long-term sickness absence.
Can an individual bring a claim for unpaid SSP?
An Employment Tribunal does not have jurisdiction to hear a claim from an ‘employee’ for unpaid or disputed Statutory Sick Pay (SSP). An ‘employee’ can only pursue this by raising a complaint to HMRC. This must be done in writing within six months of the earliest day that the entitlement to SSP is an issue.
A worker is treated as an employee for SSP so this applies to agency workers on a contract for services as well as employees on a contract of employment.
The details are set out in the regulation 3 of Statutory Sick Pay (Decisions) Regulations 1999 and the Social Security Contributions (Transfer of Functions, etc) Act 1999 (this gives HMRC the authority to hear such claims).
Our agency worker has been working on various assignments with us since July 2018. The agency worker is now off sick and the client wants to end the assignment. Does this end our liability to pay statutory sick pay?
Not necessarily, you might need to give statutory notice to end the agency worker’s contract and your liability to pay SSP. Agency workers are treated as employees for statutory sick pay (SSP) purposes. See, ‘who is entitled to SSP’ for more information. HMRC enforce SSP. Case law has determined that if an agency worker has been working on assignment for three or more months they are entitled to notice to end their contract for the purposes of SSP.
The judgment given in Brown v Chief Adjudication Officer 1997 stated that if an employee on a short term contract has been on that or a series of contracts for three or more months then they are entitled to treat their contract as being of indefinite duration as per what is now section 86 (4) Employment Rights Act 1996. This means that the contract can only be terminated by giving notice; failure to do so, even if the assignment has ended, will mean that the contract is ongoing for SSP purposes and will allow an employee to claim SSP if they meet the qualifying conditions.
Case law from the NHS Professionals v HMRC 2012 case has extended this right to agency workers and will apply to your worker because they have worked for you for over three months. HMRC take the view that if the agency worker has worked for you for over three months; provided the worker meets the qualifying conditions; unless you give statutory notice to end each of their assignments it is likely that the contract will be deemed to be ongoing and you are likely to be liable to pay SSP.
SSP entitlement runs for a maximum of 28 weeks unless the entitlement period ends sooner i.e. the worker returns to work, the assignment ends or the period of entitlement ends for some other reason. You will be liable to pay SSP until the period of entitlement ends.
If you terminate the contract solely to avoid paying SSP it is likely that you will still face liability. It is important that you terminate for a fair reason and not solely to avoid paying SSP. If the client has terminated, you could point to this as a reason for your termination but it may not eliminate your risk of liability to pay SSP. If in doubt contact HMRC for a determination.
Disclaimer
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