There are certain conditions that an individual must meet to be eligible for the payment of SSP as outlined in s152 SSCBA 1992 – see SPM110200. The conditions are broadly:
- The individual must be classed as an employee and have done some work for their employer
- The employee must have Average Weekly Earnings (AWE) of at least £120 per week (Lower Earnings Limit for 2020/21 tax year)
- The employee must have been sick from work for at least 4 days in a row including non-working days. This period is known as a Period of Incapacity for Work. (PIW)
To calculate AWE for an employee, the earnings on which Class 1 National Insurance contributions are due or would be due if the employee’s earnings were high enough and that were received in the ‘relevant period’ prior to the sickness would need to be used. The relevant period is the 8 weeks of earnings prior to the employee being sick from work.
If the employee has not worked for you for eight weeks as in this client’s case, then the normal AWE rules will not apply. In this situation, an employee’s AWE will need to be worked out differently to determine whether the employee is due a payment of SSP or not.
If the employee has not received any earnings yet, then Reg 19 (8) of the SSP (General) Regs 1982 (SI 1982/894) states that the AWE would be calculated using the earnings the employee is entitled to under their contract for
- a week’s work
- a calendar month of work multiplied by 12 and then divided into 52 or
- an annual salary divided into 52
If the employee has received some earnings but not 8 weeks’ worth prior to their PIW starting, then Reg 19 (7) of the SSP Regs 1982 states that the relevant period is calculated differently by using all the earnings paid before the PIW and the period those earnings relate to. So if an employee has received two weeks of earnings, then those earnings would need to be added up and then divided into two to gain the AWE figure to determine whether the employee has earned enough to qualify for a SSP payment.
SSP guidance can be found at https://www.gov.uk/employers-sick-pay and further guidance regarding the calculation of an employee’s AWE can also be found in SPM170500 and SPM170600.
SSP is payable from day 4 of a sickness absence if the above conditions have been met and a PIW has been formed. The SSP rate is currently £95.85 per week for the tax year 2020/21.
If your employee is away from work due to a Covid-19 related absence, both the eligibility conditions still need to be met and the PIW still needs to be formed. The requirement for three waiting days has been suspended for these types of absences and SSP would be payable from day 1 of the absence. Further guidance can be found at https://www.gov.uk/guidance/statutory-sick-pay-manually-calculate-your-employees-payments.
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