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Sick pay

Updating author: Kate Upcraft

Summary

  • Employees who earn at least the lower earnings limit for national insurance contributions and have formed a period of incapacity for work are entitled to statutory sick pay. (See Entitlement to statutory sick pay)
  • Employees must satisfy certain notification and evidence requirements to qualify for statutory sick pay. (See Notification and evidence required from the employee)
  • Statutory sick pay is paid at a flat rate, for a maximum of 28 weeks for each period or linked period(s) of incapacity for work. (See Amount of statutory sick pay)
  • Civil penalties apply for failing to meet statutory sick pay obligations. (See Penalties)
  • Statutory sick pay can be offset against occupational sick pay if the latter is at least as generous for each day of incapacity for which there is entitlement under the statutory scheme. (See Contractual sick pay)

Future developments

Statutory sick pay reform: On 30 November 2017, the Government published Improving lives: the future of work, health and disability. The Government aims to reform statutory sick pay so that it better supports phased returns to work. It also intends to legislate to enable healthcare professionals other than doctors to carry out fit note certification.

On 17 December 2018, the Government published its Good work plan, setting out its "vision for the future of the UK labour market". The Government confirmed its intention to reform statutory sick pay.

On 15 July 2019, the Government published a consultation: Health is everyone's business: proposals to reduce ill health-related job loss, seeking views on, among other matters, its proposed reforms to statutory sick pay. Proposals include making statutory sick pay better enforced and more flexible; extending it to those earning less than the lower earnings limit; enabling phased returns to work through receipt of part wage and part statutory sick pay; and introducing automatic reporting of sickness absence data to the Government through payroll systems. The consultation closes on 7 October 2019.

Employment and support allowance and universal credit: Employment and support allowance, which workers who are not entitled to statutory sick pay may claim, is being subsumed into a new benefit, universal credit. Universal credit is responsive to changes in income that employers report using real time information. Universal credit is being introduced in stages across the UK.

Statutory sick pay - overview

Payment of statutory sick pay is dependent on an employee satisfying rules relating to entitlement, notification of illness, periods of incapacity for work, periods of entitlement and qualifying days.

Entitlement to statutory sick pay

To be entitled to statutory sick pay, an employee must:

  • have actually worked for the employer under a contract of employment;
  • be paid not less than the lower earnings limit for national insurance contributions (£118 per week from 6 April 2019 (previously £116)) for the eight weeks prior to becoming sick, although national insurance contributions do not actually have to be paid;
  • not have been in receipt of certain state benefits within a specified time period, as shown on a linking letter issued by a Jobcentre Plus office;
  • be incapable of doing their work for four or more consecutive days, a "period of incapacity for work";
  • show their employer evidence that they are sick, if such evidence is required by the employer.

For evidence purposes, for periods of four to seven days, employers should accept self-certification. Beyond seven days employers usually require a doctor's certificate (ie a fit note) or similar. Under s.14(1) of the Social Security Administration Act 1992, employees can be required by their employer to provide information that is reasonable to determine whether or not a period of entitlement exists and the length of that period.

The employer's liability to pay statutory sick pay ends when there are linked periods of incapacity for work with the same employer for three years.

Employees are not excluded from entitlement to statutory sick pay because of their age. Average weekly earnings should include all earnings that attract Class 1 national insurance contributions, or would but for the person's age or level of earnings. The change does not affect national insurance contribution liability.

Employers are not obliged to operate the statutory sick pay scheme if they offer contractual sick pay that is as generous as (or more generous than) the statutory scheme for each relevant day of incapacity (see Contractual sick pay for the law on Contractual sick pay).

If an employee who is not entitled to statutory sick pay is off sick, their employer must provide a written explanation on a prescribed form (SSP1), or its own computerised version, of why the employee is not eligible. Claimants receive employment and support allowance. Individuals with the most severe health conditions and disabilities are supported by employment and support allowance at a higher rate and may opt to take up a work support programme, if they wish.

