Sick pay may seem like an easy topic to understand. Someone gets sick, you pay them until they get better.
Unfortunately, it’s more complicated than that.
To follow the letter of the law, business owners need to understand what makes an employee eligible (or ineligible) for sick pay and the specifics about how to pay them the amount they’re due.
Rather than spending hours on the HM Revenue & Customs website, we did it for you. Here’s everything you need to know about sick pay, along with some tangible examples of how to implement these ideas in real life:
Who Qualifies for Sick Pay?
Employees Who Make a Minimum of £112 per week
Not every worker in the UK qualifies for Statutory Sick Pay (SSP). To receive payment, the individual needs to be an employee (or an agency worker) at your business for at least a month. The only exception to this regulation is agricultural workers, who have to follow a different set of rules.
Qualified (non-agricultural) workers must also earn an average pre-tax income of £112 per week. To calculate this Average Weekly Earnings (AWE), follow these guidelines from HM Revenue & Customs:
1. Consider the eight-week period starting backward of your employee’s last payday before the sickness began.
2. Add up all of the earnings and divide by 8 to get the AWE for the period. This number needs to surpass £112 per week for the employee to be eligible for sick pay.
If the employee hasn’t worked for eight weeks yet, instead, consider the period between the first day of work and the last payday before the sickness took place. Calculate the average across this period; that’s the calculated AWE for these new employees.
Workers Who Report and Document the Health Issue
To be eligible for pay, the sick worker also has to tell the employer they’re ill before the deadline listed in the company’s Sickness Absence Policy. Usually, this deadline is around five days after their first day away from work. Nationally, the cutoff is seven days.
Also after seven days, an employee also needs to submit a fit note from a doctor or nurse to confirm that they’re not able to complete their duties as a worker. Sometimes, doctors will write “may be fit to work.” In this case, the employer benefits from having a candid conversation with the employee about how to make the work more reasonable, such as offering different hours or activities.
What’s the Time Period Involved For SSP?
4 Days to 28 Weeks
At a minimum, individuals must have been ill for four days in a row to be eligible for sick pay. That means an employee missed four full days of work — leaving work early doesn’t count as part of the period. However, these four days can include weekends or days off.
The government calls the specific period of sick time “Period of Incapacity for Work” (PIW).
If someone is sick multiple times over a period of eight weeks or less, they can combine their PIWs. In other words, if someone is sick for two days, and a month later, they’re sick for two more days, they have reached the four day minimum for sick pay.
If a person receives the maximum amount of SSP at 28 weeks, they are no longer eligible for the benefit. Individuals who are currently receiving statutory maternity pay aren’t eligible for this benefit either. In both these cases, you don’t need to pay a worker. What’s the Standard Rate?
Employers Need to Pay a Minimum of £88.45 Per Week
£88.45 is the standard rate that employers are required to pay individuals per week during their sick leave. If you do not need to pay your employee for the full week, you can split £88.45 into a day rate and go from there.
Gov.UK also has a handy calculator to help you make the calculation.
There’s one notable exception to this rule: if you included “contractual sick pay” in your contract with workers, you need to follow those provisions rather than the government’s. In that case, you will pay workers the percentage of the average income or the specific number discussed in the contract. In this case, £88.45 is the minimum an employer can pay employees.
When Do You Start Paying the Worker?
Although employers need to pay for the period of incapacity for work, they don’t pay for their workers’ first three days for sickness. These are known as “Waiting Days” (WDs). Unlike with PIW, waiting days have to be working days. They cannot include non-working days.
PIW – WD = Sick Pay Days
If a person received the maximum amount of SSP at 28 weeks, they are no longer eligible for the benefit. In this case, you don’t need to pay a worker. Individuals who are currently receiving statutory maternity pay aren’t eligible for this benefit either.
How Does It Work in Real Life?
Imagine that your employee Susan has the flu. She calls to let you know she can’t come in on Friday for work. (Susan usually has Saturday and Sunday off.) Susan can’t come in on Monday or Tuesday either, but by Wednesday, she’s back. You don’t have to pay her sick leave because, although her PIW was five days, her WDs didn’t surpass three days.
Tom broke his ankle. As a barista, he won’t be able to work for a few weeks. You need to subtract three days from the total days of missed work. You pay him £88.45 for each week. From there, you can try to work with Tom to create accommodations, so he can come back to work as early as possible.
Gillian has a long-term health issue. She had to take five working days off to get medical treatment. At the time, you subtracted the three waiting days and paid her for two days of work. Now, six weeks later, she has to take two weeks off to go into surgery. You need to pay her for the full two weeks off (without subtracting three WDs) because technically, the six weeks count as part of the same PIW.
Although these regulations can seem complicated, they’re manageable when you have a clear grasp on everyone’s schedule. When I Work’s all-in-one-tool helps managers and employees track shifts, time off, and managing sick leave. By streamlining these processes, you clarify what and when you owe workers for sick pay—plus, they know it too! Bringing transparency not only makes everyone’s job easier, it minimizes the chances of disputes and conflicts within your business.