Understanding maternity and sick pay

For any small business, dealing with sickness or maternity issues can be time-consuming - but an understanding attitude can pay dividends when it comes to staff relations.

The way a licensee deals with staff over potentially sensitive issues such as sickness and maternity will play a big part in establishing good working relationships.

Employees who know they can trust the boss to be understanding when they are feeling vulnerable are generally more likely to put themselves out when pressure of work demands it.

Communication​

For a small business, dealing with sickness or maternity issues can involve considerable time.

This may include:

• finding short-term staff to cover for illness, often at short notice
• finding staff to cover maternity leave
• coping with the extra administration created by dealing with statutory sick pay and maternity pay.

Unfortunately, it is often only when difficulties arise that it becomes apparent that there should have been systems in place to help deal with them.

While the law will soon tell an employer if the right procedures have not been followed, it does not always lay down what those procedures should be.

For example, employers should make their own rules about when and how sickness should be notified, and must tell employees what those rules are. However, there are a number of rules which are not legally acceptable, such as insisting that notice is given in person, or on a special form, or by a specific time on the first day of illness.

Another example is maternity leave, where it is again up to the employer to advise staff how to let them know about impending leave.

If you fail to put procedures in place, the law tends to give the employee the benefit of the doubt. So, for example, if there is no procedure for notifying sickness, an employee has at least seven days from the first day of illness to notify the employer, and longer if there is good cause for delay, without losing entitlement to Statutory Sick Pay.

Overall, both employers and employees are more secure if there is a set procedure in place for dealing with these issues.

Statutory Sick Pay​

Statutory Sick Pay (SSP) is the amount of money an employee is legally entitled to for days off sick. It is a payment made by the employer, not a benefit paid by the DSS. However, the rate of SSP is set annually by the DSS and normally changes on April 6 each year.

For SSP purposes, an employee is anyone who is liable to pay Class One National Insurance contributions, or who would be liable if their earnings were high enough. Similarly, the employer is legally defined as the person responsible for the paying the employer's share of the Class One contributions.

SSP is the legal minimum - there is no legal requirement to pay SSP if the employee's contract entitles them to a higher rate of sick pay.

Who is entitled to SSP?​

Legally, an employee is entitled to SSP once they have started work for you, whether or not they have a contract of employment. An employee who falls ill on the way to his first day at work would not be covered, but would be once they had started work. However, employees are only entitled to SSP after three consecutive days of illness.

Staff on short-term contracts are not normally entitled to SSP, but become so if the contract is extended or renewed beyond three months. Agency staff are assumed to be employees of whoever pays them - so if the licensee pays agency staff directly, they are entitled to SSP from the pub rather than the agency.

Evidence of sickness​

For illnesses of between four and seven days, an employer is entitled to ask for evidence of sickness such as a self-certificate, using form SC2 which is available from Inland Revenue offices. After seven day of illness, the employer is entitled to ask for a doctor's statement.

When is SSP due?​

Employers should pay SSP at the same time as any wages due would have been paid for the period covered, ie weekly or monthly.

Recovering SSP​

Employers can reclaim any SSP paid to employees if the business qualifies under the Percentage Threshold Scheme. If the SSP paid in any month is higher than a set percentage of the total National Insurance payments made, SSP can be reclaimed - most small businesses will qualify, but you may need advice from an accountant or other professional to work out the equation properly.

Employers can normally recover SSP by deducting the amount due before making National Insurance payments to the Inland Revenue.

Statutory Maternity Pay​

Like SSP, Statutory Maternity Pay (SMP) is not a state benefit, but is payable by an employer for up to 18 weeks to women who:

• have 26 weeks service or more by the end of the 15th week before the week the baby is due;
• and earn at least £67 per week (this minimum may vary annually).

Employers whose total gross National Insurance liability is £20,000 or less are reimbursed in full by the Government, with an additional five per cent to cover the administrative costs of operating the scheme. Other employers are reimbursed at the rate of 92 per cent of the SMP they pay out.

In addition, every pregnant employee who has given her employer proper notification of her pregnancy is entitled to:

• reasonable time off with pay for antenatal care (which may include relaxation and parentcraft classes)
• 18 weeks ordinary maternity leave
• all her normal terms and conditions except wages or salary while she is on ordinary maternity leave
• suspension from work on full pay if there is an unavoidable health or safety risk to her as a new or expectant mother and suitable alternative work cannot be found.

In addition, pregnant employees who have completed one year's service or more with their employer, by the beginning of the 11th week before the week the baby is due, are entitled to a period of additional maternity absence.

Sick pay​

What you should do as an employer:

Tell employees what the procedure for notifying sickness is.

• If the employee is sick for less than four consecutive days, no SSP action needed.

If the employee is sick for four consecutive days or more:

• If the employee is entitled to SSP, pay SSP in the same way as wages and keep records of the payments made and dates of sickness absence lasting at least four consecutive days.
• If the employee is not entitled to SSP they may claim State Incapacity Benefit instead. Issue form SSP1.

If you qualify under the Percentage Threshold Scheme, you can claim SSP payments back.

Maternity pay​

What you should do as an employer:

Tell employees how you wish to be told about maternity absence and, if the employee is entitled to SMP, pay SMP and keep records of payments made.

If the employee is not entitled to SMP, she should claim State Maternity Allowance instead. Issue form SMP1.

If you have paid less than £20,000 employer's NI contributions in the last year you can claim back SMP at 100 per cent plus compensation for the administrative time spent.

Further information​

The information in this feature is intended as a guide only.

For detailed information on specific cases, licensees should take legal advice or contact their professional association.

Leaflet CA30, Statutory Sick Pay Manual for Employer, is available from Inland Revenue offices. Leaflet CA35, Statutory Sick Pay and Statutory Maternity Pay Tables, will help employers calculate the amounts due.

Publications available free from any Jobcentre, or from the DTI Publications