What is statutory sick pay?

Statutory sick pay (SSP) is a universal sickness benefit that all employers are legally obliged to pay their employees when they have to take sick leave. It’s not related to salary, so whatever your job and wage, you’d get the same as everyone else.

Why was SSP created?

SSP was introduced by the government in 1983 to replace the national insurance sickness benefit that had been paid by the Department of Health and Social Security since 1946. Originally, the payments made by employers were fully refunded by the government, then partially until 2014 when the entire financial burden was transferred to the employer.

In theory, any employee is entitled to SSP but three conditions need to be met:

Employee status

Your employment status must be clearly that of an employee rather than a worker, which means, among other things, having a contract of employment, paying tax via PAYE and being automatically enrolled in a workplace pension scheme.

Earnings

You must earn at least £123 a week on average. There’s no upper limit on earnings.

Sickness

You need to be off sick for more than 3 days in a row. SSP is paid from the fourth day of your incapacity for work

The current rate of SSP is £118.75 a week.

Since 2016 it has risen each year from £88.45. That’s an increase of 34% in 10 years, which is a much higher growth rate than wages but starting from a considerably lower base.

Bearing in mind that the average household’s monthly expenditure is around £2300 it’s clear that for most people SSP is not even close to adequate. Fortunately for some people, employers are perfectly free to pay more than their minimum obligation and this should be written into their contracts with their employees. For guidance on how to claim statutory sick pay visit the government website.

Not impressed by the level of statutory sick pay?

Maybe it's time you looked at the alternatives

SSP is payable for up to 28 weeks of an employee’s sick leave. After that, if the employee is unable to return to work, their employer doesn’t have to provide any further financial support. If that seems limited, remember that when it was introduced it covered just 8 weeks of sickness but was extended to 28 weeks in 1985.

As we’ve already seen, for you to be eligible for SSP your employment status must be that of an employee, as defined by the government. Most people will be pretty clear about their status but it’s not always straightforward.

The DWP makes a distinction between employees and workers. They share certain employment rights, including the statutory minimum level of rest breaks and paid holiday, but when it comes to statutory sick pay, it can be a different story. These are the exceptions you’re most likely to come across.

Statutory sick pay for the self-employed and freelancers

This is a pretty broad term that covers many kinds of people who work for businesses but are not employed, which means they have a contract for services rather than a contract of employment. They’re not paid through the payroll but by invoicing the company and they don’t have the rights of employees. This means the company they work for – even if it’s a very long-term relationship – doesn’t have to give them SSP. We’ll talk about the available alternatives in a moment.

Statutory sick pay for contractors 

These workers are usually a sub-set of the self-employed but their status can be more complicated, particularly if they’re employed by a third party business. Although they might be working full-time for a company under a contract for services, they’re not employees. They might be entitled to sick pay from the contractor company that pays their wages, but this depends on their employment status with the contractor. It can be a multi-layered puzzle.

Agency workers

The position is similar to contractors. If you’re signed up with an agency that sends you to work for a client company, that company has no obligation to give you sick pay. Whether the agency is liable is a question that can only be answered by your status with the agency. Are you their employee or simply a client worker who fulfils a contract for services on their behalf? If the latter, you could be classed as self-employed.

It’s estimated that 31.4 million workers are employees, so most of the workforce will be entitled to SSP. At £118.75 a week, it’s pretty clear that not many people – even those without families – could survive for long on that amount, so the alternatives are important.

Income protection insurance

You might not have heard of it, but income protection insurance (IP) can be an extremely effective source of financial support if you get ill or injured and can no longer rely on your regular wage. It covers both physical and mental health conditions.

You take out a policy while you’re fit and in work, choosing how much you want to receive, depending on your needs and budget. If you’re forced to take sick leave you can make a claim, which, if approved, means you’ll get regular tax-free monthly payments to replace a portion of your income until you’re able to return to work. You can choose how long you want the payments to last, so you’re not stuck with the 28-week maximum under SSP, and you can make a new claim every time you have to take sick leave. 

If you get SSP or your employer pays you more than the statutory minimum you can design your income protection insurance to top it up or to take over when it ends. A lot IP policies, including the ones from Eleos, also give you valuable free perks.

Contractual sick pay

This is the name for sick pay that your employer offers over and above SSP. Your contract of employment should tell you what you’re entitled to, but you should make sure you know the details of how much you’ll get and how long it will last. IP can top it up while you get it and replace it when it ends.

State benefits

Some support is still available direct from the state.

Employment and Support Allowance

There is no statutory sick pay for the self-employed, not least because there’s no employer to pay it. Instead you might qualify for Employment and Support Allowance (ESA) which, unlike SSP, can last indefinitely. However, it’s even less generous than SSP – currently £92.05 per week. This makes protecting your incomewith insurance even more attractive.

Universal credit (UC)

UC has replaced most state benefits in one scheme and if you’re not well enough to work you may be able to claim UC for supplementary support, although it probably won’t be much and it can be affected by any savings or assets you have.