Statutory Sick Pay (SSP)
An employer is obliged to pay an employee Statutory Sick Pay (SSP) when the employee has already been absent from work for more than three consecutive days. SSP is paid to the employee from the fourth consecutive day onwards.
Only full days are recorded for the purposes of SSP. So, for example, if an employee is off work because of sickness for a half day, this is not recorded for SSP purposes.
The amount of SSP the employee is entitled to depends on a number of factors, such as their Average Weekly Earnings prior to the absence.
However, the employee is obliged to notify their employer of their extended absence in a timely manner, and they must also provide adequate evidence of their incapacity to work.
The employee must satisfy the following criteria to qualify for SSP:
- Notify the employer of the extended sickness absence
The employee must notify the employer of their extended sickness absence within a specific number of days.
The employer can specify the number of days. Otherwise, it must be done within 7 days of the first day of absence.
- Provide evidence of incapacity to work
The employee must provide evidence to the employer of their incapacity to work. The employer may have specific evidence requirements.
For extended sickness of up to 7 working days, verbal evidence, a letter or an SC2 form is usually acceptable.
(You must retain written evidence for at least 3 years after the year to which it relates. This is to ensure that it’s available in the event of an HMRC audit.)
For longer sicknesses, a doctor’s statement is usually required.
- The absence must be longer than three consecutive days
The period during which the employee is absent from work through sickness is sometimes termed the ’ Period of Incapacity to Work’ (PIW).
During the first 3 days of the PIW, the employee is not entitled to SSP. These 3 days are sometimes referred to as ‘waiting days’.
Days on which the employee is entitled to SSP are sometimes referred to as ‘qualifying days’.
Only on the fourth consecutive day does the employee become eligible for SSP, so the fourth day is the first qualifying day.
(However, waiting days don’t apply in the case of ‘linked PIWs’. See below for more information.)
The employee’s ‘working pattern’ determines where waiting days and qualifying days fall. You set their working pattern when you are editing their details.
For more information, see Creating an Employee.
- Earnings prior to absence
The employee’s eligibility for SSP depends on whether their Average Weekly Earnings (AWE) exceeds a particular level set by HMRC.
This level is called the Lower Earnings Limit (LEL).
Normally, the AWE is calculated from the employee’s pay over the 8 weeks immediately prior to the first day of absence.
The AWE amount is calculated as follows:
AWE = (Total Earnings in Past 8 Weeks) / 8 weeks
If the employee hasn’t been in with the company for 8 weeks, the AWE value is calculated over the total amount of time the employee has been employed by the company prior to the first day of absence.
So if the employee worked 3 days prior to the first day of absence, the AWE is calculated as follows:
AWE = (Total Earnings in this Employment x Number of working days per week) / 3 Days
What happens if the employee’s AWE is less than the Lower Earnings Limit?
In this case the employee is not entitled to SSP.
Instead, the employer should issue the employee with an SSP1 form.
This form enables the employee to apply for either Incapacity Benefit or Employment Support Allowance at their local Jobcentre Plus office.
HMRC sets a universal weekly SSP rate.
From this, the appropriate daily rate is calculated for each individual extended absence through sickness as follows:
Daily SSP Rate = (Weekly SSP Rate x Number of Days on which SSP is Payable) / Number of Working Days per Week
An employee receiving SMP or Maternity Allowance (MA) is not entitled to receive SSP during the 39-week time during which SMP or MA is payable.
And even if the employee is not entitled to either SMP or MA, she is not entitled to SSP during the 18 weeks that begins on the earlier of the following:
- The start of the week in which her baby is born.
- The start of the week in which she is first off sick because of her pregnancy, if this is on or after the start of the fourth week before her baby is due.
If she is receiving SSP, her entitlement to SSP ends on the earlier of the following:
- The date on which her baby is born.
- The day she is first off sick because of her pregnancy, if this coincides with some or all of the following span of time:
- Start: The Sunday beginning the fourth week before her baby is due.
- End: The baby’s due date.
The normal qualifying rules for SSP should be applied to the employee if the absence occurs after the 39-week period in which she is entitled to SMP or MA.
If the absence begins before or during the 39-week SMP period, she is not entitled to SSP until another unlinked absence occurs at least eight weeks after the end of that absence.
For example, if she phones in sick on the day she is due to start work after her SMP or MA has finished, she could be entitled to SSP if she meets the other qualifying conditions.
However, if she phones in sick during the last week of her SMP or MA and says that she will not be able to return to work because she is sick, she is disqualified from SSP throughout that particular absence.
If she returns to work and subsequently has a PIW due to sickness before the end of the SMP period (39 weeks), she may be due SMP instead of SSP.
In the 2013/14 tax year
If the total amount of SSP paid in a month exceeds a percentage threshold set by HMRC, you can reclaim the SSP amount over and above the threshold.
The threshold is a specific percentage of the gross Class 1 NIC (Employer and Employee) liability for the relevant month.
You recover the SSP amount through reduced liability in the month to tax, employee and employer Class 1 NI contributions and Student Loan deductions.
In the 2014/15 tax year
From the start of the 2014/15 tax year, you can no longer recover SSP payments.
To provide an incentive to employers to take a proactive approach to sickness absence management, the Government intends to introduce the Health and Work Service (HWS) by the end of 2014. This new service will provide health and work advice to employers, employees, and general practitioners.
The HWS is funded through the abolition of the percentage threshold scheme for recovering SSP payments.
For comprehensive information about how SSP works, including worked examples, click here.