SSP calculation with less than 8 weeks' employment when paid two months in arrears

Daft_Moggy

I'm hoping someone with experience of Statutory Sick Pay (SSP) calculations and the HMRC rules around SSP eligibility can help.  I've looked extensively at the Government website re SSP from both the employee's and employer's perspective, and I've spoken with two different people at HMRC, but none of the information I've gathered covers my specific scenario. 

I began working for my employer on a supply (effectively zero hours) contract on 13/02/23.  I worked on five days over two weeks in February, earning £383.40 gross.  I received a pay slip at the end of February, which showed zero earnings annd deductions as I am paid the month's wages at the end of the following month i.e. February's wages were to be paid at the end of March.  I then worked a few hours on one day during the first week in March earning £30.93 before falling ill.  Thus, at the start of my period of incapacity for work (PIW) on 02/03/23 I had not received any earnings although I had done some work and received a payslip. 

The advice from the second person I spoke with at HMRC was that because I had not actually been PAID any earnings when I fell ill my average weekly earnings (AWE) would be calculated using the hours stated in my contract (i.e. hourly rate x zero hours = zero), thus I wouldn't meet the minimum AWE threshold (£123 per week) to qualify for SSP. 

However, on the Government website it also indicates that there are specific calculations for when someone has had fewer than 8 weeks of earnings (also my situation).  Then when I use the calculator provided I get a different result depending on whether I say that at the start of my PIW:
a) I have received no earnings - which is technically correct, and makes me INELIGIBLE, or
b) I have had a payday and enter the earnings as £0 - which is also technically correct, and makes me ELIGIBLE. 

There is no clear indication that not having been paid (even though this has arisen only because I am paid two monthly in arrears) should override the 8-week rule, or that receiving a payslip even if I received no wages would make a difference.  The guidance also states that not paying wages doesn't mean the employer does not have to pay SSP.  All very confusing!

My employer has refused to pay SSP on the basis of their AWE calculation, but it apears that they have simply taken my earnings over the three weeks I worked and divided them by four, which is not in line with any of the HMRC guidance above (and they have refused to point me to the specific HMRC guidance they used).

Interestingly, I found some advice re Sage payroll software whereby if a weekly paid worker is paid at the end of the following week then the dates of sickness would need to be moved forward by a week for the SSP calculation to be correct.  It would make sense for the equivalent adjustment to be made for monthly paid workers, which would clearly make a difference in my case.  Unfortunately, I have been unable to determine whether my employer uses Sage or whether other payroll software behaves in a similar way.

Can anyone out there unmuddy the waters for me...?

Thanks for reading - sorry it's such a saga!

TheSpiddalKid

This is from HMRC's technical guidance.

Employee has not received an exact number of weeks pay

When an employee has not received eight weeks earnings and has not received an exact number of weeks pay the AWE is calculated by using the period represented by all of the earnings paid under the contract before the first day of sickness. So if the employee only received 2 weeks and 3 days earnings the average weekly earnings is calculated by dividing the total of the 2 weeks 3 days (17 days) earnings and multiply by seven regardless of the number of days a week the employee is expected to work.

No earnings yet paid

Where the new employee falls sick before they have had their first payday, you should use their contractual earnings to see if they earn enough to get SSP. Work out how much a week they will earn based on the due rate of pay for their job. If their AWE will be the LEL or more they will qualify.

You would appear to fall into the second category, as you have not had any pay yet, so it is therefore may be based on contracted hours.

It's probably worth mentioning that the company grievance process and the HMRC appeals process are open to you. But before you go through those, it may be worth asking your employer for more info on how they have reached their decision.

Daft_Moggy

Thanks for your reply TheSpiddalKid. 

I'm getting nowhere with my employer - I have repeatedly asked Payroll how they calculated my AWE, but no information has been provided.  It is perhaps significant that the initial reason they gave for not paying me SSP was simply that I'm a supply worker, which was wrong - it makes me think they don't actually know how to calculate it.  My statement of employment particulars says that I have no greivance procedure, and HR simply refer me back to Payroll.

