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Sick Pay

The Employment Rights Act requires employers to provide details of any terms regarding sickness absence and sick pay within the first two months of the individual’s employment. This needs to be provided in the contract of employment (link & PAYG contract employment), or within the statement of terms of employment.

An employer may choose to enhance the payments required under the statutory sick pay scheme or not. Naturally it will be seen as an attractive feature for prospective employees if the contract provides for an enhancement on the statutory sick pay scheme. Employers may now opt out of the statutory sick pay scheme, so long as they provide at least the same minimum level of sick pay as provided under the statutory scheme.

Contractual Sick Pay

The contract of employment should set out the terms of any contractual sick pay scheme. Where there is a contractual right to sick pay, but with provision about its duration, the court or employment tribunal will imply a “reasonable” duration. This leaves the situation unsatisfactory for both the employer and employee. Therefore the amount of pay, and duration of the pay should be clearly stated in the contract of employment. Employers should make staff aware of their approach to sickness absence and sick pay in an appropriate sickness absence and pay policy (link PAYG Policy). Contractual sick pay is commonly made available at certain percentages of the employee’s usual pay for a defined period, sometimes on a sliding scale over the period of the sickness absence. Many such schemes are modelled on, or limited to, the statutory sick pay scheme. Statutory sick payments may be off-set against contractual payments and vice versa – thus avoiding double payment.

Statutory Sick Pay

Subject to certain exceptions all employees are entitled to receive statutory sick pay (SSP) from their employer. In turn employers can recover the vast majority of these payments from National Insurance contributions.

The maximum entitlement to SSP is generally 28 weeks in any 3 year period.

SSP usually only becomes payable from the 4th day of sickness absence. The first 3 days are known as “waiting days”. Employees must notify their employer of their absence, and provide some evidence of their incapacity. A “self-certificate” can be used for the first week of sickness absence. Thereafter a doctor’s signed sick note should be provided. Periods of sickness absence will be treated as “linked” if they are separated by 8 weeks or less; so there will be no new “waiting days” in a period of sickness absence that is linked to a previous one that has occurred within the previous 8 weeks.

SSP is payable from the 4th day of sickness absence until the earlier of:-

a) The maximum payment period is reached (28 weeks in 3 years),

b) The employee becomes well and returns to work, or

c) The employee’s employment is terminated.

Employers are obliged to keep records for SSP purposes. Records of the following information must be kept for at least 3 years :-

  1. Dates of each employee’s periods of incapacity for work, and
  2. Any payment of SSP made in respect of any day within a period of incapacity from work.

Employers ought to keep more detailed records as these may help in identifying other personnel problems, assisting in disciplinary procedures, or helping with the proper consideration of reasonable adjustments for any disabled employee.

Those employers that opt out of the SSP scheme also need to keep details of records of sickness absences, and payments made during sickness absence, as these can be subject to inspection.

From 6th April 2017 the figure is £89.35 per week.

(From April 2016 the rate was £88.45 per week)

As part-time staff, as well as full-time staff, are entitled to SSP (subject to meeting the basic requirements), the weekly figure (of £89.35 from April 2017) should be divided by the number of days per week that the part time worker works. So, if the individual works 4 days a week the daily rate of SSP will be one quarter of the weekly statutory sick pay rate, and if the individual works 3 days a week the rate will be one third of the statutory sick pay rate per day, and so on.

Since the 6th April 2014 it has not been possible for employers to reclaim statutory sick pay from the Government. Up to that date employers had been able to reclaim any amount of statutory sick pay that exceeded 13% of its National Insurance contributions in the month. The Government has decided to stop this as it believes that this system gave employers a motive for failing to encourage the return to work of those employees that had been on long term sickness absence. The Government then proposed putting the money saved towards a new Health and Work Service which will seek to help employers and employees put in place plans to facilitate a return to work.  


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