Sick Pay Guide for Employers

Terms and Conditions used in this Helpbook

Statutory Sick Pay (SSP)
A measure of earnings replacement for employees who are off work sick.

Employers are liable to pay this to all their employees who satisfy all the qualifying conditions when they are off work sick.

Incapacity Benefit (IB)
A social security benefit for people who are incapable of work because of an illness or disability, and who are not entitled to SSP from their employer, or have already had all the SSP they are entitled to.

Employment and Support Allowance (ESA)
Employment and Support Allowance is a new Social Security Benefit that will replace Incapacity Benefit for new customers from Autumn 2008.

Employee
An employee is a person whose earnings attract a liability for employee’s primary and employer’s secondary Class 1 National Insurance contributions (NICs), or would but for the person’s age or level of earnings.

Employees include office holders, for example police officers, Members of Parliament, the judiciary and some company directors.

People who are classed as employed earners for Class 1 NICs liability are also employees for SSP.

If you are unsure who is an employee and who is an employer contact your local HMRC office.

Employer
An employer is whoever is liable to pay the employer’s secondary Class 1 NICs, or would be but for the employee’s age or level of earnings.

Period of Incapacity for Work (PIW)
A period of sickness lasting at least four or more days in a row.

All days of sickness count towards the total number of days in a PIW, even non-working days. If there are less than four consecutive days there is no PIW and you need take no action.

To check if an employee’s PIW links with a previous PIW

Lower Earnings Limit (LEL) This is the minimum level of earnings that employees need to qualify for benefits, such as State Pension and Jobseekers Allowance and for statutory payments such as SSP.

It is also the level that an employee’s Average Weekly Earnings (AWE) must reach in a specific period for them to get SSP. See Does your employee earn enough? for how to work out AWE. For 2013-14 the LEL is £109.00 weekly.

Linking
Periods of Incapacity for Work (PIWs) are linked and treated as one PIW if the gap between them is eight weeks or less. The tables of this guide will help you decide if PIWs are linked.

Linking letters
Jobcentre Plus or in Northern Ireland the Jobs and Benefits Office give these forms to people who have recently received benefit. You will need to ask your new employees who go sick for four or more days in a row in the first 104 weeks after they start, or return to work for you, if they were given one of these forms.

If they say they do not have one of these forms but you think they may have been getting IB from Department for Work and Pensions (DWP) in the last 104 weeks, you can check with Jobcentre Plus or in Northern Ireland the Jobs and Benefits Office to see if they are entitled to receive IB.

Qualifying Days (QDs)
The only days you can:

  • pay SSP for, and
  • count as Waiting Days (WDs).

They are usually the days of the week your employee normally works; their contracted working days.

You can decide not to use the contracted working days if, for example, your workforce operates a varied work pattern each week. For simplicity you may want to have the same days each week as the QDs, but you must first reach agreement with your workforce or their representative(s) about which days will be QDs.

There must be at least one QD in each week running from Sunday to Saturday. Bank Holidays and other non-working days do not alter the normal pattern of QDs.

Waiting Days (WDs)
SSP is not payable for the first three QDs in a PIW. These are called Waiting Days (WDs).

They are not always the first three days of sickness as the employee may have been sick on non-QDs.

Where PIWs are linked and all three WDs have been served in the first PIW, there will be no WDs in any later linked spells of sickness. But, if all three WDs have not been served in the first PIW, any remaining WDs must be served at the beginning of the next linked PIW or series of linked PIWs.

Week
For working out SSP entitlement and payment, a week is a period of seven days starting on Sunday and ending on Saturday. Percentage Threshold Scheme (PTS)

The scheme under which an employer may be able to recover some, or all, of the SSP they have paid to their employees in a tax month.

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