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Statutory Sick Pay: A simple guide for businesses

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Statutory Sick Pay has been hitting the headlines recently because of its role in helping people deal with the financial effects of coronavirus (Covid-19).

But, even without that vital role, it continues to be an important entitlement for employees as it means they must be paid when they are too sick to work.

For employers, it’s important to understand what Statutory Sick Pay is, how it works and what it means for employees. These points and more are covered in this article.

What is Statutory Sick Pay?

UK employees are legally entitled to receive a payment called Statutory Sick Pay (SSP) from their employer if they are too ill to work.

As an employer, you must pay SSP to all employees who are off work due to sickness and who qualify for sick pay.

SSP applies only to employees and not to the self-employed.

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How much is Statutory Sick Pay?

SSP is £95.85 per week. You cannot pay employees who are not working due to confirmed illness less than this statutory amount. But you can pay more if you have a sick pay scheme.

There are different sick pay rules for workers in specific sectors such as those in agriculture.

How long does Statutory Sick Pay last?

SSP is paid for up to 28 weeks. It is only paid for qualifying days – those for which employees are off sick when they would usually have worked.

Eligible employees will receive SSP for all qualifying days, except the first three, known as waiting days (although this has temporarily changed – see Coronavirus and Statutory Sick Pay below).

Employees only get paid for waiting days if they have already received SSP within the last eight weeks, and that included a three-day waiting period.

Coronavirus and Statutory Sick Pay

The UK government brought forward emergency legislation for employees who are sick or self-isolating because of coronavirus.

Since 13 March 2020, employees are able to get SSP from the first day they are off work due to the virus, if they meet other SSP eligibility criteria.

They still need to have been off work sick for four or more days in a row, including non-working days, but the payment starts from day one.

HMRC is working with the payroll industry and employers to develop a mechanism for delivering coronavirus SSP, since the chancellor announced it in the budget.

Who pays Statutory Sick Pay?

Employers pay SSP in the same way they pay normal wages, for example weekly or monthly on pay day. They must deduct tax and National Insurance.

The government has announced that small and medium-sized businesses can reclaim SSP that’s paid to employees who are sick due to coronavirus. With the exception of SSP relating to coronavirus, you cannot reclaim SSP for sick leave.

If an employee has more than one job, they may get SSP from each employer.

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How Statutory Sick Pay works for different employee types

To qualify for SSP, the receiver must be classed as an employee and have done some work for you. They must have been ill for at least four days in a row, including non-working days, and earn a minimum average salary of £118 per week.

Agency workers are entitled to SSP, as are part-time staff, temporary staff, and those on fixed contracts, provided they meet the relevant criteria.

Workers do not qualify if they:

  • Have already received the maximum amount of SSP (28 weeks)
  • Are receiving Statutory Maternity Pay
  • Are off work for a pregnancy-related illness in the four weeks before the week their baby is due
  • Were in custody or on strike on the first day of sickness, including any linked periods
  • Are working outside the European Union and not liable for their National Insurance contributions
  • Received employment and support allowance within 12 weeks of starting or returning to work for you.

You can use the government’s SSP calculator to check their eligibility.

There are different rules for entitlement for:

  • Casual, agency and zero-hours workers
  • Agricultural workers
  • Educational term-time workers
  • Directors
  • Mariners
  • Educational workers
  • Employees who have more than one job or contract with you
  • Those working outside the UK on the first day of sickness.

Statutory Sick Pay calculator

Calculating SSP manually can be time consuming, so the government has created a calculator that takes you through several steps as per the criteria above.

If there is more than one linked period of sickness, you will need to work out the SSP manually.

Some payroll software also calculates SSP automatically, or you can process it manually in the software if you need.

How can employees claim Statutory Sick Pay?

To claim SSP, employees need to tell you, the employer, they are sick by the deadline set by you – or within seven days if you do not have one.

They only need a fit note (also known as a sick note) from their doctor if they are off sick for more than seven days, including non-working days.

If an employee thinks a decision not to pay SSP is wrong, or they are getting the wrong amount, they can ask you for a reason.

