The Law in More Detail

Statutory Sick Pay

From 6 April the weekly rate of SSP is increased to £75.40. In addition, many employers pay occupational sick pay (OSP) or contractual sick pay to employees. There is no obligation to do this, as the only legal duty is to pay Statutory Sick Pay (SSP) to those employees who qualify. An employee may still have a right to statutory sick pay (SSP) when OSP is not due.

For example, even when an employee has not worked long enough to get OSP, SSP can be considered from the employee's first day in a new job. Also, perhaps the contract states that OSP is not payable where, for example, an employee breaks their leg in a sporting accident or have elective surgery and the OSP scheme makes it clear these are not covered. SSP will still be due in such situations.

Other examples include where OSP has fallen to half pay and this is less than SSP or the employee is no longer entitled to OSP (their full entitlement has been reached) but is entitled to SSP.

An employer is free to create qualifying rules for company sick pay and these are often stricter than allowed under SSP legislation. An employer commits an offence, however, if it does not meet an employee's SSP entitlement - even where the employee has not met the rules to receive Company sick pay.

For SSP purposes, employees are only required to notify their incapacity at some time on the first qualifying day (ie, a normal working day) that they are incapacitated. It is recommended that the Employer sets a specific timeframe for notification, and can withhold sick pay if this is not met without good reason.

For SSP, the employee can get someone else to do it on their behalf. They can
also send a letter, the date of notification being the day the letter was posted. Employers should state clearly that the employee must, wherever possible, ring in personally and speak to their manager.

Employees are also only required to notify their continuing absence every seven days in order to receive SSP. An employer can require an employee to notify, for example, in person by a set time on the first working day they are incapacitated and daily thereafter, at least for the first few days of an absence.

Employees being paid SSP are only required to self-certify their incapacity for days four to seven and then to provide a medical certificate(s) from day eight onwards covering the remaining period of their incapacity. The Employer can require a self-certification form to cover absence from day one, and this is recommended, as it helps discussion at the return to work meeting.

When it comes to paying OSP employers can require much more stringent medical evidence of incapacity and can include a requirement for the employee to attend an employer arranged medical examination. Ideally this should be included in the employees contract or handbook, confirming that a refusal to cooperate could result in withdrawing company sick pay (remember SSP is probably still payable)

For SSP purposes, an employer is very limited in what it can do to query an employee's incapacity. It can only be done through asking HMRC to help using Medical Services. They are contracted to HMRC and the Department for Work and Pensions to give advice on the medical aspects of a claim to State benefits, such as Incapacity Benefit (IB).

Company sick pay may be available from day one. SSP terms require an employee to be off for four or more consecutive days in a row (known as a Period of Incapacity for Work (PIW)) for SSP to be considered, or that PIWs can link for SSP purposes. Therefore, although an employer pays OSP that is more generous than SSP they still need to keep SSP records detailing each employee's PIWs and their SSP entitlement.

The payment of OSP then needs to be tracked against any SSP entitlement to ensure the employee receives at least what they are due under SSP. Where an employer, through OSP, has met an employee's full entitlement to 23 weeks' SSP in a single PIW or a number of linked PIWs, the employer needs to issue a form SSP1 at the 23rd week. An employee is currently entitled to 28 weeks SSP.

Employers that pay company sick pay beyond this may consider a term allowing for the value of any Incapacity benefits to be deducted from the company element (otherwise the employee may receive more than full salary).

The payment of SSP is also affected by an employee's average weekly earnings normally calculated over an eight-week period ending on the last payday before the first day of an original PIW. If earnings are not at least equal to the lower earnings limit for Class 1 NICs, SSP is not due and a form SSP1 should be issued transferring the employee to state benefits. If an employee is not entitled to SSP in an original PIW they are not entitled to SSP in any PIW that links to that one.

Whereas it is not normally possible to recover any SSP payments made now, smaller employers can sometimes take advantage of the Percentage Threshold Scheme (PTS).
Employers can recover all or part of the SSP paid, where the SSP exceeds 13% of gross Class 1 NI contributions for that month.

Note: Statutory Maternity benefits are different, and most businesses can recover 92% of these payments, with smaller businesses claiming 104.5% of payment made under family friendly rules.

Increased Statutory Holiday Rights (1 October 2007)

Statutory holiday entitlement under the Working Time Regulations are being extended from 4 weeks (20 days including Bank Holidays if full time) to 4 weeks plus Bank Holidays a year. (i.e. 28 days per year full time). The Government proposes to increase the statutory holiday entitlement in stages starting with an additional 4 days holiday from 1 October 2007. This will give 24 days holiday as a minimum (16 days plus 8 Public Holidays).

This means of course that workers will have the right to be paid for Bank Holidays in addition to their "normal" annual entitlement. However in these Regulations there is no right to take these holidays on specific dates, so the Employer can still require people to work on Public Holidays. Now however an alternative day must be provided in the annual entitlement to make up for the "lost" day if this is worked. Payments for, and any time off in lieu of, working a Public Holiday is an issue that should be dealt with in a staff handbook or holiday policy.

To work out an individual entitlement in the transitional stages from October 2007, you must multiply the proportion of the holiday year left to run, by the additional holiday due from 1 October. So for a part time worker on 3 days per week, whose leave year starts on 1 January 2007 the entitlement is 12.6 days for 2007. A full time employee on a 5-day week will get an extra day in 2007 (3/12 or 0.25 x 4 days)

There is no obligation to round the calculation "up", but many employers probably will, at least to the nearest half-day. Employers cannot however round the holiday entitlement "down"!

The Government has set up an on-line calculator to help with this transitional period. It is on the following link: www.berr.gov.uk/employment

The practice of "buying out" holiday entitlement by providing payment in lieu is not encouraged by the Working Time rules. In fact it has not been permitted unless the entitlement exceeded the (previous) minimum of 4 weeks. However until April 2009, again as a transitional measure, Employers will be allowed to make a payment in lieu of the additional 4 days holiday entitlement. This was introduced to help Employers to overcome any difficulties in finding enough staff to cover the extra days off. After April 2009 it will no longer be permissible to buy out any statutory entitlement, by which time this will be set at 28 days per annum.

Another change is that Employers are now allowed to let staff "carry over" these additional statutory holidays to the next holiday year. (No carry over was allowed on the previous statutory minimum of 20 days per annum, and the new rules only apply to the extra days - there is still no carry over below 20 days). Do note that Employers are under no obligation to allow for any "carry over" days at all if they do not wish to.

Don't forget the obligation (in the Employment Rights Act) on all employers to inform employees in writing of any changes to their employment terms. This should be done within a month of the changes coming into effect.

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