Statutory Sick Pay (SSP) is paid to Employees who are unable to work because of illness. SSP is paid at the same time and in the same way as you would pay wages for the same period. An Employer is responsible for paying SSP to Employees who meet certain qualifying conditions.
SSP rate for 2014/2015 Tax Year
The rate of SSP is payable at a rate of £87.55 per week for 2014-2015 Tax year. (For Tax Year 2013-2014 the SSP rate was £86.70)
Qualifying for SSP
To qualify for SSP, the following criteria apply:
- The Employee must actually be in the employment of the Employer and they must have done some work under their employment contract before going off sick.
- The days that they are off sick must make up part of a “Period of Incapacity for Work” (PIW) and they must be incapable of work for a period of at least 4 or more consecutive calendar days. All days of incapacity count towards these days including weekends, holidays and any other day on which the Employee would not normally be expected to work. If the Employee performs any work on a day, this cannot be counted as a day of incapacity, so SSP would not be payable for any such day/s.
- In the 8-week period up to and including the last pay day before the PIW, their Average Weekly Earnings (AWE) must be at least as much as the Lower Earnings Limit for National Insurance Contributions. This is £111.00 a week for 2014-2015 tax year (This was £109.00 in the 2013-2014 tax year).
- They cannot have already received the maximum amount of SSP for the PIW or for a series of linked PIWS. This is 28 weeks / 156 days.
- They must have notified the Employer of their sickness
- They must give evidence of their incapacity
Period of Incapacity for Work (PIW)
SSP is only payable if there is a PIW. This is a period of four or more days in a row that the Employee can’t work because they are sick or incapacitated. The days that make up a PIW don’t need to be working days. If an Employee normally works from Monday to Friday and they are sick on Friday, Saturday, Sunday and Monday then this would be considered a PIW. Likewise, if they only work on Tuesdays and Fridays but they are sick on both of these days and also sick on Wednesday and Thursday, then that too would be considered a PIW.
PIW’s that are complete (i.e. they last at least for consecutive days) and are separated by less than eight weeks (or 56 days) are called “linked PIW’s” and are treated as a single PIW. Sickness periods that last for less than four consecutive days cannot be counted towards a linked PIW.
SSP isn’t payable straightaway. Only qualifying days can count as waiting days. The first three qualifying days (days the Employee normally works for you) of a PIW are called “waiting days”. SSP isn’t payable on waiting days. SSP is payable from the first qualifying day after the three waiting days. If there are several PIWS that are linked, the waiting days will only apply to the first PIW.
Average Weekly Earnings
Average Weekly Earnings are assessed during the relevant period, which for weekly paid Employees will be the eight-week period up to and including the last payday before the start of the PIW. The average earnings are assessed by adding the total sum of the earnings in the eight-week period together and then dividing by eight.
If the Employee is paid on a monthly basis, the gross earnings in the relevant period (normally two months pay) are divided by the number of months covered by the payments. The result is multiplied by 12 and then divided by 52, to gain an equivalent average weekly earnings value.
In instances of the “relevant period” being less than 8 weeks (for example, in the instances of new starters), the Employees’ normal weekly earnings should be averaged over the period in respect of which they have actually been paid.
Qualifying Days are the only days for which SSP can be paid. They are usually the days of the week on which an Employee is required to work by the contract, be available for work or normally work. Both the Employee and Employer must agree the Qualifying Days. They are unaffected by bank holidays.
Generally, most companies will adopt a 5-day qualifying week (i.e. on the assumption that employees work Monday to Friday). SSP is payable at a daily rate which is the equivalent of the weekly rate of £87.55 (2014-2015 Tax Year) divided by the qualifying days specified for the employee. Therefore, an employee on a 5-day qualifying rate will receive an SSP daily rate of £17.51 (2014-2015 Tax Year.)
The table below shows the daily rates due according to the qualifying pattern:
SSP Offset against Basic and SSP paid in addition to / instead of Basic
There are two ways in which SSP is processed on a payroll and presented on payslips.
