Statutory Sick Pay Guide for Employers

An introduction to this SSP Guide for small businesses, covering the period 6th April 2012 to 5th April 2013

Statutory Sick Pay Guide for Employers

Exceptions and checksheets for the SSP Scheme

How to work out Average Weekly Earnings (AWE)

To get SSP an employee must have AWE of at least £107.00 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 relevant period – you can work it out using the checksheet below
  • only include earnings paid in the relevant period.

Checksheet for weekly paid employees

To work out AWE for employees paid weekly or in multiples of a week, for example weekly, fortnightly, three weekly or other multiple weekly

1. Note first day of the PIW __/__/__
2. Find the date of the last normal payday before the first day your employee was sick. This is the last day of the relevant period. __/__/__
3. Count back to the payday that is at least eight weeks before the date in 2 and come forward one day, for example 25 August becomes 26 August.
This is the first day of the relevant period. mm/dd/yyyy
__/__/__
4. Add together all the earnings paid between the dates in 3 and 2 (inclusive). £
5. Divide the figure in 4 by the number of whole weeks in the relevant period. £

(Don’t round up or down to whole pence, use the unrounded figure to decide if the employee’s average earnings are high enough.)

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 relevant period – you can work it out using the checksheet below
  • only include earnings paid in the relevant period.

Checksheet for monthly paid employees

To work out AWE for employees paid monthly

1. Find the date of the last normal payday before the first day your employee was sick. This is the last day of the relevant period __/__/__
2. Find the date of the payday at least eight weeks back from the date in 1 and come forward one day, for example if the payday is 22 June, enter 23 June. This is the first day of the relevant period. __/__/__
3. Add together all the earnings paid between the dates at 2 and 1 (inclusive).
This is the first day of the relevant period.
__/__/__
4. Add together all the earnings paid between the dates in 3 and 2 (inclusive). £
5. Divide the figure in 4 by the number of whole weeks in the relevant period. £
6. Multiply the figure in 5 by 12 £
7. Divide the figure in 6 by 52 £

(Don’t round up or down to whole pence, use the unrounded figure to decide if the employee’s average earnings are high enough.)

Employees not paid in a regular pay pattern

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

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

Checksheet for employees not paid in a regular pay pattern

To work out AWE if you do not pay your employees in a regular pay pattern

Note the first day of the employee’s PIW __/__/__
1. Find the date of the last normal payday before the first day your employee is sick. This is the last day of the relevant period. __/__/__
2. Find the date of the payday at least eight weeks before the date in 1 and go forward one day, for example, 15 May becomes 16 May. This is the first day of the relevant period __/__/__
3. Add together all earnings paid between the dates in 2 and 1 (inclusive) £
4. Work out the number of days between the dates in 2 and 1 (inclusive)
5. Divide the figure in 3 by the number of days in 4 £
6. Multiply the figure in 5 by 7 £

(Don’t round up or down to whole pence, use the unrounded figure to decide if the employee’s average earnings are high enough.)

Weekly paid employee gets regular payment earlier or later than normal with more or less than eight weeks pay in the relevant 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 checksheet in How to work out Average Weekly Earnings (AWE) 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 relevant period

It is important that the following provision is only applied to regular payments of earnings paid other than on their normal date.

This usually happens when you decide to bring your employee’s normal payday 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 checksheet on How to work out Average Weekly Earnings (AWE), divide the figure in Step 4 by the number of weeks’ wages actually paid.

Rounding to the nearest whole month when there isn’t a whole number of months in the relevant period

To work out the AWE for monthly paid staff, where there is a part month payment in the relevant period, between the dates at 2 and 1, use the monthly paid checksheet on How to work out Average Weekly Earnings (AWE).

When you get to Step 4 of the monthly checksheet, work out the number of rounded months as follows:

  • • count the number of whole months
  • • count the number of odd days
  • • round the number of odd days up or down in line with these rounding rules.

If the date at 2 is in:

  • • February, round 14 days or less down and 15 days or more up
  • • any month except February, round 15 days or less down and 16 days or more up.

Then use the number of rounded months at Step 4 and follow the rest of the steps on How to work out Average Weekly Earnings (AWE)

Directors

Companies incorporated after 1 October 2009

There are new regulations for companies incorporated after 1 October 2009. They provide new Articles of Association for these companies and will:

  • apply by default if other Articles are not adopted
  • allow its directors to determine a director’s remuneration.

Directors can decide what and when to pay remuneration. There is no need for a resolution of the companies shareholders at its Annual General meeting (AGM).

In such cases payment of director’s fees will be regarded as earnings for the purpose of entitlement to SSP on the date payment was made.

Companies incorporated before 1 October 2009

The previous standard Articles, which apply in default, continue to apply. An ordinary resolution is required to determine director’s remuneration. The method of calculating director’s remuneration by an annual figure (after an ordinary resolution has been passed by shareholders) will apply to these companies. Any payments made in anticipation of the annual vote cannot be taken into account for calculating Average Weekly Earnings (AWE).

Paid contractually

If the director is contractually paid a regular salary calculate their Average Weekly Earnings (AWE) like any other employee by using the checksheets on How to work out Average Weekly Earnings (AWE).

Paid by a determination of the directors (not a formal vote)

Calculate their AWE by using the ‘Checksheet for directors paid only by a formal vote’, below, but use the date monies were paid instead of the date of the shareholders resolution at the AGM.

Paid both contractually and by formal vote

A director who is paid contractually may also be paid a bonus or fees by a formal vote. You must still calculate their AWE using the checksheets on How to work out Average Weekly Earnings (AWE)

You should only include the monies voted by formal vote if the date of the vote falls in the relevant period.

Paid only by a formal vote

If the director is paid only by a formal vote calculate their AWE using the checksheet below. A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.

Monies drawn in anticipation of a formal vote

Some directors may regularly draw money from the business in anticipation of a formal vote. Do not include this money when working out the director’s AWE, even if NICs were deducted at the time they were paid.

Checksheet for directors paid only by formal vote

To work out AWE for directors paid only by a formal vote

Note the first day of the employee’s PIW __/__/__
1. Find the date of the last normal payday before the first day your director was sick. (This is the date of the last formal vote)
This is the last day of the relevant period.
__/__/__
2. Count back to the payday at least eight weeks from the date at 1 until the date of the previous formal vote and go forward one day, for example, 15 May becomes 16 May. This is the first day of the relevant period. __/__/__
3. Add together the money voted and any other payments of earnings between the dates in 2 and 1 (inclusive)
(Do not include any money drawn in anticipation of the vote)
£
4. Work out how many whole months there are between the dates in 2 and 1 (inclusive). If there isn’t a whole number of months see
Rounding to the nearest whole month
5. Divide the figure in 3 by the number of days in 4 £
6. Multiply the figure in 5 by 12 £
7. Multiply the figure in 6 by 52 £

(Don’t round up or down to whole pence, use the unrounded figure to decide if the director’s average earnings are high enough)

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