UK law requires that employers pay statutory sick pay (SSP) to all employees (who qualify for sick pay) that are off work due to sickness. SSP is the minimum statutory requirement employers must pay to their employee and is separate to any company sick policy that may be in place.
Who qualifies for Statutory Sick Pay?
To qualify, employees must:
- Be classed as an employee and have done some work for the employer
- Have been ill for minimum 4 days in a row
- Earn an average of at least the lower earnings limit for National Insurance
- Tell their employer they’re sick before their deadline, or within 7 days if they don’t have a deadline
For more information on eligibility for SSP, see the HMRC website.
Calculating Statutory Sick Pay
Calculating Statutory Sick Pay can be a tricky process, with the potential for manual data errors when switching between the HMRC calculator and payroll. There are numerous rules and complexities to be taken into account, such as:
- In order for SSP to be paid, a Period of Incapacity to Work (PIW) needs to be formed. This is a period of sickness lasting 4 or more consecutive days, including non-working days, bank holidays and weekends.
- When a PIW has been formed, the first 3 days are not payable. These are the ‘waiting days’, after this SSP is due. If the PIW is linked then the ‘waiting days’ only apply to the first PIW.
- SSP periods can be linked should an employee be off sick again for more than 4 consecutive days within a period of eight weeks from a previous period. When periods are linked, it means that the employee will not have 3 waiting days for SSP to be applied.
- The maximum entitlement is 28 weeks in each period – or series of linked periods.
- You must figure out the employee’s average weekly earnings, and then the daily rate, by dividing the weekly rate by the number of qualifying days in that week. Qualifying days are the days which an employee usually works.
- An employee must have average weekly earnings of at least the Lower Earnings Limit (LEL) for National Insurance to qualify for SSP.
Sounds confusing, right?
Well, need not worry about remembering the rules and calculation process. KeyPay automates the complexities of SSP calculations and streamlines the pay run. Read more about how SSP calculations work in KeyPay.
Sounds good, but what other value can KeyPay bring to my payroll efficiencies?
KeyPay makes SSP calculations and payroll management easier than your average system. The below scenarios commonly leave payroll managers in a pickle if they haven’t got the right technology like KeyPay in place:
What if I’m transferring my payroll from KeyPay to another system?
If you have an employee currently off sick, don’t worry about the waiting days. You can override these to the right amount in the system.
Do I need to think about linking SSP periods if employees are sick for more than 4 days within an 8 week period of a previous SSP period?
No – KeyPay automatically links periods within the system.
What do I do if there’s insufficient historical payroll data to determine an employee’s AWE?
With KeyPay, you have the ability to override this calculation in the pay run.
Do I need to keep a record of SSP entitlements?
No. As soon as an employee has reached the 28 weeks cap of SSP, KeyPay will give a warning and you’ll be unable to pay any more SSP until the next period. For more good record keeping, you can also store any sick certificates against the actual SSP record via an attachment.
How will KeyPay know the employee’s qualifying days?
You can set up your employees qualifying days pattern in ‘Employee Details’ > ‘Pay run Defaults’ > ‘Standard Work Week’ then click on ‘Advanced’ so you can edit the days your employee works. These populate by default in the SSP context panel in KeyPay.
I’m a payroll bureau. How else could KeyPay help me with SSP?
Using KeyPay’s employee self service apps, you can receive real time data from employees regarding their sick days. What does this mean? You don’t need to wait for you clients to update you at the last minute about changes relating to sick leave, meaning fewer post pay run amendments.