Employers are not required to pay statutory sick pay to certain employees who are within eight weeks or 12 weeks of their last payment of employment and support allowance. Such employees will be given a linking letter (Jobcentre Plus form BF220 or similar) showing when they will re-qualify for statutory sick pay, which they should show to their employer. Employers should check whether or not new employees, or existing employees returning from sickness absence, have such a letter and if so they should retain a copy. If this is the case, instead of paying statutory sick pay, the employer should issue form SSP1 so that the employee can reclaim employment and support allowance.

Workers providing services to agencies are treated as "falling within the category of employed earners" and liable to Class 1 national insurance deductions by the agency. Agency workers are therefore eligible to be considered for statutory sick pay from the start of the contract under which they work for an agency.

Additional resources on entitlement to statutory sick pay

FAQs

Policies and documents

Notification and evidence required from the employee

An employee, or somebody else on their behalf, must inform the employer that they are sick (reg.7 of the Statutory Sick Pay (General) Regulations 1982 (SI 1982/894)). The employer is at liberty to set down requirements for the manner of notification although it cannot require the employee to notify it personally or on a particular document or printed form. Nor can it require the employee to notify it more than once every seven days. For the purposes of notification, employers also cannot require employees to provide medical evidence (but see below).

Employers must bring to the attention of employees rules about notification of illness.

In the absence of requirements made by the employer, notification must be made within seven days after the first qualifying day of incapacity (see below: Qualifying days), unless there is good cause for an extension of time for anything up to 91 days.

The Statutory Sick Pay (Medical Evidence) Regulations 1985 (SI 1985/1604) set out the requirements for providing evidence of incapacity. Employees cannot be required to provide medical evidence relating to the first seven calendar days of illness.

Med3 statements of fitness for work (known as "fit notes") allow doctors to state that an employee is "not fit for work" or that they "may be fit for work taking account of the following advice" (with the focus being on what the employee can do).

A doctor can suggest changes that the employer could make to the job role or working environment to enable the employee to remain in work, or to return to work sooner than would otherwise be the case. The employer is not obliged to adopt the suggestions (subject to its other legal obligations, for example under the disability discrimination provisions in the Equality Act 2010). If it chooses not to do so the fit note can be taken to indicate that the employee is unable to work. Therefore, a further visit to the doctor to get an amended note will not be necessary. Doctors will not need to assess whether or not an employee can return to work before the expiry of a fit note. It will be for the employer to carry out a risk assessment when an employee returns to work.

The Government has published guidance on fit notes, for employers, employees and doctors. Government guidance also indicates that reports from some Allied Health Professionals can be considered as evidence of sickness.

Additional resources on notification and evidence required from the employee

FAQs

Policies and documents

Period of incapacity for work

A period of entitlement arises when the employee has had four or more consecutive calendar days of sickness (the period of incapacity for work). If an employee works, even for a few hours as part of a return-to-work plan prompted by a fit note, that day cannot count as a day of incapacity. Therefore, statutory sick pay will not be due.

It is not necessary that the employee was supposed to be at work on any or all of the four consecutive days (for example, the employee may be sick on a bank holiday or at a weekend).

Two separate periods of incapacity for work may be treated as a single period ("linked") if they are separated by no more than 56 calendar days. Where an employee works odd days as part of a phased return-to-work plan these work days will interrupt a period of incapacity for work. Four consecutive days of sickness will need to occur before statutory sick pay can be considered.

Since 10 April 2006 a person is deemed incapable of work if they are excluded or abstains from work in accordance with a request or notice in writing made under an Act of Parliament, and the intention is to prevent the spread of a relevant infection or contamination. This includes food poisoning or an infectious disease.

Period of entitlement to statutory sick pay

The period for which an employee is entitled to statutory sick pay is usually the same as the period of incapacity for work. However, the period of entitlement will end prematurely in any of the following circumstances:

  • The employee's contract of employment is brought to an end before the end of the period of incapacity for work, unless the contract is terminated simply in order to evade liability for statutory sick pay.
  • The employee reaches their maximum entitlement to statutory sick pay. That is, they have been in receipt of statutory sick pay in respect of one period of incapacity for work for more than 28 weeks. It should be remembered that one period of incapacity for work can be linked to another, so that the linked periods all constitute a single period for the purpose of calculating the maximum entitlement.
  • Where an employee is pregnant, they enter the disqualifying period. This is the statutory maternity pay period of 39 weeks, or 18 weeks for employees not in receipt of statutory maternity pay or Maternity Allowance.
  • The employee is sentenced to a term of imprisonment or is detained in legal custody (this does not include voluntarily helping the police with their enquiries).

