Managing sickness absence

How to handle employee absence management, from dealing with short and long term sickness to creating a sick pay policy and paying statutory sick pay

With the average small business losing 40 days each year to staff illnesses, it is no surprise that the UK regularly tops global polls for sickness-related absences.

Totalling a loss of £3.15bn, sick days are a huge burden, and are potentially crippling to start-ups and small firms that simply don’t have the resources to cope.

No matter how tempting it may be to sweep sickness absences under the table, as an employer you should be equipped to deal with both ad-hoc and long-term sickness.

How to handle employee absenteeism

Staff absences fall under three main categories:

  • Authorised leave, including holidays, maternity and training
  • Unable to attend work due to family or caring duties
  • Sickness (either short term or long term)

Short-term employee sickness

‘Odd days off’, referred to as unauthorised absences, are arguably the most damaging to fledgling start-ups, with their unpredictability having the potential to throw your carefully-laid growth plans off course.

As an employer, it is well within your rights to require employees to notify the business by a particular time of day if they’re going to be off sick. You can also state the required method of contact, with employees that have to call rather than text/email often less inclined to take unnecessary days off.

You’re also entitled to ask for a self-certification form should an employee’s sickness last more than three days and a doctor’s ‘fit note’ when the absence period exceeds one week.

If an employee persists with short-term sickness absences and there’s no long-term medical condition behind the cause, you may want to consider beginning disciplinary procedures based on poor attendance. This may eventually result in dismissal. A fair procedure should be applied, and the employee should feel that they are involved in an open, transparent dialogue with a view to identifying the best outcome for both parties. Adhering to best practice when it comes to disciplinary procedures will minimise your exposure to unfair dismissal claims.

Long term employee sickness

Handling employees on long-term sickness absence represents a different but equally tricky challenge for owners of start-ups.

It may sound obvious, but it’s vital that you stay in touch with the employee in question. Do not fall into the ‘out of sight, out of mind’ trap.

You should schedule regular review meetings to discuss the employee’s medical condition and return-to-work prospects.

Also be aware that employees on long-term absence continue to accrue annual leave and other entitlements associated with continuous service, even if they are no longer receiving sick pay from the company.

Long-term sickness absence can be a legitimate reason for dismissal, but be sure to follow the correct dismissal procedures to prevent any costly backlash.

Sickness absence management

The key to successfully managing sickness-related absences within your business is a clearly communicated absence management policy. Ideally, this should be included within your staff handbook.

Ensure your employees know exactly what is expected of them, and the consequences if they do not follow procedure.

Pro-active implementation is fundamental to the success of your absence management policy. It’s good for employees to see that you’re actively managing absences and applying procedures fairly and equitably.

Recording and investigating absences may make staff less inclined to take days off without proper cause.

Return-to-work interviews are another helpful means of preventing persistent cases, and will help to highlight any absence patterns (e.g. if one employee regularly takes Fridays off).

When tackling sickness absence, it may also be helpful to identify and address any underlying issues within the workplace – such as employee relations and working schedules for example – that could ultimately be contributing to poor health amongst your workforce.

Statutory sick pay (SSP) for employers

SSP is paid to employees who are unable to work because of illness. SSP is paid at the same time and in the same way as you would pay wages for the same period.

As an employer you’re responsible for paying SSP to employees who meet certain qualifying conditions.

What is the statutory level of sick pay?

The weekly rate of SSP for days of sickness from 6 April 2017 is £89.35 for up to 28 weeks.

SSP calculator

There is an easy and quick way to calculate SSP

  • The HMRC SSP calculator will help you work out if your employee is entitled to SSP and if so, provide a schedule of the payments that you should make. It will also help you work out if you are entitled to recover any of the SSP you have paid to all your employees in each tax month.

Qualifying SSP conditions

An employee must meet all the following conditions to get SSP

  • They must be your employee – and they will need to have done some work under their employment contract before going off sick
  • They must be incapable for work for at least four days or more in a row. This is called a ‘period of incapacity for work’ (PIW).
  • They must have at least one Qualifying Day (QD) in each week – these are days they normally work.
  • Their earnings must be at least as much as the lower earnings limit (LEL) for National Insurance contributions (NICs), currently £113 a week.
  • They must have notified you about their sickness – either within your own time limit or within seven days of the first day of sickness.
  • They must provide you with medical evidence of their sickness if you require it.

Time limits for SSP notification

An employee telling you they are sick is the starting point for SSP. It is not evidence of incapacity, it is simply your employee letting you know why they are off work.You can make your own rules about when and how your employee should notify sickness for your own purposes,subject to certain conditions, but you must tell your employees your rules for notification in advance.

For further information see Time limits for notification of SSP.

Medical evidence

You must tell your employees what you expect them to give you as evidence. This is not the same as notifying you that they are sick

Your employees can self-certify sickness periods of up to seven days. They can do this using form SC2 Employees statement of sickness or your own equivalent form.

If the sick absence lasts more than seven days your employee must provide you with sufficient evidence of incapacity for work, if you require it. The medical certificate from a doctor is usually strong evidence of incapacity.

