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Statutory Sick Pay

Statutory Sick Pay: how different employment types affect what you pay.

All employees, and certain groups of workers, are eligible for Statutory Sick Pay (SSP) as long as they meet the other qualifying conditions. These groups are classed as employees for the purposes of SSP.

Casual, short-term and zero hour contracts

Individuals who are classed as employees for the purposes of SSP and are on casual, short-term or zero-hours contracts are eligible for SSP as long as they meet the other qualifying conditions.

The period for which SSP is due is different depending on whether or not the employee has had 3 months’ continuous employment with you.

The 3-month continuous period does not have to be immediately before a period of sickness, and is not broken:

  • by periods of sickness
  • by annual leave
  • if the employee was not offered work

It is only broken by a trade dispute, such as strike action, or if the employee has been given written termination of their contract.

If the employee has had at least 3 months’ continuous employment with you

The contract is considered as an indefinite period, and the employee is treated as an employee with a permanent contract, unless their contract states otherwise.

This means that eligibility for SSP continues for the entire period of incapacity for work unless either:

  • the employee is given written notice that their contract has come to an end
  • eligibility to SSP ends for another reason (for reasons other than avoiding liability for SSP) as detailed on the SSP1 form

If the employee has not had 3 months’ continuous employment with you

Eligibility for SSP continues until the end of any period the employee had agreed to work.

It does not continue for the entire period of incapacity for work if this continues after the period for which the employee had agreed to work.

If the employee had been offered and accepted other work, for example another assignment, with the same employer, eligibility will continue until the end of the last assignment, unless the employee has been given written notice that their contract has come to an end.

Agency workers

You can check your employment status for tax, in conjunction with the terms of the working relationship. This can be a helpful indicator of categorising an agency worker’s status.

Subject to the terms of working relationship, agency workers can be categorised as:

  • workers
  • employees
  • self-employed

Agency workers who are categorised as employed earners and meet the other qualifying conditions will be eligible for SSP.

Employed earners are people who are gainfully employed in Great Britain under a contract of employment, or in an office with earnings, or who are engaged under other forms of contract but classed as employed earners for the purposes of SSP. An agency worker will meet this definition if they are engaged under a contract of employment or if they are otherwise supplied by agencies to work under the supervision, direction, and control of the client.

Agency workers with overarching contracts which continue between assignments are, subject to them being employed earners and meeting the qualifying conditions, entitled to SSP for the entire period of incapacity until their contract ends (for reasons other than avoiding liability for SSP) or entitlement to SSP ends for another reason as detailed on the SSP1 form.

Agency workers whose contract does not continue between assignments are subject to them being employed earners and meeting the qualifying conditions entitled to SSP for the entire period of incapacity for work until the assignment ends (for reasons other than avoiding liability for SSP) or entitlement to SSP ends for another reason as detailed on the SSP1 form.

Agency workers who are employed earners and meet the qualifying conditions become eligible for SSP from the first day on which they have done some work under their contract. For agency workers who have an agreed future assignment which is to commence no later than 8 weeks after the end of the current assignment, SSP eligibility will arise from day one of that future assignment, as though it were the same assignment, even if they have not done any work under the future assignment.

Self-employed agency workers

Self-employed individuals, including self-employed agency workers, are not eligible for SSP.

Educational workers

Educational workers, including teaching assistants, lecturers, nursery workers, school bus drivers and kitchen staff, are eligible for Statutory Sick Pay provided they meet the other qualifying conditions.

Where they have a period of incapacity outside of term time, their eligibility depends on the type of contract.

If the employee has a contract that continues throughout the year, including between term times

Eligibility for SSP continues as it would for an employee with a permanent contract of employment.

This means that eligibility continues for the entire period of incapacity for work unless the employee is given written notice that the contract has come to an end (for reasons other than avoiding liability for SSP) or eligibility to SSP ends for another reason as detailed on the SSP1 form.

If the employee has a contract that only lasts for the school term, and not outside of term times

Eligibility for SSP ends with the school term times and so the individual is not eligible to SSP for periods of sickness which occur outside of term time.

Where one contract ends and a new one begins

Eligibility for SSP ends with the end of the first contract.

Where the individual falls sick between contracts, there is no eligibility for SSP for the period between contracts.

If the new contract begins within 8 weeks of the end of the old contract, then the 2 contracts will be treated as one, provided they are with the same employer. If the employee has done some work under the old contract then they will be eligible for SSP when the next contract begins, even if they have not done any work under the new contract.

Directors

Directors will need to meet the Statutory Sick Pay qualifying conditions, this includes their average weekly earnings being at least the Lower Earnings Limit (LEL).

The way a director calculates their average weekly earnings differs according to how they are paid. Usually, any earnings that directors get from the business will count towards this amount unless otherwise specified, this includes:

  • director fees
  • dividends
  • wages for other work they may do within the company

If a director is paid contractually by a regular salary

Their average weekly earnings are calculated as they are for any other employee considering eligibility for SSP.

If a director is paid only by a formal resolution

If payment is agreed only following a formal resolution, the director’s average weekly earnings are calculated by substituting the dates of the formal resolution in place of normal paydays.

Any payments made in anticipation of the resolution are not taken into account for the purpose of calculating average weekly earnings even if National Insurance contributions were deducted at the time of payment.

If a director is paid only by a determination of directors

If payment is agreed following a determination of directors, rather than a formal resolution, the director’s average weekly earnings are calculated by substituting the date of payment in place of normal paydays.

If a director is paid both contractually and by a formal vote or determination of directors, for example if they are paid a salary and a then a bonus

They will calculate average weekly earnings like any other employee.

They will count the separate payment on the date of payment, even if it was agreed by a formal resolution.

Contact AJR & Co Ltd for further advice