Statutory Sick Pay: business changes that affect payment

What to do if an employer ceases, becomes insolvent, takes over an existing business, or makes employees redundant whilst paying sick pay.

You take over a business or part of a business

If the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations 2006 apply, then continuity of employment is not broken. The regulations apply when you take over a business, part of a business, or a service provision together with the transfer of contracts of employment. The transferring employer must provide the identities of those employees being transferred with the business.

If you are not sure if the TUPE Regulations 2006 apply contact Acas or in Northern Ireland contact the Labour Relations Agency.

If you take over a business during the relevant period you must add together all their earnings in the relevant period including those paid by the previous employer. If the employee was getting Statutory Sick Pay (SSP) when you took over the business you must continue paying it until the Period of Incapacity for Work (PIW) ends.

You cease to trade

When an employer ceases to trade, entitlement to SSP only ends when the employee’s contract ends. You remain liable to pay any outstanding SSP payments up to and including the end of the employee’s contract. You must issue form SSP1 so that the employee can contact Jobcentre Plus or in Northern Ireland the Jobs and Benefits Office to claim Employment Support Allowance (ESA).

You become insolvent

Any SSP due for the period before the insolvency date is payable by you.

If your employees’ contracts:

  • haven’t been terminated, any SSP due in that employment from the insolvency date will be paid by HM Revenue and Customs
  • are terminated, entitlement to SSP ends when the contracts end

If the incapacity continues after the insolvency date and the employee’s contracts are terminated, you or the liquidator must complete form SSP1 and give it to your employee so that they can claim ESA.

Published 14 March 2014