When to start paying SSP

SSP isn’t payable straight away. The first three Qualifying Days of a PIW are called ‘Waiting Days’ (WD’s) when SSP isn’t payable: SSP is payable from the first qualifying day after the three WDs.

Starting payment

SSP is paid at the same time and in the same way as you would pay wages for the same period. A full week for SSP purposes begins with a Sunday and ends at midnight the following Saturday. If you pay in cash you will need to ensure that you have arrangements in place so that sick employees are paid SSP on their normal payday.

You cannot pay SSP:

  • in kind
  • as board and lodging
  • by way of service.

SSP must be paid for all periods of entitlement regardless of whether or not earnings would normally be due for the same period.

Deductions from SSP

You treat SSP just like pay, so you must make deductions for PAYE and NICs. Any other deductions which you lawfully make from pay can also be made from SSP, for example, pension contributions, Student Loan deduction sand attachment of earnings orders.

How to work out the relevant period

You need to work out the ‘relevant period’ to establish the earnings to be used and the earnings period. All earnings paid in the ‘relevant period’ will be divided by the number of days, weeks or months in that ‘relevant period’. Regulations define the ‘relevant period’ as the period between:

  • Date 1 the last normal payday before the first complete day of sick absence. This payday is Date 1 and is the end of the ‘relevant period’, and
  • Date 2 the last normal payday falling not less than eight weeks before the payday at Date 1. Date 2 is the day after this payday and is the start of the ‘relevant period’.

You must include all the earnings paid on, or after, Date 2 up to and including those paid on Date 1.

If your employee has a contractual payday this is always the normal payday, even if you pay them early in a particular month.

Company sick pay policy examples

Example – weekly paid employee

Employee paid every Friday.
First full day of sick absence 07/11/17.

The relevant period is therefore from 08 September to 2 November 2017.

Average Weekly Earnings – total earnings £1070.66 ÷ 8 = £133.8325.

Do not round the average earnings figure up or down to whole pence.

Example – monthly paid employee

Employee paid on the last working day.
First full day of sick absence 11/11/17.

The relevant period is therefore 1 September to 31 October 2017.

Average Weekly Earnings – total earnings = £2,191.10 ÷ 2 x 12 = £13,146.60 ÷ 52 = £252.81923.

Do not round the average earnings figure up or down to whole pence.

When does SSP payment stop?

Employee returns to work for you

You usually stop paying SSP when your employee returns to work. You should work out if any SSP is still owing to them for days of sickness before they returned to work and pay it on their next normal payday.

Maximum 28 weeks’ entitlement paid

If your employee is still off when you have paid SSP for 28 weeks, fill in form SSP1 and send it to your employee no later than seven days after after the day on which entitlement ended. Your employee will need to use form SSP1 to claim Employment and Support Allowance (ESA).

If you know in advance that your employee will continue to get SSP for the full 28 weeks, you should issue form SSP1 at the 23rd week to ensure there is a smooth change over to ESA.

Pregnancy related illness

If your employee has a pregnancy related illness in the 4 weeks before their baby is due, SSP should stop being paid.

Exceptions and checksheets for the SSP Scheme

Employees who can’t get SSP from you

Some employees can’t get SSP from you when they are sick. You must give them form SSP1 within 7 days of them notifying sickness explaining why they are not entitled to SSP. They may be able to claim a Social Security benefit instead.

Remember, if your employee cannot get SSP at the start of a PIW they will not be entitled to it in any later linking PIW.

They cannot get SSP if they are not sick for four or more days in a row as this does not form a PIW. Your employee cannot get SSP if, on the first day of the PIW they:

  • had Average Weekly Earnings (AWE) in the ‘relevant period’ below the LEL for National Insurance purposes. If they had any earnings in their relevant period that were included in a PAYE Settlement Agreement
  • are within the 18/39 week disqualifying period due to pregnancy or recently having had a baby
  • have already had 28 weeks’ worth of SSP from you and this new spell of sickness links to their last one
  • were not entitled to SSP the last time they were sick, for any reason, and this spell of sickness links to that one
  • started or returned to work for you after getting ESA from Jobcentre Plus/SSA and are a ‘benefit recipient’ who is sick within the first 104 weeks of starting, or returning to work for you
  • are outside the EU and you are not liable to pay employer’s Class 1 NICs, and would not be liable even if their earnings were high enough
  • are a new employee and have not yet done any work for you
  • had a contract of employment with you which has ended or been brought to an end
  • had a series of linked PIWs lasting more than three years
  • had been away from work because of a trade dispute which started before the first day of sickness
  • were in legal custody.

If your employee is not entitled to SSP you must give them form SSP1:

  • no later than the seventh day after the sickness has been notified, or
  • by the next normal payday in the tax month after sickness has been notified.

If you know your employee will still be sick when their entitlement to SSP will be exhausted, give them form SSP1 at the 23rd week of SSP to ensure that a claim to ESA is made on time.

SSP penalties

Legislation provides that employers failing or refusing to operate the SSP Scheme correctly can incur penalties.

Like those in place for PAYE or NICs these penalties are civil (not criminal).

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