Pay - an overview of obligations

Statutory Sick Pay

Under certain conditions, you may have to pay an employee Statutory Sick Pay (SSP). This is the minimum level of payment you must make to an employee who is off work through illness - their contract may entitle them to more than this.

Some people are not entitled to SSP, including:

• employees who are sick for less than four days in a row
• people you pay who are non-employees, eg freelancers and contractors
• employees who are under 16 or over 65 on the first day of sickness
• employees who earn less than the lower earnings limit for National Insurance contributions (NICs) - £82 a week for the 2005/06 tax year
• employees who have recently claimed state incapacity benefit or severe disablement allowance

You must pay SSP to employees who cannot work for four or more days in a row, including weekends and holidays, because of illness or disablement.

The maximum time for which an employee may be entitled to SSP is generally 28 weeks for any one period of sickness.

The current SSP rate - for tax year 2005/06 - is £68.20 a week and pro rata for fractions of the working week. You must deduct income tax and NICs where appropriate.

You may be able to recover some SSP from the income tax and NICs that you pay to HM Revenue & Customs. If your total SSP payments are more than 13 per cent of the total gross Class 1 National Insurance liability for your whole company in the same tax month, you can get the difference back. The amount you may recover is the amount by which the SSP you have paid exceeds 13 per cent of your National Insurance liability.

You must keep records, for at least three years, of any SSP you pay and of the dates of any periods of sickness lasting at least four days in a row.

Find general information about SSP at the Department for Work and Pensions website.

You can also find out about SSP rules at the HM Revenue & Customs website.

Subjects covered in this guide

• Introduction
• Issuing pay statements
• Statutory Maternity, Paternity and Adoption Pay
• Statutory Sick Pay
• Guarantee pay
• Complying with the National Minimum Wage
• Rates and calculation of the National Minimum Wage
• Paying workers holiday pay
• Making deductions
• Calculating final pay