What are the statutory payments your business should make to a sick employee?

What are the statutory payments your business should make to a sick employee?

Winter is here, the nights are darker and Christmas is just over the horizon. With it comes the annual assault of winter colds and flus, causing employees to take more time off sick. Considering your business’s sick pay scheme is therefore an important aspect of your business plan; laying out how much you will pay your employees, and under what circumstance. Here we will look at the obligations employers must abide by, by law, and the payments all employees are entitled to.

How much is an employee entitled to?

By law, an employee who is absent due to periods of sickness is entitled what is known as Statutory Sick Pay (SSP). This is the minimum amount an employer must pay out if a sick employee meets certain requirements. As of 2018, this is £92.05 a week, for up to 28 weeks. This is regardless as to whether your employee is contracted to full-time or part-time employment and is not limited to the number of jobs an individual has: they may receive SSP from each employer. An employee cannot receive less than the statutory amount.

The amount paid out for each sick day which qualifies under the law, is calculated by dividing the weekly amount by the number of days a week an employee should have worked. An employee will be paid in the same way as their normal wages, whether this is weekly or monthly, and therefore tax and national insurance will be deducted.

When does an employee qualify for sick pay?

Although these entitlements are solidified by law, there are certain requirements an employee must meet to be eligible for SSP. It is needless to say that to qualify for SSP, an individual must be an employee at your business and must earn more than the lower earnings limit which is currently £116 per week. An employee must be ill for at least four days, which also includes non-working days, but is not paid SSP for the first three days they were off. However, an employee may be paid sooner if they have already received SSP within the last eight weeks and are eligible again. As an employer you must be notified of sickness before the deadline defined in your employee contract.

An employee will not qualify for SSP if they have received the maximum amount of 28 weeks of SSP, or if they are already receiving Statutory Maternity Pay. It is important to note that an employee is only required to hand over a doctor’s fit note if they are off for more than seven days in a row, which includes non-working days. To ensure your business has a clear and simple procedure to be able to process SSP payments, addressing sick pay in your business plan should be an important consideration when establishing your business.

Can my business offer its own sick pay scheme?

SSP is one of two options an employer has in terms of paying sick employees. The alternative is offering a unique company sick pay scheme, which is also known as contractual or occupational sick pay. If this is offered through an employment contract, an employee can only receive one version of sick pay, either SSP or the company sick pay, they cannot receive both. As long as it doesn’t fall below the legal minimum, the amount of sick pay offered through a company scheme is down to the discretion of the business itself. However, a company scheme is typically more generous than the SSP.

Generally, a company scheme will be paid out after the employee has passed a minimum term of service, receiving their regular amount of pay for any period of sickness up to an outlined number of weeks. Any period of sickness taken above this amount will result in an employee receiving half-pay, up to a certain point at which sick days become unpaid. How an employer should be notified of sickness should be outlined in their employment contract, and within the employment particulars the business should describe what type of scheme is available to employees. If your company does not offer a sick pay scheme, this should be outlined.

Ensuring your business meets the minimum legal requirements when it comes to paying employees for the days they have off sick is an important element when establishing your business.

If you would like help with putting together your business plan, get in touch today! Contact us online using the form on the right or call 01604 420 420.

Share this blog