sick payAs we all know, the last few years have seen a shift from sick note to fit note. The employment contract should set out what sick pay an employee is entitled to and this will vary from job to job. As an over-riding principle, sick pay from work cannot offer an employee less than they are entitled to through Statutory Sick Pay.

The purpose of this article is to provide some clarity on what employees are entitled to and what employers are obliged to pay when an employee is unable to come to work through sickness.

The Fit Note

The fit note was introduced to replace the old sick note on 6 April 2010.  Doctors now issue fit notes to individuals to provide evidence of the advice the doctor has given about the individual’s fitness for work.  The fit note allows doctors to advise that individuals “may be fit for work” taking into account the doctor’s advice, or that they are “not fit for work”. For further information, visit the gov.uk website, here.

Two types of Sick Pay

When an employee takes time off from work due to illness, they might be entitled to sick pay. There are two types of sick pay, which are:

  • Company Sick Pay (also called contractual or occupational sick pay)
  • Statutory Sick Pay

If an employer runs its own sick pay scheme it is a ‘company sick pay scheme’ and an employee should be paid what they are due under that. This will depend on what is included in their employment contract.

Where an employee isn’t entitled to anything under a company scheme, their employer should still pay them Statutory Sick Pay (SSP) if they are eligible.

Company Sick Pay

An employer may offer a sick pay scheme that is more generous than SSP. The employer can offer any scheme that does not fall below the legal minimum.

Details of any company sick pay entitlement should be included in the written statement of employment particulars, which the employee should be given within two months of starting work. Where a company doesn’t offer a scheme, the written statement should say so.

Statutory Sick Pay

Employees may be eligible for Statutory Sick Pay (SSP), which is currently £86.70 a week for up to 28 weeks. You can offer more if you have a company sick pay scheme (but you can’t offer less). Company schemes are also called ‘contractual’ or ‘occupational’ sick pay and must be included in an employment contract.

Holiday (or ‘annual leave’)
Statutory annual leave is accrued while the employee is off work sick (no matter how long they’re off) and can be taken during sick leave. If an employee is sick after 28 weeks of company sick pay, or if this ends earlier and they are not entitled to SSP. More information is available here.

A typical Company Sick Pay scheme

Company sick pay schemes vary from employer to employer. A typical sick pay scheme usually starts after a minimum period of service (e.g., a three month probationary period). An employee would then receive their normal pay during any period that they are off work due to illness, up to a specified number of weeks. After this, they are likely to receive half-pay for a further period before any sick leave they take becomes unpaid.

Proof of sickness
An employer may set out how an employee should tell them that they are sick (e.g. ring in before a certain time of the day). Usually they will be able to self-certify for a week of illness, beyond that a doctor’s note is normally needed.

Discretion
An employer can choose to make an exception and pay an employee sick pay even if they don’t qualify under the company rules. Also, some sick pay schemes say that payments are ‘at the employer’s discretion’, which means an employer can refuse payment if they think the absence is unjustified. However, in doing so they must ensure that their decision is free from discrimination (that is, they are not favouring one category of employee over another when they are required not to).

If an employer has chosen to pay discretionary sick pay in the past this does not automatically mean they have to in the future. However, it is sometimes possible for a discretionary arrangement to become a part of an employee’s contract through ‘custom and practice’.

Work related sickness
The amount of sick pay an employee gets isn’t usually affected by the cause of their sickness. An employer may have a special scheme in place for workplace injuries.

If an employer is responsible for an employee’s incapacity they may have a legal right to make a personal injury claim. This applies to both a physical or psychological injuries (e.g., stress).

Time off to care for a sick dependant
An employee might be able to take time off to care for a sick dependant. However, their employer does not have to pay them for this time unless their contract says they should.

If an employer refuses to pay an employee sick pay that they are due, this is classed as an ‘unlawful deduction from wages’. The employee might be able to make a claim to an Employment Tribunal.

What else employees should know

  • If an employee goes into hospital, SSP isn’t affected.
  • If an employee works abroad, they may be able to get SSP if their employer pays National Insurance contributions for them.
  • If an employee goes abroad to visit, they may still claim SSP if they can prove they’re still sick.
  • Serving members of the Armed Forces cannot get SSP, but members of their families may be able to get it.

SSP and insolvency

A guide to Sick payIf an employer does not pay an employee SSP because they are insolvent, payment will be made by Her Majesty’s Revenue & Customs (HMRC). They will only do this when the employer has been formally declared insolvent. HMRC will take over the payment from and including the week of insolvency. Any payments before that date must be paid by the employer.

Further information

The Bizezia Online Library includes a PDF publication covering this subject. If you would like a copy, please email me at: mpollins@bizezia.com

Martin Pollins

Martin Pollins

Managing Director at Bizezia
Martin Pollins is a Chartered Accountant with wide experience in corporate finance and business management. He holds a number of directorships and has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX.

He was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996.

Martin Pollins ran his own firm based in Sussex and was the first Accountancy firm in the UK to advertise on television and Martin went on to create and launch the CharterGroup Partnership (the UK's first Accountancy network) and then LawGroup UK (one of the largest networks of lawyers in the country).

Martin started work on the Bizezia concept in 1996, developing the broad range of information resources and products over the past 18 years.
Martin Pollins
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