How to Calculate Statutory Sick Pay (SSP)

Statutory Sick Pay (SSP) is a legal requirement for all employers, providing eligibility requirements are met by the relevant employee. There may be times when you need to calculate SSP manually, and here we explain how to work out sick pay and what needs to be considered and factored into the process.

There are a few eligibility conditions that must be met before paying SSP. Employees do not need to ‘claim’ SSP, as it should be paid by default by an employer, providing they meet the criteria and follow company procedure, which usually involves submitting a sick note from a doctor. 

If Class 1 National Insurance contributions are paid to your employees, the below criteria are relevant to your business. 

To claim employee’s Statutory Sick Pay, employees must:

• Have been off work for due to illness for a minimum of 4 consecutive days (this includes non-working days)
• Earn at least an average of £123 before tax is applied (2022-23)
• Inform their employer within 7 days of any deadline that has been set

This also applies to casual, agency and zero-hour workers, who can claim SSP if these conditions are met. Agricultural workers have a different scheme which you can find out more about here. 

SSP is usually not paid for the first 3 days of absence, which is known as a ‘‘Period of Incapacity for Work’ (PIW)’. However, this will not apply if they have already received SSP in the previous 8 weeks which included a 3-day waiting period.

Employees unable to work due to illness can claim Statutory Sick Pay (SSP) for up to 28 weeks, receiving at least £99.35 per week. 

However, many employers offer a more generous sick pay through their own occupational schemes, which can exceed the statutory minimum. 

The details of these schemes, including payment amounts and duration, are typically outlined in the employment contract. Occupational schemes aim to provide better financial support during illness, reflecting an employer’s commitment to employee welfare. 

Employees should review their contract or employee handbook to understand their specific sick pay entitlements, which can help alleviate financial concerns during extended periods of illness.

To understand how to calculate SSP you can follow these steps:

It’s essential for employers to keep up to date of SSP rate changes to ensure they’re compliant with the law. 

The weekly rate is a crucial figure, as it forms the basis for calculating the SSP due to employees based on their average weekly earnings. Failing to pay the correct amount for qualified sick leave days could lead to legal issues.

SSP eligibility hinges on the employee’s contracted working days. The first three days of sickness are considered ‘waiting days’ and are typically unpaid, with SSP payments commencing from the fourth day of absence. 

For example, if an employee with five contracted working days per week is off sick for nine days, they are eligible for SSP for six of those days, considering the waiting period.

SSP eligibility hinges on the employee’s contracted working days. The first three days of sickness are considered ‘waiting days’ and are typically unpaid, with SSP payments commencing from the fourth day of absence. 

For example, if an employee with five contracted working days per week is off sick for nine days, they are eligible for SSP for six of those days, considering the waiting period.

To determine the daily rate of SSP, divide the weekly SSP rate by the total number of days the employee was off sick, based on their contracted working days. 

This calculation should factor in the employee’s average weekly earnings to ensure accuracy. For example, dividing the weekly rate of £109.40 by the total sick days (nine in this scenario) provides the daily SSP rate.

The final step is to multiply the calculated daily SSP rate by the number of days the employee is eligible for SSP, excluding the waiting days. This calculation results in the total SSP amount payable to the employee during their sick leave.

Here’s a breakdown of the calculation:

Weekly Rate ÷ Total Sick Days = Daily SSP Rate

Daily SSP Rate x Eligible Sick Days = Total SSP Payable

Example calculation:

£109.40 ÷ 9 = £12.15 (Daily SSP Rate)

£12.15 x 6 = £72.90 (Total SSP Payable)

Remember, this is a manual calculation and will not be necessary if you are using a good payroll software system, as it will automatically calculate the figure once you have inputted the relevant employee sick leave information.

Ideally, the software should also be able to automatically incorporate any updates that have been made to SSP legislation, including any rate changes for the new tax year.

This process ensures that employers accurately calculate SSP based on contracted working days and average weekly earnings, maintaining compliance and fairness. 

Additionally, understanding these principles can be beneficial when dealing with other statutory payments, such as statutory maternity pay (SMP), which also relies on average earnings and specific eligibility criteria.

Statutory holiday pay can still be accrued while they are off sick from work, so this should be taken into account with any statutory sick pay calculation.

Annual leave can also be used while an employee is on sick leave (regardless of how long they are off work). If employees are eligible for SSP, they cannot be asked to take holiday pay. 

It is also a good idea to keep records when paying SSP to employees, as this can be matched with attendance records if there are any queries or disputes raised at a later date.