Statutory Sick Pay (SSP) for Umbrella Company Employees

Like it or not, everyone feels unwell at some stage in their lives, and sometimes to the extent that 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.

We get many questions from freelancers and contractors around Statutory Sick Pay (SSP) 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 £99.35 a week, for up to 28 weeks in the tax year 22/23. 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 mentioned above, an employer is legally obliged to pay employees SSP.

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).

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.

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)

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 an assessment rate for up to three months, at which point the person’s illness is reassessed and adjusted. The assessment rate is:

  • up to £77.00 weekly to claimants aged 25 and over
  • up to £61.05 for those under 25

Once your assessment is complete and if you're entitled to ESA, you will be placed into one of two groups with the following weekly rates:

  • up to £77.00 a week if you can return to work (the work-related activity group)
  • up to £117.60 if you can’t return to work (the support group)

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 get in touch.

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