04 Oct Payroll – Zero Hours Contracts and Statutory Sick Pay (SSP)
What do you do if you have employees who are engaged in ‘zero hour’ contracts and SSP?
So what happens if your staff member on a Zero Hours Contract falls in sick?
To fall within the SSP scheme, the individual must be an employee for the purposes of Class 1 National Insurance Contributions. There is no room to discuss the definition of an employee is here, but suffice it to say that simply being a ‘worker’ is not sufficient. Check out the HMRC worker classification here.
There is no quick and simple answer but below are a few pointers. We would suggest that you seek professional advice should the situation arise that a worker on zero hours contract calls in sick.
The employee will only qualify if they have average earnings at least equal to the NICs Lower Earnings Limit (£113 per week in tax year 2017/18).
Average earnings are calculated over the 8 weeks prior to the initial commencement of the Period of Incapacity for Work (PIW).
Assuming they meet this condition, then the trickier bit is working out how much to pay them. SSP is paid from the 4th Qualifying Day (the first 3 being Waiting Days), this means it is necessary to decide which are the Qualifying Days (QDs).
What are Qualifying Days
This is where the situation becomes a little more complicated.
If there is an agreement between the employer and employee as to the Qualifying Days they work then there is no problem, but usually, there won’t be – so here the legislation steps in.
It is not permitted to agree that there are no QDs in a week, or that sick days don’t count or any other such arrangement.
Regulation 5(2) of the Statutory Sick Pay (General) Regulations 1982 gives 3 possible alternatives
(2) Where an employee and an employer of his have not agreed which day or days in any week are or were qualifying days the qualifying day or days in that week shall be—
- (a) the day or days on which it is agreed between the employer and the employee that the employee is or was required to work (if not incapable) for that employer or, if it is so agreed that there is or was no such day,
- (b) the Wednesday, or, if there is no such agreement between the employer and employee as mentioned in sub-paragraph (a),
- (c) every day, except that or those (if any) on which it is agreed between the employer and the employee that none of that employer’s employees are or were required to work (any agreement that all days are or were such days being ignored).
So the following will be applicable:
(a) will apply where there is a rota or schedule so that it is known in advance which days the employee was due to work; those agreed days will be the days for which SSP is potentially payable
(b) will apply where there is a rota or schedule so that it is known in advance that the employee was not due to work that week at all; there will only be one Qualifying Day in the week, and that day will be Wednesday.
(c) will apply if there is no rota or schedule in place; every day will be a Qualifying Day for SSP.
It is, therefore, possible for the QDs to change from week to week.
Working out SSP can be a difficult task at the best of times – you can visit the HMRC website here – or alternatively outsource your payroll function to EA Assist.
EA Assist can provide a bespoke payroll solution to suit you and your business – find out more here.