SSP: Special Circumstances and Business Changes

Introduction

Statutory Sick Pay (SSP) isn't always straightforward — different types of employment contracts, changes in employee circumstances, and major business events can all affect whether you must pay SSP and for how long. Understanding these special situations helps you meet your legal obligations whilst avoiding costly mistakes.

Casual, short-term and zero-hour contracts

Employees on casual, short-term or zero-hour contracts are eligible for SSP if they meet the standard qualifying conditions. The key factor is whether they've had 3 months' continuous employment with you.

With at least 3 months' continuous employment

The contract is treated as indefinite, and the employee receives SSP for the entire period of incapacity for work — just like a permanent employee. This continues unless you give written notice ending their contract (for reasons other than avoiding SSP liability) or their entitlement ends for another reason.

The 3-month continuous period doesn't need to be immediately before the sickness. It's not broken by periods of sickness, annual leave, or times when you didn't offer work. Only a trade dispute (like strike action) or written termination of the contract breaks continuity.

Without 3 months' continuous employment

SSP eligibility continues only until the end of the period the employee agreed to work. If they remain sick after this agreed period ends, you don't continue paying SSP. However, if they've accepted another assignment with you, eligibility extends until the end of that last assignment.

Agency workers

Agency workers can be workers, employees, or self-employed, depending on the terms of their working relationship. Only those categorised as employed earners are eligible for SSP.

An agency worker meets the definition of an employed earner if they work under a contract of employment or are supplied by an agency to work under the supervision, direction and control of your business.

Workers with overarching contracts

If the agency worker has an overarching contract that continues between assignments, they're entitled to SSP for the entire period of incapacity until their contract ends (for reasons other than avoiding SSP liability) or entitlement ends for another reason.

Workers without continuous contracts

If the contract doesn't continue between assignments, SSP entitlement lasts until the current assignment ends.

Agency workers become eligible for SSP from the first day they've done some work under their contract. If they have an agreed future assignment starting within 8 weeks of the current one ending, SSP eligibility begins from day one of that future assignment, even if they haven't yet worked under it.

Self-employed agency workers are not eligible for SSP.

Educational workers

School staff — including teachers, teaching assistants, lecturers, nursery workers, bus drivers and kitchen staff — are eligible for SSP if they meet the qualifying conditions. How you handle sickness outside term time depends on their contract type.

Year-round contracts

If the contract continues throughout the year, including holidays, treat the employee like any permanent worker. SSP eligibility continues for the entire period of incapacity unless you give written notice ending the contract or their entitlement ends for another reason.

Term-time only contracts

If the contract only covers school terms, SSP eligibility ends with the term. The employee cannot claim SSP for sickness outside term time.

When contracts change

SSP eligibility ends with the first contract. If the employee falls sick between contracts, there's no SSP entitlement for that gap period. However, if the new contract begins within 8 weeks of the old one ending with the same employer, the two contracts are treated as one. If they worked under the old contract, they're eligible for SSP when the next contract begins, even without working under the new one yet.

Employees with multiple contracts

An employee may hold more than one contract, either with you or different employers. What they receive depends on whether their earnings are aggregated for National Insurance purposes.

If earnings are aggregated

When the same or different associated employers aggregate the employee's earnings:

• Average weekly earnings are also aggregated to calculate SSP
• The employee must be incapable of work under all contracts to receive SSP
• They receive one SSP payment covering all contracts

If earnings are not aggregated

When earnings are kept separate (for example, two completely separate jobs):

• Average weekly earnings are calculated separately for each contract
• The employee can be incapable of work under one contract but not others and still receive some SSP
• They may receive more than one SSP payment

When your business changes hands

If you take over a business and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) apply, continuity of employment isn't broken. TUPE applies when you take over a business, part of a business, or a service provision along with employee contracts. If you're unsure whether TUPE applies, contact Acas (or the Labour Relations Agency in Northern Ireland).

When taking over during an employee's relevant period, add together all their earnings from that period, including those paid by the previous employer. If the employee was receiving SSP when you took over, you must continue paying it until the period of incapacity for work ends.

When you cease trading

When you stop trading, SSP entitlement only ends when the employee's contract ends. You remain liable to pay any outstanding SSP up to and including the end of their contract. You must issue form SSP1 so the employee can contact Jobcentre Plus (or the Jobs and Benefits Office in Northern Ireland) to claim Employment Support Allowance.

When you become insolvent

Any SSP due before the insolvency date is payable by you.

If your employees' contracts haven't been terminated, HMRC will pay any SSP due from the insolvency date onwards. If contracts are terminated, SSP entitlement ends when the contracts end.

If incapacity continues after insolvency and contracts are terminated, you or the liquidator must complete form SSP1 and give it to affected employees so they can claim Employment Support Allowance.

Employees earning below the Lower Earnings Limit

An employee may not qualify for SSP because their Average Weekly Earnings fall below the Lower Earnings Limit. However, check whether they received any benefits or expenses during the relevant period that were subject to a PAYE Settlement Agreement and Class 1B National Insurance contributions, which would otherwise have attracted Class 1 NICs liability.

If so, recalculate their Average Weekly Earnings to include these expenses and benefits on which Class 1B NICs were paid. This may bring them above the threshold.

Overpayments and underpayments

If over or underpaid earnings affect the Average Weekly Earnings calculation and disadvantage either you or the employee, check for documentary evidence of what should have been paid. If an agreement exists, use the agreed earnings to calculate Average Weekly Earnings. If not, use the actual earnings paid.

Employees in legal custody

If an employee is taken into legal custody during a current period of incapacity for work, SSP entitlement ends the day before they were detained. No new periods can start until the day following release.

Any full or part days in custody don't count towards qualifying days, waiting days or linking. A new period of incapacity after release (whether the original illness or a new one) will link if there are 56 days or less between them.

Trade disputes

An employee cannot receive SSP if they're off work because of a trade dispute on the first day of the period of incapacity for work. To be entitled, they must have no direct involvement in the dispute and must not have taken part at any time up to and including the first day.

Linked periods count as one — the situation at the start of the first period determines whether you pay SSP. If your employee has a linked period and was involved in a trade dispute at the start of the previous period, SSP isn't due.

If an employee is already off sick when a trade dispute starts, they continue to be entitled to SSP only if they take no active part in the dispute.

Pregnant employees

Women entitled to Statutory Maternity Pay or Maternity Allowance cannot receive SSP during their Maternity Pay Period or Maternity Allowance Period (both 39 weeks).

If your employee isn't entitled to either and isn't already receiving SSP, she cannot receive SSP for 18 weeks starting from the earlier of:

• The beginning of the week her baby is born
• The beginning of the week she's first off sick, wholly or partly because of pregnancy, if this is on or after the start of the fourth week before the baby is due

If your employee isn't entitled to Statutory Maternity Pay or Maternity Allowance but is receiving SSP, her entitlement ends on the earlier of:

• The date her baby is born
• The day she's first off sick, wholly or partly because of pregnancy, if this is on or after the fourth week before the baby is due

If a period of incapacity doesn't start until after the disqualifying period ends, consider SSP under the normal rules.

Employees with linking letters

Ask any new employee who falls sick within the first 12 weeks of starting or returning to work whether the Department for Work and Pensions gave them a linking letter. If so, the employee may be able to return to social security benefit payments and is not entitled to SSP.

You must send the employee form SSP1 within 7 days of them going off sick if they don't qualify for SSP due to any of the circumstances described in this article.

Sources

• Statutory Sick Pay: business changes that affect payment
• Statutory Sick Pay: employee circumstances that affect payment
• Statutory Sick Pay: how different employment types affect what you pay

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.