Statutory Sick Pay: how different employment types affect what you pay
Some employment types like agency workers, directors and educational workers have different rules for entitlement.
For these employees you must consider other factors around entitlement and which earnings should be used in the Average Weekly Earnings (AWE) calculation before you can use the calculator.
The Agricultural Wages Board in England was abolished on 1 October 2013.
From this date Agricultural workers in England who are not covered by the terms and conditions of the Agricultural Wages Board will be eligible for Statutory Payments if they meet the appropriate qualifying conditions.
Casual employees and agency workers
Casual (or short contract) employees and agency workers are treated as employees for PAYE tax and Class 1 National Insurance contributions (NICs). The qualifying conditions in all cases must be satisfied. The period for which Statutory Sick Pay (SSP) is payable is different depending on whether the employee has had 3 months continuous employment with you.
The 3 month continuous employment period doesn’t have to be immediately before the Period of Incapacity for Work (PIW). Continuous employment isn’t broken by periods of sickness, annual leave or if you are unable to offer work. But it will only be broken by a trade dispute such as strike action or if the worker has been given written termination of contract.
Your employee has had at least 3 months continuous employment with you
SSP entitlement will continue for the whole of the PIW unless:
they have been given written notice that the contract has come to an end
SSP entitlement stops for some other reason
Your employee hasn’t had 3 months continuous employment with you
SSP entitlement will continue to the end of any assignment they had agreed to work. Your employee may have been offered and accepted other assignments when they went sick. Entitlement will then continue until the end of the last accepted assignment and the periods in between unless the contract has been ended in writing.
Educational term-time workers
Employees in education including classroom assistants, college lecturers, nursery workers, school bus drivers and kitchen staff may be contracted to work outside of term-times. Entitlement to SSP depends on the type of contract you have with your employee.
No contract outside of term-times
A term-time worker who becomes sick outside of their contract, eg during school holidays, is not entitled to SSP, as they are not an employee during those weeks.
Contract ends and new contract starts
Where an employee is already entitled to SSP during a contract, entitlement will stop at the end of that contract.
If the first day of their PIW is either:
- between contracts
- when their new contract would have started
there is no entitlement to SSP because they haven’t worked under that contract. If the employee signs a new contract, eg start of a new term, entitlement to SSP will only apply when they have worked under the new contract.
Contract continues between term-times
Where a contract continues between term times, any entitlement to SSP will continue during and after the holiday periods until the earlier of the end of the contract or PIW.
If your employee isn’t required to work during the holiday periods, there is no entitlement to SSP where any PIW starts during a holiday period.
Companies incorporated after 1 October 2009
There are new regulations for companies incorporated after 1 October 2009. They provide new Articles of Association for these companies and will:
- apply by default if other Articles are not adopted
- allow its directors to determine a director’s remuneration
Directors can decide what remuneration to pay and when. There is no need for a resolution of the company’s shareholders at its Annual General Meeting (AGM). In such cases payment of director’s fees are regarded as earnings for the purpose of entitlement to SSP on the date payment was made.
Companies incorporated before 1 October 2009
The previous standard Articles, which apply in default, continue to apply. An ordinary resolution is required to determine director’s remuneration. The method of calculating director’s remuneration by an annual figure (after an ordinary resolution has been passed by shareholders) will apply to these companies. Any payments made in anticipation of the annual vote cannot be taken into account for calculating AWE.
If the director is contractually paid a regular salary - their AWE are calculated like any other employee.
Paid by a determination of the directors (not a formal vote)
Calculate the AWE by adding together the monies paid and any other payments of earnings. Use the date monies were paid instead of the date of the shareholders’ resolution at the AGM to determine the total earnings during the relevant period.
Paid both contractually and by formal vote
A director who is paid contractually may also be paid a bonus or fees by a formal vote. You must still calculate their AWE like any other employee, but you should only include the monies voted by formal vote if the date of the vote falls in the relevant period.
Paid only by a formal vote
If the director is paid only by a formal vote calculate their AWE in the usual way, substituting the dates of the formal votes in place of the normal paydays. A formal vote usually takes place at the company’s AGM and is agreed in the company minutes.
Monies drawn in anticipation of a formal vote
Some directors may regularly draw money from the business in anticipation of a formal vote. Do not include this money when working out the director’s AWE, even if NICs were deducted at the time they were paid.
Mariners can get SSP if they or their employer have a place of business in the UK.
Employee with 2 contracts
An employee may have 2 distinct contracts, with the same or different employers, and be incapable of work under 1 contract but capable of working under the other. When an employee has more than 1 contract with the same or different employers trading in association, and their earnings are aggregated for NICs purposes, they must be incapable of work under all contracts before they can be entitled to SSP.
Employee with more than 1 job with you
If the employee’s earnings from all their jobs with you are added together to work out Class 1 NICs, they must also be added together to calculate the employee’s AWE for SSP purposes. The employee can only get 1 amount of SSP. They must be incapable of work under all of their contracts with you before they are entitled to SSP.
If Class 1 NICs are worked out separately on earnings from each job, calculate their AWE separately, and the employee can get more than 1 amount of SSP.
Employee working outside UK on first day of a PIW
These employees may be entitled to SSP if you are liable to pay employer’s Class 1 NICs, or would be if the employee’s earnings were high enough. If your employee’s PIW or linked PIW continues but your liability to pay employer’s Class 1 NICs ceases, SSP continues until their entitlement stops for another reason.