The clocks have turned back, the weather is colder and the skies are greyer. While many may be excited by the fact that we are now less than 8 weeks away from Christmas, personally I am dreading the onset of the cold and flu season.
Many employers, particularly business start-ups, are unclear as to their obligations to provide staff with Statutory Sick Pay. I set out below a summary of the legal position.
Q: Do I need to provide Statutory Sick Pay to staff?
A: It depends. Under English law, employees may be entitled to Statutory Sick Pay (“SSP”), or the equivalent occupational sick pay – which their employer provides, if they meet the qualifying conditions. The current rate of SSP is £88.45 per week.
What are the “qualifying conditions”?
1. The individual must be classed as an employee
Only employees are entitled to SSP. In summary, there are three different categories of staff – employees, workers and the self-employed. Employees are afforded the most rights and protections in law, including the provision of SSP. An employee is a person who has entered into a contract of employment, which is defined as contract of service or an apprenticeship (s.230 Employment Rights Act 1996).
Determining whether an individual is an employee as opposed to a worker or self-employed is often not clear cut. However, there are certain guiding principles from case law regarding who is an employee, namely:
• there must be a contract between the employer and the employee (whether written or oral);
• there needs to be mutuality of obligation – i.e. the individual be obliged to carry out work provided to them and the employer obliged to provide work;
• the individual be subject to control by their employer (e.g. how, where and when they carry out work);
• the work must be personally performed by the individual who is not in business for their own account.
For the purposes of SSP, the definition of “employee” is wider than the normal employment law tests, and includes all those whose earnings are liable for Class 1 National Insurance contributions. As a result, agency workers are deemed to be employees for these purposes and can claim SSP. Also, workers on zero hours contracts will be entitled to SSP (should they meet the other qualifying conditions). However, there are certain exceptions: Women on maternity leave who are receiving Statutory Maternity Pay or Maternity Allowance are not entitled to SSP.
2. The employee must have done some actual work for the employer
Although qualifying employees will be entitled to SSP from day one their employment, they will need to have completed at least one day of work to qualify. The entitlement to SSP starts from the 4th consecutive day of sickness absence.
3. Been ill, sick or injured for at least 4 days in row
To be eligible to claim SSP, an employee must have been prevented from working for at least 4 days in a row (including non-working days) due to sickness or a disability which has rendered them not fit for work.
4. Meet the earnings criterion
An eligible employee must earn at least the current Lower Earning Limit (presently £112 before tax per week). This is calculated by reference to an employee’s average weekly earnings over the previous eight week period.
5. Not have exhausted their entitlement to SSP
Employees are entitled to up to 28 weeks of SSP in any period of incapacity for work. Periods of incapacity are linked where they are less than 56 calendar days (eight weeks) apart. The impact of this is that an employee will not be entitled to SSP if they have a continuous series of linked periods of sickness absence that last more than 3 years.
Practical notes for employers
• As mentioned above, determining employment status can be difficult. To complicate matters further, it is possible for an individual to be deemed to be an employee for employment purposes while also considered self-employed for tax purposes. If in doubt, seek legal advice given the possible legal and tax implications.
• SSP is only payable for qualifying days. Such days are agreed between the parties and usually set out in the contract of employment. In the absence of such agreement, this will be the days which the employer and employee agree are or were working days for that week.
• The payment of SSP is subject to PAYE and NI contributions deductions and these must be recorded.
• Any dispute as to whether an employee is entitled to SSP will be determined by HMRC and not an employment tribunal.
Partner – Hine Legal: specialist solicitors in employment law
At Hine Legal we provide clear advice without legal jargon. Our clients come to us for help with strategy and advice on how to grow their businesses – not just when they have an employment problem. We give our opinion and recommend a course of action; we don’t just sit on the fence.
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