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COVID-19: How employers can recover statutory sick pay

Updated 27 April 2020: The government is supporting employers paying sick pay to employees forced to take sick leave due to coronavirus. ICAEW’s Tax Faculty outlines what employers and employees need to know.

The coronavirus statutory sick pay rebate scheme (SSPRS) will repay statutory sick pay (SSP) to employers that they pay to employees for periods of sickness starting on or after 13 March 2020. The maximum recoverable will be the SSP amounts prescribed by government (ie, at the rates of £94.25pw for 2019/20 and £95.85pw for 2020/21).

Eligibility for the SSPRS

The SSPRS can be used by employers if they:

  • are claiming for an employee who is eligible for sick pay due to coronavirus; and
  • had a PAYE payroll scheme that contained fewer than 250 employees on 28 February 2020.

Connected companies and charities can use the scheme if their total combined number of PAYE employees was fewer than 250 on 28 February 2020.

The scheme covers all types of employment contracts, including:

  • full-time employees
  • part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hours contracts

Entitlement to SSP is based on average earnings in the eight weeks prior to the absence reaching the lower earnings limit for the year in question. Thus, for a zero-hours contract employee, it does not matter whether or not the employee was assigned any work in the week in which they are now sick.

Update 27 April: HMRC has confirmed that the coronavirus SSP rebate scheme is state aid. Find out more

Record Keeping

Employers must keep, for at least three years following a claim, records of all the SSP claimed from HMRC. These records must include:

  • the reason why each employee could not work;
  • details of each period when each employee could not work, including start and end dates;
  • details of the SSP qualifying days when each employee could not work; and,
  • NI numbers of all employees to whom SSP has been paid

SSP due to coronavirus

For coronavirus (COVID-19) cases, there are two categories of employees and they have different rights to SSP:

  • Employees who because of COVID-19 were absent from work due to sickness or self-isolated before 13 March 2020. 
    As for normal SSP, ‘waiting days’ apply and employers should pay SSP from the fourth ‘qualifying day’
  • Employees who on or after 13 March 2020 are because of COVID-19 absent from work due to sickness or need to self-isolate.
    Self-isolating includes those caring for people self-isolating in the same household and therefore have been advised to do a household quarantine. It also includes sick individuals who are 'shielding', which is a measure to protect people who are clinically extremely vulnerable.
    Employers should start paying SSP from the first 'qualifying day' that an employee is off work, as long as they are off sick for at least four days in a row.

Employees who are on sick leave or self-isolating because of COVID-19 should speak to their employer about whether they are eligible for SSP. They should be paid SSP while on sick leave or self-isolating. When they are once again available for work, they can be furloughed under the COVID-19 job retention scheme. Employees who choose to self-isolate and are not sick are making themselves unavailable for work so are ineligible for either SSP or furloughing.

Evidence of sickness

Employees who have COVID-19 or are advised to self-isolate can obtain an ‘isolation note’ by visiting NHS 111 online and completing an online form rather than visiting a doctor. For COVID-19 cases, this replaces the usual need to provide a ‘fit note’ after seven days of sickness absence. Isolation notes will also be accepted by Jobcentre Plus as evidence of inability to attend for benefit interview purposes.

The SSP terminology is explained in HMRC’s Working out employees’ statutory sick pay guidance. Other HMRC online help on SSP is in its Employer guide. See also the government’s guidance Support for those affected by COVID-19 and on Shielding.

Rates of SSP

Rates of SSP increased on 6 April 2020. The same weekly SSP rate applies to all employees (ie, whether or not the SSP is COVID-19 related).

The amount that an employer must actually pay an employee for each day that they are off work due to illness (the daily rate) depends on the number of ‘qualifying days’ that they work each week. Employers can use the government’s SSP calculator to work out an employee’s sick pay if their payroll software does not do this (the government’s SSP calculator has been updated for the 2020/21 rates), or use the table in HMRC’s Working out employees’ statutory sick pay guidance to work it out manually.

Further reading

We provided an initial outline of the SSPRS in ICAEW Tax Faculty’s earlier article dated 19 March 2020 COVID-19: HMRC working on statutory sick pay delivery.

The government’s online service for employers to reclaim SSP is not available yet. HMRC has undertaken to announce once it is available and will update its Claim back SSP paid to employees due to coronavirus (COVID-19) guidance.

This article is based on our current understanding of official guidance and how the rules will be applied, which may change as more details are made available.