HRA guide to Statutory Sick Pay (SSP) for small business employers

A guide to Statutory Sick Pay (SSP) for small business employers

Statutory Sick Pay (SSP) is a payment provided to employees and workers in the United Kingdom who are unable to work due to illness or injury. It is a legal entitlement that aims to support the employee or worker during times of temporary illness or incapacity. For small business owners, it’s important to understand how this legal requirement is implemented correctly in your business.

So if you’re a business owner with full-time employees, part-time workers, or even if you are self-employed, it’s important to understand SSP to remain legally compliant.

In this comprehensive guide, we cover the eligibility criteria, payment rates, duration, and various scenarios where SSP applies to provide you with the rights and entitlements of your employees and your responsibilities when it comes to Statutory Sick Pay.

Employee eligibility criteria for Statutory Sick Pay

To qualify for Statutory Sick Pay, your employees or worker must meet certain criteria:

Firstly, they must be an employee, earning at least £120 per week.

Secondly, their illness or injury must have caused them to miss work for a minimum of four consecutive days, including weekends and public holidays.

The employee must inform you, their employer, about their absence within their specified timeframe and they must provide a valid note from a doctor after being absent for more than seven days. This note serves as evidence of your incapacity to work. If the employee fails to meet all of these criteria, they may not be eligible for Statutory Sick Pay.

How much is Statutory Sick Pay in the UK?

The current SSP rate is a rate of £109.40 per week. It’s essential to remember that the Government updates this amount annually.

As the employer, you need to make this payment in the same way as the normal wages, for example monthly or weekly.

It’s important to note that SSP is not paid for the first three days of an absence, commonly known as waiting days. After this initial period, you will need to start paying the equivalent weekly rate of £109.40 for up to 28 weeks. If an employee is still unable to work beyond this period, other government benefits may be available to support them during their prolonged absence, such as Employment and Support Allowance (ESA).

Calculating Statutory Sick Pay

Calculating Statutory Sick Pay can be a bit confusing, especially if the employee works irregular hours or earns a variable income. To simplify the process, the government has provided a calculation method:

If the employee earns a fixed salary, their weekly SSP entitlement will be the same as their salary, up to the maximum rate of £109.40.

If the employee has irregular hours or earns a variable income, their average weekly earnings over the past eight weeks will determine their SSP entitlement.

To calculate average weekly earnings, add up their total earnings over the past eight weeks and divide it by eight. Ensure to include any overtime, bonuses, or commission you received during this period. The resulting average weekly earnings will be used to determine their SSP payment rate.

Statutory Sick Pay for part-time and casual workers

Part-time and casual workers are also entitled to Statutory Sick Pay, as long as they meet the eligibility criteria mentioned earlier. If they work irregular hours or have a variable income, their SSP entitlement will be calculated based on their average weekly earnings over the past eight weeks, as described above.

It’s important to note that the calculation includes the worker’s total earnings, including any overtime or bonuses received during the eight-week period.

Statutory Sick Pay during pregnancy and maternity leave

Pregnant employees and those on maternity may also be eligible for SSP if they are absent from work due to a pregnancy-related illness or injury. The same eligibility criteria mentioned earlier apply, including the need for a valid fit note after seven days of absence.

During maternity leave, if a worker becomes ill or injured and is unable to work, they may still be entitled to Statutory Sick Pay. In this case, the SSP will be paid instead of their maternity pay.

Statutory Sick Pay for self-employed individuals

If you’re self-employed in your small business then SSP is not available, however, there are alternative options to consider. The government provides a benefit called the New Style Employment and Support Allowance (ESA), which offers financial support for those unable to work due to illness or disability.

To be eligible for New Style ESA, you must have made sufficient National Insurance contributions in the past two to three years. It’s advisable to explore this option if you are self-employed and require financial support during periods of illness or incapacity to work.

Statutory Sick Pay for employees on fixed-term contracts

Employees on fixed-term contracts are entitled to Statutory Sick Pay, provided they meet the eligibility criteria described earlier. The duration and payment rate for SSP apply to fixed-term contract employees in the same way as for permanent employees. It’s important to check that their minimum earnings threshold has been met and that they provide the necessary documentation, such as a note from a doctor, to claim SSP during their fixed-term contract.

SSP might be an option until the end of your contract at which point their eligibility ends.

How SSP works with other benefits

Statutory Sick Pay may also have implications on other benefits the employee or worker may be receiving. For instance, if they receive Universal Credit, SSP will be treated as income and may affect the amount they receive from Universal Credit. The worker needs to inform their Jobcentre Plus work coach about any SSP payments to ensure benefits are adjusted accordingly.

Similarly, if they are receiving other benefits such as Housing Benefit or Council Tax Reduction, they must inform the relevant authorities about their SSP payments. This will prevent any potential overpayments or discrepancies in the benefits received.

How an employee or worker should claim Statutory Sick Pay

To claim Statutory Sick Pay, an employee or worker must inform you about their absence as soon as possible. Your company handbook will normally describe the specific procedures in place for reporting sickness or injury so use this as an opportunity to check the document is up to date.

As their employer, it’s your responsibility to assess their eligibility for SSP based on the information provided. If you approve, you will need to start paying SSP in the same way as their regular wages, either weekly or monthly.

Common questions

One common misconception is that SSP is only payable for work-related illnesses or injuries. However, this is not the case. SSP is available for any illness or injury that prevents an employee or worker from working, regardless of its cause.

Another question that is often asked is if SSP is taxable. The answer is yes, SSP is subject to income tax and National Insurance contributions, just like regular wages.

Summary

Statutory Sick Pay plays a vital role in supporting your employees during periods of illness or injury. By understanding the eligibility criteria, payment rates, duration, and various scenarios where SSP applies, you can ensure your business supports your employees and provides the legal requirements they are entitled to. Remember to ensure that your company handbook has a description of the procedure for reporting an SSP claim and if someone does claim, make sure you communicate with them to stay informed about any changes that may impact their SSP payments.

Written by

Anna Thornhill
Anna Thornhillhttps://gosmallbusiness.co.uk
Anna Thornhill is one of our expert writers. Anna is our specialist editor covering business growth and marketing and makes it her mission to provide small business owners with practical guides that help you step-by-step to grow your business. Anna’s an experienced sales and marketing professional who moved to writing and editorial and helps startups and small business owners with practical advice in growing their business with the latest sales and marketing techniques plus guides to choosing and using sales and marketing technology.

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