Employees outside the UK on their first day of sickness may remain entitled to statutory sick pay if their employer has a Class 1 national insurance liability. Aircrew and members of the armed forces are not covered by the statutory sick pay scheme.

An employee may be able to claim employment and support allowance if they are still off sick at the termination of the period of entitlement.

The employer must give the employee notice of the end of their period of entitlement by using form SSP1 form or its own computerised version.

Qualifying days

Qualifying days are days on which the employee would usually be required to work.

Employers and employees can agree between themselves what days should be qualifying days, as long as each week has at least one qualifying day. The default day is a Wednesday if the employer does not specify a qualifying day. Qualifying days should not be defined by reference to the days on which the employee has been sick. Similarly they should not be identified by reference to any period of entitlement.

Many employers define qualifying days as the same days the employee is expected to perform work under the contract of employment. Then the first three normal working days of sickness are qualifying days, but they do not attract payment of statutory sick pay.

The first three qualifying days are known as "waiting days". Waiting days are not necessarily coextensive with the first three days of the period of incapacity for work. For example, if an employee who works a normal Monday to Friday five-day week becomes sick on a Friday, then Saturday and Sunday are part of their period of incapacity for work. By Monday the employee has become eligible for statutory sick pay. But Saturday and Sunday are not qualifying days because the employee would not normally be expected to work them, so statutory sick pay is not payable until the following Wednesday, after the three waiting days have been served. The three waiting days in this scenario are Friday, Monday and Tuesday.

Amount of statutory sick pay

Unlike statutory maternity pay, statutory sick pay is not referable to the employee's average earnings, other than to assess qualification for the daily rate of statutory sick pay. Section 157(1) of the Social Security Contributions and Benefits Act 1992 and the relevant statutory instrument (currently the Social Security Benefits Up-rating Order 2019 (SI 2019/480)) set down a flat rate for statutory sick pay. From 6 April 2019, the rate is £94.25 per week (previously £92.05).

Statutory sick pay is paid daily and is paid for a maximum of 28 weeks for any one period of incapacity for work. This should be calculated by dividing the flat weekly rate by the number of qualifying days in the week. It is wrong to divide the flat rate by the number of days in a calendar week, unless these are the agreed qualifying days. A part-time employee may be entitled to more per day than a full-time employee, since there are more qualifying days in a full-time week than in a part-time week.

Termination of employment and statutory sick pay

Employees are not entitled to sick pay after the termination of their employment, unless the employment is terminated for the sole or main purpose of avoiding statutory sick pay.

Sick pay records

The statutory sick pay provisions do not require employers to keep specific records concerning payments. According to government guidance (Statutory sick pay: employer guide), employers can choose how they record employees' sickness absence but HM Revenue and Customs may require employers to provide this information in the event of a dispute about statutory sick pay.

Where an employer does not operate a statutory sick pay scheme because it offers a contractual scheme that is as generous as, or more generous than, the statutory scheme, it should hold sufficient records to show that payment in excess of statutory sick pay has been made.

Records should be processed in accordance with general data protection requirements and specific data protection requirements relating to health records (see Conditions for processing special categories of personal data and Records relating to health).

Additional resources on statutory sick pay records

Policies and documents

Remedies available to the employee

An employee may require their employer to give written reasons within a reasonable time (seven days of the request being made) for a refusal to pay statutory sick pay. If an employer refuses to pay an employee statutory sick pay, or if the employee feels that the appropriate amount has not been paid, the employee may apply to HM Revenue and Customs (HMRC), which has the power to overrule the employer's decision. If agreement between the employer and employee on the decision made is not possible, the appeal will go to the tier 1 Tax Tribunal. If there is a point of law of general importance to be decided, a claimant or HMRC may appeal, with leave, to the Court of Appeal.