I've looked at all the HMRC guidance numerous times, and I can see why I might appear to fall into the second category - however, It's not clear what the definition of a payday is.  I'd have thought that if your employer has you on their payroll system and has issued you with a payslip then that would count as a payday.  If so, then I had actually had my first payday (28/02/23) before I fell sick (although no earnings were due in to be paid that pay period as I wasn't actually working for them in January).  This seems to be signficant; certainly the calculator on the website seems to think so.  

HMRC's internal manual states: "If a new employee becomes sick before their first pay day and no earnings have been paid, the AWE are those to which the employee is entitled to under their contract of service".  Perhaps I need to get HMRC to clarify whether receiving a payslip counts as a pay day regardless of the amount of wages paid - if it does, then I don't meet the criteria for that scenario. 

If I had been paid for my hours at the end of the same month as I worked them (i.e. in February), then the first scenario would appear to apply and my AWE would qualify.  If the second scenario is the one that applies then it seems that I am effectively losing out because my employer pays me more than 4 weeks in arrears.

TheSpiddalKid

Daft_Moggy said:

Thanks for your reply TheSpiddalKid. 

however, It's not clear what the definition of a payday is.  

This is determined by looking at the guidance and then how it applies to the circumstances.

The guidance defines a normal payday as 

Regulations define a 'normal payday as either the payday specified in the contract or the day on which the employee is usually paid if they have no contract or their contract does not specify a payday'.

To define the first part, you need to look at the application of the contract; as you commenced work in February, your first contractual payday was in March. The payday in February was not contractual, as the pay reference period for that pay date was In January prior to when you started.  

Daft_Moggy

Thanks for clarifying that TheSpiddalKid.

My employment particulars state: "You will normally be paid monthly in arrears on the last working day of each month." 

So, from what you say I'm assuming that HMRC would ignore my February payday as it was not a contractual payday.

I think I'm going to give up pursuing this now, as it seems futile.  The bottom line is that had I been paid weekly in arrears I would have qualified for SSP, but because I'm paid monthly in arrears I don't.  

chrisbur

Has your employer issued you with an SSP1 form detailing why you are not being paid.  If not you should ask for one (they should issue one without you having to ask).
This will advise what to do if you disagree with their decision and how to claim for ESA which you might be entitled to.
https://www.gov.uk/statutory-sick-pay/eligibility
See section 
"

If you’re not eligible or your SSP ends

You may be able to apply for Universal Credit or Employment and Support Allowance (ESA). You can use form SSP1 to support your application.

If your SSP is ending your employer must send you form SSP1 either:

• within 7 days of your SSP ending, if it ends unexpectedly while you’re still sick
• on or before the beginning of the 23rd week, if your SSP is expected to end before your sickness does "

 

Daft_Moggy

Thanks for your reply chrisbur.

I eventually obtained an SSP1 on 24 May (my first day of sickness was 2 March) after requesting it weeks earlier.  It shows that I am not being paid SSP because "Your average earnings for the 8 weeks before you were sick were less than the Lower Earnings Limit."  I don't believe my employer have reached this conclusion using the appropriate HMRC guidance (based on what little they have told me), even if it is the right conclusion (according to HMRC, who won't raise a dispute with my employer as they say the conclusion is correct).  My employer won't tell me what guidance they used.

I am now using the SSP1 to apply for ESA but, due to being in dispute with my employer about SSP for so long and the delay in them providing my SSP1, it might not be considered (it is a wholly retrospective claim as I was fit to return to work on 1 May).  I won't hold my breath.

Daft_Moggy

As an addendum to my previous post:

It looks as if my employer should have provided me with the SSP1 within 7 days of the start of the period of sickness in order to give me information about claiming for other benefits (e.g. ESA), and that HMRC can issue them with a civil penalty for not doing so.  My employer has also denied me access to my records by not allowing me to see how they calculated my SSP entitlement, which can also lead to a civil penalty.  However, I don't know how HMRC would get to know about this in order to investigate...