The Responsibility of Care: UK Employers and Statutory Sick Pay

Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or health & safety advice. For guidance or advice specific to your business, consult with a qualified professional.

When employees fall ill, they need to know that their employers will pay them enough to cover their basic living expenses and prevent their illness from causing financial hardship. This is why the UK government states that all employers have a legal obligation to provide their employees with statutory sick pay (SSP). Here, we’ll look at everything employers need to know about paying statutory sick pay and ensuring compliance with HMRC’s sick pay rules.

What is statutory sick pay?

Statutory sick pay (sometimes known as SSP sick pay) is a mandatory payment that employers are legally obliged to pay their employees when an illness prevents them from being able to work.

SSP represents a sort of minimum wage for sick employees. It is a legal requirement that employers must pay employees who have been off work due to illness for a minimum of 4 days. By rule of thumb, all contracted employees are eligible for SSP whether they are employed on a full-time or part-time basis. It is not legal to force employees to use paid holiday entitlement on days when they are sick as an alternative to paying SSP.

Employers are not legally obliged to keep records of SSP payments. However, it is always advisable to do so as they may be provided to HMRC in the event of an employee dispute.

How much are statutory sick pay rates?

At the time of writing, the weekly rate for statutory sick pay stands at £109.40. This sum is paid for all ‘qualifying days’ (i.e. days during which an employee would usually work). It is paid in exactly the same way as wages. Employees should receive their statutory sick pay entitlement on their usual pay, and employers should deduct tax and National Insurance from this pay as usual.

Where employees are employed on a daily rate, statutory sick pay may be calculated accordingly to ensure that it reflects the hours an employee would usually work. The UK government website has a handy SSP calculator to help work this out.

Just as employers elect to pay employees more than the minimum wage, employers may also pay their employees any amount they wish under their own discretionary sick pay scheme. However, discretionary rates must never fall below the statutory rate of £109.40 per week.

How long do employers need to pay statutory sick pay?

Employers are legally obliged to pay employees statutory sick pay for a maximum of 28 weeks. This limit applies from the first day that SSP takes effect. Please note that this is not the same as the first day of an employee’s absence.

In order for a day to qualify as a sick day, the employee must be completely absent from work. If an employee works for one minute or more before being sent home sick, the day does not qualify as a sick day.

When does statutory sick pay take effect?

SSP does not take effect on the first day of an employee’s absence. It only takes effect on the fourth consecutive working day an employee has been off sick. These first three days are known as ‘waiting days’ while the fourth day is known as the first ‘qualifying day’. The waiting days are typically not eligible for SSP sick pay unless they are part of a previous allocation of SSP within the past 8 weeks.

Where employees are sick for 3 days or less, the employer has no legal obligation to pay them SSP. However, many discretionary sick pay policies take effect earlier than this and offer sick pay for at least one of the 3 waiting days.

Who is eligible for statutory sick pay?

The SSP rules for employers provide guidance on which employees are entitled to statutory sick pay. From your first employee to your thousandth, every contracted team member is entitled to SSP as long as they meet the following criteria:

• They have an employment contract (including a short-term or zero-hours contract)

• They have carried out some work for you under their contract

• They earn an average of £123 per week or more

• They have been sick for 4 or more consecutive days

• They provide notice and proof of illness (i.e. a doctor’s note) when required

Are any employees not eligible for SSP sick pay?

While contracted employees generally qualify for SSP, there are some exceptions that may not be eligible. The following are not eligible for statutory sick pay:

• Self-employed contractors and agency workers

• Employees earning less than £123 per week

• Employees who have already had SSP for 28 weeks and have been back at work for less than 8 weeks

• Employees in receipt of Employment and Support Allowance (ESA) within the last 12 weeks

• Employees in the armed forces

• Employees who have been detained by the police or are in prison

• Employees earning maternity pay/maternity allowance

• Employees who have had a baby in the past 14 weeks

• Expectant parents with pregnancy-related illnesses where the baby is due in 4 weeks or less

• Agricultural workers who were employed before 1 October 2013. They receive agricultural sick pay (ASP) instead

What happens when employers do not comply with statutory sick pay regulations?

Employers will no doubt agree that looking after their valued employees while they are sick is its own reward and a vital part of their employee management infrastructure. However, it’s worth noting that non-compliance with statutory sick pay regulations can lead to some harsh penalties.

Employees who feel that they have not been provided with SSP when they should have will raise a query with HMRC’s statutory pay dispute team. An investigation will follow, and any employer found to have denied SSP to an eligible employee will face fines of up to £3,000.

Furthermore, failure to allocate the correct amount of SSP to an employee will also result in a fine of up to £3,000, while failure to provide clear and accurate information for employees about their rights pertaining to statutory sick pay and other forms of statutory pay (e.g. maternity pay) can result in a £300 penalty with an additional £60 penalty for every day the failure continues.

This is why it is advantageous to use automated tools to ensure that the correct statutory sick pay rates are assigned to employees.

How Square Team Management software can help

Square’s powerful yet intuitive team management platform can take the leg work out of statutory sick pay compliance. You can set up statutory sick pay rates (or any sick pay policy) from your employees’ profiles, track sick pay based on fixed amounts or hours worked, and pay out statutory sick pay while running payroll in just a few clicks.

Statutory sick pay: An FAQ for employers

We have done our best to cover all aspects of SSP rules for employers above. But if you still have some lingering questions, we will endeavour to answer them in this FAQ section.

Who pays for statutory sick pay?

The Statutory Sick Pay (General) Regulations 1982 state that SSP is an overhead cost that must be paid by the employer. Employers are also responsible for ensuring that the appropriate tax and national insurance contributions are deducted.

Can I offer employees more than the statutory sick pay?

Yes, absolutely. While HMRC sick pay rules dictate that employers can never offer employees less than the statutory amount of £109.40 a week for up to 28 weeks, companies with their own sick pay scheme can pay employees whatever they wish when they are off sick.

This is known as a discretionary sick pay scheme. When designing and implementing a discretionary sick pay scheme employees must ensure that the scheme:

• Treats both part-time and full-time staff equally

• Does not discriminate against employees because of disabilities and other protected characteristics such as gender reassignment

What happens after the 28-week statutory sick pay limit?

Statutory sick pay regulations state that employers must support employees who are too sick to work for up to 28 weeks. When this period elapses, employers have a range of options, including:

• Offering extended sick pay in line with their own discretionary scheme

• Encourage the employee to apply for Employment and Support Allowance or Universal Credit

In the latter case, employers must send an SSP1 form to employees 7 days at the latest before the SSP period ends. Ideally, this should be sent 2-3 months before the end of the 28 weeks in order to ensure continuity of income for the employee.

Whichever option is chosen, employers must recognise that a contract of employment still exists between employer and employee.