The first process is known as “SSP Offset”. This is generally used for Employees who are in receipt of a normal monthly salary or weekly wage, and for whom, if SSP were to be added to their normal pay would benefit from receipt of SSP – i.e. it would be advantageous for them financially. The most common treatment for these Employees is to “offset” any SSP values against their Basic pay, so that effectively the SSP amount is merely for recording purposes. It is not actually being paid to the Employee, nor are they having their salary reduced by the amount, it is merely acting as an in-out recording entry, with their gross payment being unaffected by the SSP value.
The second process is known as “Adding SSP”. This is generally used for Employees who are not paid a fixed salary or wage, but instead are paid according to the hours that they work. Their payslip each period will reflect the number of hours they have actually worked and are being paid for. For these workers, because they are not being paid for the hours when they were unable to work due to incapacity, the value of any SSP due needs to be “added” to their payslip in order to pay them for the time they were unable to work. These SSP values are not offset against any basic payments, and therefore the SSP value will increase their overall gross pay value for the period.
Non Payment of SSP
There are a number of reasons as to why SSP cannot be paid to an Employee. Some of them will be system generated – for example, the system will recognise when 28 weeks SSP has been paid as it will keep a running total using the absence calendars. However, others will need to be manually entered by the user – the payroll system would not know for example if an employee was in legal custody or outside of the EEC.
The reasons for non-payment of SSP where the Employee does not qualify on the first day of the Period of Incapacity for Work (PIW) are:
- The Employees average weekly earnings are below the lower earnings limit for NI (£107.00 per week for 2012/2013)
- Their Period of Incapacity links with a recent claim for state sickness benefit (either Incapacity Benefit or Employment and Support Allowance). In such cases, a letter ESA220, ESA220A, ESA220B or ESA220C will have been received by the Employee and allowing the Employer not to pay SSP until the date shown on the letter, and the Employee will revert back to the higher rate of Employment and Support Allowance (ESA) that they were in receipt of previously.
- They have reached 28 weeks SSP in a linked PIW.
- They are away from work because of a trade dispute / strike
- They are in legal custody (at any time on the first day of the PIW)
- They have not undertaken any work for the Employer
- They are outside of the EEA (European Economic Area) and are not liable to pay Class 1 National Insurance Contributions, or would not be liable even if the earnings were high enough
- If the Employee is a female worker who is within the qualifying period related to her pregnancy. There is a 39 week period during which SMP (Statutory Maternity Pay) is payable when SSP is not paid, unless the woman is not entitled to SMP in such cases the disqualification period is 18 weeks.If an employee does not qualify for SSP, they must be issued with form SSP1 (non-paymnent of SSP). This can be downloaded from the HMRC website. They can then claim Employment and Support Allowance from their local job-centre plus or social security office.
If an employee does not qualify for SSP, they must be issued with form SSP1 (non-payment of SSP). This can be downloaded from the HMRC website. They can then claim Employment and Support Allowance from their local job-centre plus or social security office.
End of Entitlement
The end of SSP entitlement will usually occur because the incapacity for work ends and the Employee returns to work. The Employer does not have to pay SSP for any day after:
- The Employees contract of service ends
- The Employee has received 28 weeks SSP in a PIW
- The Employees linked PIW has run for 3 years
- The Employees disqualifying period related to pregnancy begins
- The Employee is taken into legal custody
- The Employee dies
- The Employee goes outside of the EEA and there is no liability for Class 1 NIC’s
Recovery of SSP
SSP may only be recovered under the Percentage Threshold Scheme (PTS). In order to recover SSP, the Employer must:
- Establish the total gross Class 1 NIC liability (Employee and Employer) for the tax month and deduct any contracted-out NI rebate
- Multiply by a set percentage (currently 13%) rounding down fractions of a penny
- Establish the total SSP payments in that month
Where the amount at (3) is more than the amount at (2), the difference may be recovered from the monthly PAYE remittance.