Like it or not, everyone feels unwell at some stage in their lives, and sometimes to the extent where they can’t work. And taking time off work due to sickness is something that COVID-19 brought into sharp focus for millions of people working for themselves in the UK.
But while the worst of the pandemic looks to be over, the questions that freelancers and contractors have around Statutory Sick Pay (SSP) remain. From ‘what is Statutory Sick Pay?’ to ‘who pays it?’ and ‘do umbrella workers get SSP?’ It's fair to say there’s a lot of confusion around the issue.
With this in mind, we’ll explain the sick pay rules for umbrella workers, sole traders and contractors.
What is Statutory Sick Pay (SSP)?
SSP is the minimum amount an employee must be paid by their employer if they can’t work for at least four days consecutively, due to illness.
Sick pay rate - how much do employees get?
Employees must be paid at least £96.35 a week, for up to 28 weeks in the tax year 21/22. That said, employers can - and sometimes do - pay above the required minimum if they have a sick pay scheme (also known as an occupational scheme). All information will be outlined in the employment contract.
Who pays Statutory Sick Pay (SSP)?
As touched on above, an employer is legally obliged to pay employees SSP. If you are a small employer, you may be able to reclaim the cost of SSP for staff that are on sick leave due to COVID-19. If you run your own business you can check eligibility here: Check if you can claim back Statutory Sick Pay paid to employees.
Here’s how the sick pay rules work in practice:
When does Statutory Sick Pay start?
SSP is granted from the fourth consecutive day spent not working due to illness. This day onwards is known as a ‘qualifying day’. The first three days are called ‘waiting days’, where employees don’t usually receive SSP from their employer (unless they’ve received SSP in the previous 8 weeks).
This is different with SSP relating to COVID. SSP starts from day one rather than day four if you have caught COVID or you have to self isolate because of the disease.
Is SSP taxable?
Yes. Employees are paid SSP as part of their salary, with Income Tax and National Insurance Contributions deducted. It’s also worth bearing in mind that those with more than one job can claim SSP from multiple employers.
Umbrella company sick pay explained
As employees of an umbrella company, umbrella workers qualify for SSP, along with other statutory employment rights, like holiday pay, employer pension contributions and maternity and paternity leave. It’s one of the many benefits of working via an umbrella company.
Contractor sick pay explained
Sick pay is a little more complicated for contractors operating via their own limited companies. For all intents and purposes, contractors are self-employed, albeit employees of their own company. This means contractors can claim SSP, assuming they work on the payroll of their business and pay themselves at least £120 a week in salary, not dividends.
The only sticking point is that contractors have to pay themselves sick pay via their own company. So SSP for contractors is quite different to employees and those operating via umbrella companies, where the payment is covered by the employer.
However, when SSP relates to COVID some contractors can reclaim SSP via the The Coronavirus Statutory Sick Pay Rebate Scheme.
Sole trader sick pay explained
Sole traders don’t benefit from sick pay, as it is only for employees. Saying that, other initiatives are available to sole traders who fall ill and can’t work.
The Employment and Support Allowance (ESA) is open to everyone (employed or self-employed) and helps out with the cost of living for those unable to work. The ESA currently pays £74.35 weekly to claimants aged 25 and over (£58.90 for those under 25) for up to three months, at which point the person’s illness is reassessed and adjusted - £73.10 a week if you can return to work or £111.65 if you can’t.
Given the ESA isn’t as generous as SSP, it’s important to note that it can be claimed in addition to Universal Credit.
Find out more
To learn more about sick pay rules and the amount you’ll receive when working via Parasol, please request a callback and one of our umbrella experts will be in touch.