If this does not solve the problem, tell them to contact HMRC statutory payment dispute team.

Offering a company sick pay scheme

Company schemes are also called ‘contractual’ or ‘occupational’ sick pay and must be included in an employment contract.

One main benefit of having a company scheme is that you can offer employees more than the statutory £94.25 a week for up to 28 weeks. This reduces financial hardship and helps promote a healthy and supportive workplace.

Laura Kearsley is the head of employment at Nelsons Solicitors. When it comes to setting up a company sick pay scheme, she says things to consider are: “Is it affordable; is it consistent with sick pay provision in your industry; and do you have the absence management processes and tools alongside the scheme to make sure it is managed and not abused?”

Kristian Jones, principal at Ashburnham Solicitors, says: “If setting up a company sick pay scheme, the main considerations are how much you wish to pay over and above the SSP entitlement, how it will be paid and for how long.

“Employers also need to consider which employees it will cover and which ones it will not although the scheme must not discriminate against employees based on any protected characteristic under the Equality Act.

“Usually sick pay schemes give full pay for a period, then reduce the pay by a percentage.

“But an employer will also need to consider questions such as whether an employee will be entitled to company sick pay in their probationary period; and what if someone goes into hospital for an elective procedure?”

Managing Statutory Sick Pay with software

For employers, manual SSP calculations can be time consuming, but up-to-date HR and payroll software can greatly reduce the administrative burden, making your SSP processes more efficient and reducing compliance risk.

Jones says cost, compatibility and user friendliness are the three biggest factors when purchasing such software.

Kearsley says another important consideration is the ability to make changes or adapt to changing legislation.

Good HR and payroll software keeps up to date with the latest legislation and simplifies processing of sick pay by automatically calculating SSP for you. It also allows you to record sick days on the individual employee’s diary, and keep track of employees’ sickness.

Conclusion on Statutory Sick Pay

SSP is an important entitlement to millions of employees, as it ensures they can continue to support themselves when they are too sick to work.

The SSP system is also now providing a vital mechanism for the government to support people affected by coronavirus.

Manual SSP calculations can be time consuming but the latest software can ease that burden greatly, increase efficiencies in your HR and payroll function, and make sure you stay up to date with the latest legislation.

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Comments (2)

  • Hi there, we have an Employee who has been furloughed from the 25/03/2020. I don’t have an exact date yet, but she is due to go on Statutory Maternity leave sometime in June. I know her pay has to be based on their usual earnings rather than the furloughed pay rate, but i’m not sure how we calculate it. Is there an update for SAGE that will incorporate this or will we need to calculate it manually? We are using version V26.01.162. We haven’t used SAGE 50cloud payroll module to make our claims. We have used the HMRC option.

    kind regards,

    Vicky Dawson

    • Hi Vicky,

      The calculation of an employee’s statutory maternity pay (SMP) entitlement is usually based on their average weekly earnings during the calculation period, i.e. the eight weeks leading up to the 14th week before their expected week of childbirth. However, the Government has amended the rules on the calculation of SMP for employees who have been furloughed under the Coronavirus Job Retention Scheme.

      For periods of maternity leave beginning on or after 25 April 2020, if an employee was furloughed and on reduced wages during any part of the calculation period, their SMP should be calculated using the pay they would have earned had they not been furloughed.

      When processing this in Sage 50cloud Payroll you’ll to need to calculate and process the employee’s SMP manually:

      Prepare an employee record for manual SMP
      1. Double-click the required employee, then click the Absence tab.
      2. Click S.M.P, then select the Manual Statutory Maternity Pay Calculations check box.
      3. Click OK, then click Save.
      4. Click Close.

      Process manual SMP
      1. Select the required employee, then click Payroll.
      2. Click Enter Payments, then click the Summary tab.
      3. For Statutory Maternity Pay, under Current, click the finder button.
      4. Enter the value of SMP you want to pay your employee this pay period, then click OK.

      Regards,

      Paul
      Sage UKI