Entitlement to sick pay for zero hours workers

| 6 min read

Employers in the UK are increasingly reliant on flexible working arrangements. Many use zero hours contracts to provide that flexibility. However, despite the wide use, there are many misconceptions surrounding employment rights under zero hours contract. One of such is that zero hours workers do not have the right to Statutory Sick Pay (‘SSP’).

Does a zero hours worker have a right to Statutory Sick Pay

Workers on zero hours contract are entitled to Statutory Sick Pay as employees, if they:

  • are working under a contract of employment;

  • have done some work for their employers under the contract of employment;

  • have been ill for at least four days consecutively, including non-working days (known as the Period of Incapacity or ‘PIW’);

  • earn at least £120 per week (before tax);

  • inform their employer that they are sick within the time limit set by the employer (7 days if no time limit has been set); and

  • give proof of illness to their employers, only after 7 days off.

Zero hours workers can receive £95.85 a week for SSP for up to 28 weeks. However, they are not entitled to  SSP for the first 3 days they are off, which are also called the waiting days.

How to calculate Statutory Sick Pay for zero hours workers

In this article, we shall focus on working out the statutory sick pay for workers on zero hours contracts.

We will guide you regarding SSP payable to zero hours workers who have been in continuous employment for 8 weeks and SSP payable to zero hours worker having less than 8 weeks of continuous employment.

Does the zero hours worker's average weekly earnings cross the threshold?

For a worker employed under a zero hours contract to be entitled to Statutory Sick Pay, he or she must reach the Lower Earning Limit and, on average, earn at least £120 or more per week (the Average Weekly Earnings or AWE for the financial year 2020-2021).

When it comes to workers under zero hours contract, their earnings are likely to vary. Furthermore, some workers are paid weekly, and others are paid monthly.

Consequently, the employer must work out if the worker's AWE in a 'relevant period' satisfies the threshold that requires the employer to pay SSP.

What is the relevant period and how to work it out

Since a worker's earnings under a zero hours contract are likely to vary, basing it on a relevant period ensures a fair representation of the worker's average weekly earnings.

It is quite simple to identify the relevant period.

First, the end date of the relevant period must be identified because this will determine when the relevant period begins. The average earning during the relevant period is then used to calculate SSP for workers on zero hours contract.

How to identify the end date of the relevant period

The end date of any relevant period is the last normal payday before the first complete day of sickness.

How to identify the start date of the relevant period

The start date is worked out by selecting a date no less than 8 weeks before the end date. The start of the relevant period is the day after the normal payday, and the Relevant Period must be a full pay period.

All of this might sound confusing to you at first. However, it is simpler than you think. Consider the following example:

Example of a worker who gets paid weekly

Matt has worked on a zero hours contract for his employer for the past year. He fell sick on 14 June 2021 and notified his employer on the same day. His payday was every Friday.

The first step to working out whether Matt should be paid SSP is to identify the relevant period.

Identifying the relevant period

If Matt's first full day of sickness was 17 June 2020 and he was paid every Friday, the last payday before his first day of sickness was 12 June 2020. This is the end date of the relevant period.

The start date of the relevant period was the day after the payday, at least 8 weeks before Matt's last payday. Therefore, the start date of the relevant period was 17 April 2020.

Working out the average weekly earnings

Now that Matt's employer is aware of the relevant period, he needs to calculate Matt's average weekly earnings.

This can easily be figured out by adding up all the earnings paid to Matt during the relevant period and dividing it by 8 (the number of weeks in the relevant period). If the average weekly earnings of Matt is at least £120, he will be entitled to SSP.

Example of a worker who gets paid monthly

Rachel has worked for her employer on a zero hours contract for the past 6 months and is paid on the last day of the month. She fell ill on 17 June 2020. To calculate Rachel's average weekly earnings, her employer will first have to work out the relevant period.

Identifying the relevant period

In this case, the last payday before Rachel's first day of sickness was 31 May 2020. This means the payday at least 8 weeks before 31 May 2020 was 31 March 2020. So the relevant period is 1 April 2020 to 31 May 2020.

Working out the average weekly earnings

All Rachel's employer now has to do is follow the following simple steps:

First, divide the total earnings paid to Rachel in the relevant period by the total number of months in the relevant period (which in this case is 2 months).

Then multiply that answer by 12 (which gives the annual income).

Lastly, divide the figure derived from step 2 by 52 (as there are 52 weeks in a year). This gives the average weekly earnings in a year.

If this figure is less than £120, Rachel will not be entitled to SSP.

What if the zero hours worker does not have 8 weeks of earnings

If the zero hours worker has not completed 8 weeks of continuous service before falling ill, they may still be entitled to SSP.

Calculating statutory sick pay where the worker has not completed 8 weeks of continuous employment

Average weekly earnings will be calculated in the same way as shown above. However, the relevant period will be the total amount of employment before the worker's first day of sickness.

Consider the following example:

Alan has been working for his employer for the past 3 weeks and 3 days on a zero hours contract. Alan is paid weekly on a Wednesday.

Identifying the relevant period

Alan fell ill on 21 June 2020 and notified his employer the same day. Since Alan did not have 8 weeks of continuous service, using the help of a calendar, Alan's employer can quite easily work out the relevant period. In this case, the relevant period is 24 days.

Working out the average weekly earnings

Further, Alan's employer can work out his average weekly earnings by:

dividing his total amount of earnings by the total number of days he has worked (which gives his average daily earnings); and

multiplying that figure by 7 (regardless of the actual number of days worked, the calculation of days is always on the basis of a 7 day week).

Further information and useful legal documents

You may wish to read about what zero hours contract are and the different employment rights and obligations that flow from them or about calculating paid holiday entitlement for zero hours workers.

Net Lawman offers a wide range of employment contract templates, including zero hours contract template that covers all legal requirements and provides full protection to the employer for employing a worker under this types of an employment contract.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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