Sick Pay Guide for Employers

How to work out the set period

You need to work out the ‘set period’ to establish the earnings to be used and the earnings period. All earnings paid in the ‘set period’ will be divided by the number of days, weeks or months in that ‘set period’. Regulations define the ‘set period’ as the period between:

Date 1 the last normal pay day before the first complete day of sick absence. This pay day is Date 1 and is the end of the ‘set period’, and
Date 2 the last normal pay day falling not less than eight weeks before the pay day at Date 1. Date 2 is the day after this pay day and is the start of the ‘set period’.

You must include all the earnings paid on, or after, Date 2 up to and including those paid on Date 1.

The ‘set period’ ends with the last normal pay day before the first complete day of sick absence and starts with the day after the last normal pay day at least eight weeks before that.

See the example below of how to work out the ‘set period’ correctly.

Example – weekly paid employee
Employee paid every Friday.
First full day of sick absence 11/06/08.

Weekly Paid Employee Table

The set period is therefore from 12 April to 6 June 2008.

Average Weekly Earnings – total earnings £860.21÷ 8 = £107.52625.

Do not round the average earnings figure up or down to whole pence.

Example – monthly paid employee
Employee paid on the last working day of each month.
First full day of sick absence16/06/08.

Monthly Paid Employee Table

The set period is therefore 1 April to 30 May 2008

Average Weekly Earnings – total earnings = £1,409.30 ÷ 2 x 12 = £8,455.80 ÷ 52 = £162.61153.

Do not round the average earnings figure up or down to whole pence.

Weekly or multiple weekly paid employees – how to work out Average Weekly Earnings (AWE)

To get SSP an employee must have AWE of at least £90.00 in the period of at least eight weeks before the first day they are off work sick.

To work out AWE you must:

  • always use the set period – you can work it out using the check sheet below
  • only include earnings paid in the set period.

AWE Weekly Paid Employees Table

Calendar monthly paid employees – how to work out Average Weekly Earnings (AWE) To work out AWE you must:

  • convert monthly pay into an average weekly amount
  • always use the set period – you can work it out using the check sheet below
  • only include earnings paid in the set period.

AWE Monthly Paid Employees Table

Weekly paid employee gets regular payment earlier or later than normal with more or less than eight weeks pay in the set period

This usually happens when, for example, you pay a week’s wages early because of a holiday.

Follow Steps 1 to 4 of the weekly check sheet and divide the figure in Step 4 by the number of weeks wages actually paid.

Weekly paid employee without a whole number of weeks in the set period

This usually happens when you decide to bring your employee’s normal pay day forward because of Bank Holidays at Easter, Christmas or when you pay them early or late, such as when you withhold pay for late notification of sick absence and pay it later.

Follow Steps 1 to 4 of the weekly check sheet, divide the figure in Step 4 by the number of weeks’ wages actually paid.

Agency and short contract workers – weekly paid

If an agency or short contract worker had periods when they were not contracted to work for you or a client of yours, and there were less than eight weeks break between their contracts, you should only count the weeks they were contracted to work.

Follow Steps 1 to 4 of the weekly check sheet and divide the figure in Step 4 by the number of contracted weeks.

Employee paid at irregular intervals

If you pay your employee at irregular intervals, for example:

  • because they do not work for you during every pay period see ‘Agency and short contract workers’ above, or
  • they are paid on a commission only basis – use the check sheet below to work out their average weekly earnings.

If you do not pay your employees in a regular pay pattern use the check sheet below to work out their AWE.

If you do not pay your employee for all weeks because they did not work for you in every week, go to ‘Agency and short contract workers – weekly paid’ and follow that method to calculate their AWE.

Check sheet for employees paid at irregular intervals

Check sheet for employees paid at irregular intervals

Directors

If the director is contractually paid a regular salary, calculate their AWE like any other employee. The director may also be paid a bonus or fees by a formal vote. If so, only include this if it is paid in the set period.

If the director who is paid by a formal vote may also draw money from the business on a regular basis in anticipation of the vote do not include these drawings in your calculation as they are not earnings for SSP purposes even if the director has chosen to pay voluntary Class 1 NICs on them at the time they are drawn. Calculate their AWE using the check sheet below.

Check sheet for directors paid by formal vote

Check sheet for directors paid by formal vote

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