Do I have to pay sick pay as a small business?

In many ways, working as a sole trader is pretty straightforward – you do your work and then you get paid. However, it has its downsides too. For example, if you’re ill and can’t work, then there’s nobody there to cover your work and business costs for you.

Of course, this can easily be remedied by taking on an employee or two to handle greater workloads and meet demand should you be unable to work due to illness. But if you’re employees get sick, then you will be required by UK law to pay what’s known as statutory sick pay.

Take a look below to learn more about what covering sick pay for employees entails, and whether or not you can reclaim some of this pay from HMRC.

Do companies have to pay statutory sick pay?

No matter the size of your business, if you have even a single employee under your care, you’re legally obliged under small business employment law to meet their sick pay requirements, provided they meet the eligibility criteria.

Much like maternity leave pay, if your employee is eligible for sick pay, then this payment is non-negotiable, and your employee must be paid the minimum amount stated by law for the duration of their sick leave.

How does SSP work for employees?

If you’re at all concerned that the process for calculating and paying sick pay for employees may be complicated, then you’ll be pleased to hear that the government has streamlined the process where possible.

Take a look at what you need to know below:

How do I know if an employee is eligible for sick pay?

Employees, including those who are temporary, part-time, or agency workers, are all entitled to statutory sick pay to cover periods of absence as a result of illness or otherwise being unfit for work, provided they meet the following criteria:

• They have an employment contract with your business.
• They have worked for you, to some degree, under this contract.
• They have been sick for four or more days in a row, (including non-working days).
• They earn at least £112 a week.
• They give you notice within your business’s agreed sickness notice period.
• They provide proof of their illness.

Employees are NOT entitled to statutory sick pay under any of the following conditions:

• They have already received SSP for 28 weeks.
• They are currently receiving maternity pay.
• They were on strike or in custody on the first day of their illness.
• They were off work due to a pregnancy-related illness in the four weeks prior to their baby's due date.
• They have received employment support allowance within 12 weeks of starting or returning to work for you.

When should you pay statutory sick pay?

SSP should be calculated and paid on your business’ normal payment date, e.g., the end of the week or the month, depending on what system you use for employee payment. As for when SSP payments begin, this will be the fourth ‘qualifying’ day of sickness, which is a day your employee would usually work.

In practice, this usually means there are three days before sickness pay starts in any period of incapacity for work. For example, if your employee normally works from Monday to Friday but they are ill from a Monday, then sick pay would be calculated as starting from Thursday – after three qualifying days.

However, if they fall ill on a Saturday, the Saturday and Sunday would still count towards this period of incapacity for work, but they are not qualifying days, so SSP would still not be paid until Thursday. The government have created an online calculator to help you work out what your employees are entitled to.

How much is SSP?

The weekly rate for statutory sick pay currently sits at £116.75 and can be paid for up to 28 weeks of continual sickness. If an employee is sick for longer than 28 weeks, they’ll instead need to claim an employment support allowance.

When should employees notify employers of sick pay?

Employees must notify you that they are sick within an agreed-upon period of sickness notification time, as stated in your employment contracts. For example, this could be by 10am on the first day of sickness.

Alternatively, if you don’t have a set notification period, then an employee must notify you within seven days of their illness beginning instead. In both cases, they must also provide you with proof that they’re unfit for work. This will typically take the form of a ‘fit for work’ note from their GP.

Do I need to provide records of statutory sick pay?

Yes, you’re required by law to keep records relating to the dates of sickness pay being made to your employees, as well as records of all payments made to your employees under SSP.

Can employers claim back SSP from HMRC?

Unfortunately, despite previous schemes being in place in the past, employers are now no longer able to claim back SSP, though it’s worth keeping an eye out for specific employer relief schemes provided by the government – such as those implemented during the COVID-19 pandemic to help employers meet the costs associated with absentee workers.

Other important things to know about SSP

On top of being paid during their absence, all employees benefiting from SSP can still accrue annual leave while they are sick, and annual leave can be taken while employees are off sick.

Employees can also qualify for sick pay from more than one job, such as if they’re deemed fit for one but unfit for another. For example, if one role was office-based and another involved heavy lifting.

Finally, if an employee doesn’t qualify for SSP, or they are sick for more than 28 weeks, then you must give them form SSP1, which will help the Jobcentre decide what benefit, if any, they are entitled to under their continued absence.

Become a Trusted Trader

When customers see you displaying our logo, they'll know when you're a trader they can trust

Find out more

Get in touch today to learn more about becoming a Which? Trusted Trader, and don’t forget to visit our advice hub for more informative business articles like this one.