Last reviewed 17 June 2019
John Davison looks at the alternatives that can be considered by businesses when designing appropriate sickness, sick pay and absence policies.
Statutory Sick Pay (SSP) is to be paid to employees that are too ill to work. This article explains the legal requirements and practices concerning SSP and then discusses the optional occupational sick pay schemes that may be offered.
Employees that earn more than the lower earning limit as set by the government each year have an entitlement to SSP after they have been off sick for four or more days in a row (including non-working days). No SSP is payable for the first three days (these are called the waiting days). The employee must inform the business of their illness within seven days or within the deadline set by the company’s procedures. A business only has to pay SSP if these conditions apply and the business pays Class 1 National Insurance contributions (or would do if not for the employee’s age or level of earnings).
Where SSP has been paid in the past eight weeks, and there is a further period of illness, SSP is paid for the waiting days. Periods of sickness are linked where the period of sickness lasts four or more days and they are less than eight weeks apart.
SSP is not payable where the employee receives Statutory Maternity Pay or Maternity Allowance or are off work in the four weeks before the due date of birth for a pregnancy-related illness. Also, no SSP is payable if the employee is in custody or on strike on the first day of sickness, is working outside the EU (and therefore there is no liability for payment of National Insurance contributions) or they received Employment and Support Allowance within 12 weeks of starting to work for the business. SSP ends after 28 weeks.
There are different rules for Agricultural Sick Pay.
The weekly SSP amount is set annually by the government in April and is payable for up to 28 weeks. An employer can pay more or for a longer period if it wishes (see Occupational Sick Pay below). Where there is an Occupational Sick Pay scheme the amount of sick pay payable and the length of time it will be paid for will be in the staff handbook or company procedures. Any SSP or Occupational Sick Pay payment will be paid in the same way as normal wages with tax and national insurance deducted. SSP paid used to be recoverable from the government, but this is no longer the case.
SSP is not payable after the maximum of 28 weeks of SSP has been paid or if the employee is receiving Statutory Maternity Pay.
It is necessary to determine if a person is an employee for that person to be entitled to SSP. It can be difficult to determine if a person is an employee or not. A person is usually an employee if:
The individual is required to work regularly for the business unless on leave;
They are required to work for a minimum number of hours and are to be paid for the hours worked;
The work cannot be passed to another person and a supervisor is responsible for their workload;
The individual has a number of entitlements such as SSP, maternity or paternity pay, holiday pay and can join the pensions scheme;
The person is subject to the business’s disciplinary procedures and redundancy procedures;
The workplace is specified by the business; and
The business provides the employee with the necessary tools and equipment to enable them to do their job.
If most of these apply the individual will be an employee. It should be noted that agency workers are also eligible for SSP, but they may have different rules of entitlement.
Usually it is clear if a person is an employee or not, but it may be necessary to take advice to determine if a person is an employee or not.
Sick notes (more accurately these are called Fit Notes) have to be provided by the employee to the employer where they are away sick for seven days or more (this period includes non-working days) for SSP. The business’s procedures can make further stipulations regarding sick notes and notification of illness. The sick note can be provided by the employee’s GP, a hospital doctor or a company doctor. Sick notes can also be provided by Allied Healthcare Professionals such as physiotherapists if this is acceptable to the business. When a person is late in notifying their illness no SSP is payable by the business for the period they were late in telling the business. A doctor’s note may be provided by an overseas doctor if the employee is ill whilst overseas.
For absences of between four to seven days the business can accept self-certification by the employee. This can be by letter, e-mail, verbally, or using form SC2 or a similar company form.
A doctor’s note will state whether a person is unfit for work or if they may be fit for work. It can also provide further information that may assist the business in determining if the employee is fit to work or if there needs to be adjustments or changes to help the individual to return to work. This can also advise that an employee cannot work for a precautionary reason or to convalesce. The absence will continue for as long as the doctor says that the employee is not to work. Absence can also be certified due to the employee having an infectious or contagious disease. Whilst bereavement is not an incapacity the shock of bereavement may make an individual unwell due to shock or depression.
An employee’s holiday entitlement still accrues when the employee is off sick. This holiday leave can be taken during the period of sick leave. An employee cannot be forced to take holiday leave when they are eligible for sick leave.
