How to Understand The Basics of Statutory Sick Pay

Since 6 April 1983 all employers have had to pay statutory sick pay to their employees for the first eight weeks’ absence each year. Since April 1986, this period has been extended to 28 weeks. In principle, the scheme does not seem too disastrous. The payments during illness – one of three flat rates depending on income, not family circumstances – will be made by the em­ployer instead of by the Department of Health and Social Se­curity, but the employer can reclaim the sums paid out. The small businessman might initially see the scheme as giving him more unnecessary work – irksome, but no more.

It is, though, when the scheme is studied in detail that the problems become apparent. Payments can only be reclaimed from the government if they have been properly made, so all companies will have to become thoroughly familiar with the scheme. In essence, the payments apply only to periods of inca­pacity (periods of illness lasting at least four days), and these periods themselves must form periods of entitlement – periods which begin on the first day of incapacity and end when the em­ployee resumes work, leaves the company, becomes excluded from the right to receive statutory sick pay, or at the end of the tax year.

There are also waiting days: payment is not made for the first three days of absence except when two periods of absence are separated by no more than two weeks. In such cases the periods are linked and the waiting days rule applies only to the first absence.

Finally, when it has been established that there is a period of entitlement, payment must only be made for qualifying days. These are days which have to be agreed between employer and employee’s as reflecting the days on which employees normally work. No problems occur if employees only work from Monday to Friday each week, but when employees work on shifts or their days change from week to week, difficulties will obviously arise in deciding which days should be chosen, as this will affect the amount of pay employees are entitled to receive – and so the amount employers can reclaim from the government – during periods of illness.

There are still further complications: employees are excluded from receiving statutory sick pay when they have exhausted their entitlement in any year; if they are over state pension age; if their earnings are less than the National Insurance lower earnings limit (£41.00 in the year from 10 April 1988); and if the illness falls during the period of up to 11 weeks before a woman’s expected date of confinement to six weeks after that date.

In most of these situations, the employer will have to com­plete a form and send it to the employee, who may then be able to claim National Insurance sickness benefit. Once an employee has claimed benefit from the state, he is automatically excluded from the right to statutory sick pay for 57 days beginning with the last day of sickness and so, if he falls ill during this period, he must go back to the DHSS for sickness benefit and begin a further 57-day exclusion period.

The statutory sick pay scheme applies to all employees under pension age who earn more than £41.00 a week, so groups such 3s married women who pay the small stamp and are currently excluded from the right to receive state sickness benefit are also covered. This, together with self-certification, which means that employees can take a week’s sick leave without having to see their doctor, will probably account for any significant increase in absenteeism.

The scheme may have involved bigger companies taking on new employees just to cope with the requirements of the Scheme. Indeed, this scheme could well turn into one of the more successful job creation schemes! For the smaller company, though, already under economic pressure the answer may well seem to lie in dismissing employees who go ill. The government, however, has contingency plans for dealing with such response: the DHSS has powers to make regulations which would require employers to continue to pay statutory sick pay for up to the full eight-week period to employees sacked to avoid liability for payment.

So what can companies do about the costs involved? As re­gards the record keeping necessary to check whether absences qualify for payment, there is little that can be done other than devising a simple record form. The government has issued a record form which may be used by small companies – it is avail­able from the DHSS. So far as controlling absence is concerned, the self-certification procedure enables employers to challenge employees’ sickness claims when ‘the nature of the circumstances, the time of the absence and the general character of the person concerned’ give cause for doubt. The employer could then refuse to make the sickness payment. The employee, though, would then have the right to appeal against this de­cision to a DHSS inspector. It is likely that small companies will opt to pay up rather than risk getting entangled with National Insurance officers and tribunals.

Filed Under: Work & Careers


About the Author: Vanessa Page works a career counselor in one of the leading firms in Los Angeles. She is also a blogger and gives tips on how people can tackle their work and career issues. She has 8 years of experience in this field.

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