Penalties

The National Insurance Contributions and Statutory Payments Act 2004 provides that employers that fail to meet their obligations under the statutory sick pay scheme are subject to civil penalties up to a maximum of £3,000. These penalties can be applied where an employer, for example:

  • refuses or repeatedly fails to make payments of statutory sick pay;
  • fraudulently or negligently makes an incorrect payment of statutory sick pay;
  • fraudulently or negligently obtains incorrect funding; or
  • makes any incorrect statement or declaration in connection with establishing entitlement to statutory sick pay.

A maximum penalty of £300, and of £60 for each day that the failure continues, applies where an employer fails to give an employee the required information in respect of a claim for statutory sick pay.

In all cases there is a right of appeal, which will be heard by the tier 1 Tax Tribunal. On appeal, the penalty may be upheld, varied or discharged.

Contractual sick pay

Many employers will wish to make up the difference between statutory sick pay and the employee's normal weekly earnings. Statutory sick pay can be set off against contractual sick pay, so it is particularly important to be clear about the intended purpose of any contractual scheme.

Employers are not obliged to operate the statutory sick pay scheme if they offer contractual sick pay that is as generous as, or more generous than, the statutory sick pay scheme for each relevant day of incapacity. However, an employer must supply the SSP1 form (or its own computerised version) to an employee who remains sick after receiving 28 weeks' contractual sick pay or where contractual sick pay ends earlier than this and the employee is not entitled to statutory sick pay, for the employee to claim employment and support allowance.

Section 1 of the Employment Rights Act 1996 provides that employers must state in the written particulars of employment whether they offer sick pay and if so on what terms. If it is intended to replace statutory sick pay with a contractual entitlement, care should be taken when drafting the policy so that it accords properly with the statutory regime.

Even if the employer does not specify a right to contractual sick pay, the courts may infer that there is one in the light of the facts and surrounding circumstances and the conduct of the parties. In Guthrie v Scottish Courage Ltd [2004] All ER (D) 15 (Jun) EAT, the Employment Appeal Tribunal (EAT) ruled that where there was a contractual clause allowing sick pay to be withheld, this did not allow the employer unlimited discretion. The precise words of the express contractual term had to be considered and the employer's decision made in good faith.

In Bellingham v Secession Ltd [2006] All ER (D) 62 (Jan) EAT the EAT found that, in the absence of a written contract, the tribunal had been entitled to conclude that, on the basis of the parties' previous conduct, a term was to be implied to the effect that the employee should be paid full contractual sick pay during periods of sickness absence.

In Burlo v Langley and another [2007] IRLR 145 CA the Court of Appeal ruled that the employee should receive compensation for only the amount actually lost through not being allowed to work out her notice. She was unfit for work during her notice period, and contractually entitled to receive only sick pay. Damages for wrongful dismissal were therefore calculable on the amount due for payment, not her normal weekly wage.

In O'Hanlon v Commissioners for HM Revenue & Customs [2007] IRLR 404 CA a sick pay policy that did not provide unlimited full pay for a disabled employee who had lengthy absences from work was not discriminatory under the Disability Discrimination Act 1995 (which has been repealed and replaced by the Equality Act 2010).

In Beattie v Age Concern EAT/0580/06 the EAT held that where there was a sick pay policy that provided a contractual right to enhanced sick pay, the amount payable should be based on an average of the employee's normal weekly hours, which, although variable, were generally in excess of 30 hours a week rather than the guaranteed minimum contractual hours of 15 hours.

Part-timers should be treated the same as full-timers in relation to any contractual sick pay scheme, on a pro rata basis (Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000).

Additional resources on contractual sick pay

FAQs

Policies and documents

Key references

Legislation

Social Security Contributions and Benefits Act 1992
Social Security Administration Act 1992
Social Security (Incapacity for Work) Act 1994
Statutory Sick Pay (General) Regulations 1982 (SI 1982/894)
Employment and Support Allowance Regulations 2008 (SI 2008/794)
Social Security Benefits Up-rating Order 2019 (SI 2019/480)