Monitoring periods of absence
Monitoring periods of absence can help reduce costs and improve productivity. It is also beneficial for employee welfare. Where there are repeated short periods of absence there may be a more serious underlying cause. Obtaining a medical opinion can help in determining if there is an underlying problem. It may also be necessary to redesign the workplace or assign the individual to other duties to improve their health.
The payment of SSP can be stopped if there are concerns about the reasons for the employee’s absence. This must be explained in writing to the employee within seven days.
Where the employer wants further medical advice, this can be obtained from the employer’s own medical adviser, obtaining a report from the employee’s doctor or HMRC can be contacted to arrange for the employee to be examined by Medical Services. This can be used if the employee has been of sick for four to seven days repeatedly in a relatively short period or where they have been absent for four or more periods with the year. Where the employee is referred to Medical Services the report will be sent to HMRC and not the employer. HMRC will write to the employer regarding this.
Back to work action plans
Where an employee has been absent for over four weeks it is advisable to create a back to work action plan. This is to set a framework to enable the individual to be able to return to work, detailing the hours to be worked, the duties to be undertaken and any other relevant factors to enable the individual to be reintegrated back into the work environment.
Cessation of SSP
When the SSP period ends the employee is to be provided with form SSP1. This is to enable them to obtain other State Benefits. When the SSP period is ending the employee must be given the form within seven days of SSP ending or on or before the beginning of the 23rd week of SSP if it is expected that the SSP period will end before the illness ends. The SSP1 form needs to be sent to an employee not entitled to SSP within seven days of becoming ill.
Occupational Sick Pay
An occupational or company sick pay scheme will offer amounts in addition to SSP. Any amount can be offered as long as it is not less than SSP. The occupational sick pay arrangements must be detailed in the company procedures, and if there is no occupational scheme this should also be stated.
Occupational sick pay schemes are provided as a benefit to employees. It provides security to the employee in the event of illness and is, therefore, seen as a valuable benefit to receive. The usual main benefit to the employee is that the amount paid under an occupational sick pay scheme is more than SSP. Also, most occupational schemes provide benefits immediately, there are no waiting days excluded from the amount of sick pay that is provided. It is usual to require some form of proof of illness (such as a doctor’s letter) after a period of days similar to SSP, and the employer may require the individual to have further medical checks if the illness is prolonged.
There is only a cost where an employee makes a claim for the occupational sick pay. This can be calculated by estimating the number of employees that will be away on sick leave during the year and multiplying this by the average length of time of absence and the amount payable under the occupational sick pay scheme (using the past history of sick leave within the business). For example:
Average number of employees ill per annum = 5
Average number of weeks absent = 10
Average pay of employees = £500 per week
Estimate of sick pay payable = 5 X 10 X £500 = £25,000.
This amount of pay would, of course, have been payable to the individual if they had been at work and the true cost is their absence and the loss of productivity or the cost of hiring temporary staff to cover for the absent individual.
Occupational sick pay schemes will vary between employers, but will usually have the following components:
Description of the employees eligible to receive the benefit (usually after the three month or six month probationary period has been passed);
Number of weeks that sick pay is payable for; and
Amount of pay the ill person is eligible to receive.
For example, a scheme may offer an employee that is ill (once they have completed their probationary period) sick pay of 100% of their salary for six months and 50% of their salary for a further six months. Some schemes may also allow for absence with pay when taking time off to care for a sick dependent.
Occupational sick pay schemes often have a discretionary element. The employer may make payments at their discretion if the person does not qualify for the scheme or for extended absences that are in excess of the amount stipulated in the sick pay rules. Some sick pay schemes may state that payments are at the employer’s discretion and may be refused if it is believed the absence is not justified. When making this decision the employer must ensure that it is free from discrimination and that one category of employee is not favoured over another type of employee.
The amount of SSP sick pay payable is not affected by the cause of the illness. Occupational schemes may have a specific scheme that covers workplace injuries. Alternately, the occupational scheme may only cover workplace injuries. This should be clear from the scheme rules and the employment contract.
Where the illness or injury is due to work conditions the employee may be able to make a claim for personal injury. This includes physical injury, workplace accidents, stress related illness and any other work-related injury or illness.
The operation of SSP and occupational sick pay schemes is usually fairly straightforward, but there are a number of elements where care needs to be taken. This includes the definition of employee, ensuring there is no discrimination, monitoring periods of absence and creating return to work plans. Ensuing that sick pay is paid helps ensure that employees feel secure and removes a financial worry when they are suffering from their illness.