Sick pay for zero hours contracts

As an employer in the UK, it's important to understand the regulations regarding sick pay for employees on zero-hours contracts.

In the event that one of your zero-hours contract employees falls ill and is unable to work, it can be challenging to determine whether they are entitled to sick pay or not, given the unpredictable nature of their hours.

Some employers might be under the impression that zero-hours workers don't have any employment rights. But that's not true.

Zero-hours contract employees are entitled to holiday pay and the National Minimum Wage. However, what's less straightforward is whether zero-hours contract employees receive sick pay.

By familiarising yourself with the rules surrounding sick pay for zero-hour contracts, you can ensure that you are treating your employees fairly and within the bounds of the law.

A zero-hours worker does have a right to Statutory Sick Pay (SSP)

Zero-hours contract employees are entitled to statutory sick pay as long as:

• They've started employment and performed some work for you

• They're ill for four days or more in a row (including non-working days)

• They follow your rules about reporting sickness—or tell you within seven days

• They earned on average at least £123 per week (before tax) in the past eight weeks

Zero-hours employees are entitled to £109.40 a week of statutory sick pay for up to 28 weeks.

However, if a zero-hours contract employee relies on more than one employer to reach the lower earnings limit, they may not be eligible for sick pay depending on their circumstances as it must be reached from the earnings from one employer.

Regardless of whether your employee has more than one job or not, you have a responsibility to pay them correctly.

Therefore, you will need to work out if the worker's average weekly earnings in a 'relevant period of continuous employment' will satisfy the threshold to determine if you are required to pay statutory sick pay.

What is a relevant period?

The relevant period is a period of time that is long enough to ensure that there is a fair representation of the worker's average earnings. The start of the relevant period is the day after the last normal payday falling at least eight weeks before the end date of the relevant period.

How to calculate statutory sick pay for zero hours workers

Calculating sick pay for your employees on zero hours contracts isn't as complicated as it might seem. Really all you have to do is work out the average weekly earnings using the relevant period.

We've broken it down into three easy steps for you:

Step 1 - Check that your employees earnings meet the lower earnings limit

Those on a zero-hour contract must reach the lower earnings limit of £123 a week on average, to be eligible for SSP. Once this is determined you can calculate their average weekly earnings in more detail.

Step 2 - Work out the relevant period

Because there aren't guaranteed hours every week for workers on zero-hours contracts, using a relevant period will help to determine their average weekly earnings more accurately. As mentioned above, the end of the relevant period is normally the last payday before the first day of falling ill and the start is eight weeks before this.

Step 3 - Calculating average weekly earnings

Once you are sure that your employee meets the lower earnings limit and you've worked out the relevant period, you are ready to calculate the average weekly earnings.

All you have to do is add up the total amount paid over the eight weeks within the relevant period and divide by eight. If they earn at least £123 per week, they are entitled to SSP.

When would a zero-hours contract worker not get sick pay?

You don't have to pay zero-hours workers statutory sick pay if:

• They've received the maximum amount of SSP (28 weeks)

• They're getting Statutory Maternity Pay

• They’ve given written notice that their contract has ended

• They're self-employed

What happens if I don't pay zero-hours workers sick pay?

As an employer, it's your responsibility to give your zero-hours contract workers sick pay. If you don't you could face some hefty fines.

And it's not just the fines you have to worry about, if you owe your staff sick pay, or holiday entitlement but don't pay up it could be considered a breach of the Employment Rights Act 1996. This means your employee could take you to an employment tribunal after a grievance has been made and a complaint to HRMC with no resolution.

Research by our group found that the average tribunal claim costs £11,546 to defend—win or lose.

So, to avoid any potential fines or a tribunal claim we recommend that all annual leave and absences be recorded accurately, using a reliable absence management software.

Did you know that BrightHR is an award-winning HR software that not only has an integrated absence tracker but also an easy-to-use annual leave planner?

BrightHR can also help with any employment law uncertainties you have with a 24/7 employment law advice line and BrightLightning our instant HR and health & safety advice A.I. platform.

Try it for yourself just ask BrightLightning: Do zero-hours staff get SSP?