Statutory Sick Pay

What is Statutory Sick Pay

The government has adopted this measure which is a substituted form of earnings for employees who are off sick from work and who meet the entitlement requirements.

Employer’s Duty

An employer has a legal duty to pay statutory sick pay to an employee who becomes ill and is absent from work as a result of that illness as stipulated by the Social Security Contribution and Benefits Act 1992. Prior to 1994 an employer was able to be reimbursed for most if not all of the money that was paid to an employee from National Insurance Contributions. However the Statutory Sick Pay Act 1994 has repealed employers’ right to recoup those losses and has made it their responsibility.

The Entitlement to Statutory Sick Pay

A person is entitled to statutory sick if the he or she meets the following requirements:

  •    An employee

  •    Illness for more than 3 days (inclusive of weekends and holidays)

  •    Wages that are equivalent to the Lower Earnings Limit (earnings required to qualify for certain state benefits) or more

The Employee

An employee includes the following:

  •    A person employed gainfully under a contract for service in Great Britain

  •    A person who pays Secondary Class 1 National Insurance Contributions

  •    An apprentice who is in employed earner’s employment

  •    An office holder (including elected office)

  •    An agency worker


Limitation on entitlement

  •    Statutory Sick Pay is limited to 28 weeks during the qualifying 3 year period in which a person is absent from work.

  •    An employee cannot aggregate the amount of statutory sick pay against one employer which exceeds the maximum 28 weeks.

Protection of an Employee’s right to Statutory Sick Pay

  •    An employer cannot contract with an employee to limit, exclude or modify the employee’s right to Statutory Sick Pay.

  •    An employee cannot be required to contribute to an employer’s cost under its obligation to pay Statutory Sick Pay.

Contracting out of an Employee’s Protection

The protection of an employee’s right to Statutory Sick Pay does not apply to circumstances where the following applies:

  •   The contract or agreement authorises the same deductions from contractual remuneration the employer is liable to pay within the same period.

  •   The employer would be so authorised if it were liable to pay contractual sick pay in the same period.

The Rate

The 2009-2010 rate of Statutory Sick Pay is £79.15 paid on a weekly pro rata basis. Income tax and national insurance contribution deductions apply.

New Development- Holiday pay for employees on long term sick leave

The actual amount of Statutory Sick Pay is arguably very modest. However, the recent landmark case of Inland Revenue Commissioners v Ainsworth [2009] is seen as a welcome change in the law by employees who are on long term sick pay as they are now entitled to holiday pay in addition to their Statutory Sick Pay. This case has settled the confusion in this area of the law where previously the Court of Appeal ruled that an employee is not entitled to holiday pay whilst off sick from work. This judgment followed a ruling of the European Court of Justice in Stringer v Revenue and Customs Commissioners

However, this ruling has created controversy as businesses now fear that it will be costly to pay compensation in lieu of an employee’s lost annual leave in addition to Statutory Sick Pay. This is particularly aggravated by the fact that an employee can claim for aggregated holiday pay.