The rules determining entitlement to statutory pay are different for directors, casual / agency workers and certain other employment types. 

For these individuals it is necessary to consider other factors around entitlement as well as which earnings should be used when calculating Average Weekly Earnings (AWE).  This applies across:

  • Statutory sick pay (SSP)
  • Statutory maternity pay (SMP)
  • Statutory paternity pay (SPP)
  • Statutory adoption pay (SAP)

Directors

Depending on how and when they are paid determining AWE for directors can be complicated.  The general rules are as follows:

How paid How to determine AWE

Under terms of director service contract or employment
contract i.e. a regular salary

As for any other employee
Paid by determination of director(s) (not formally voted)

Add together monies paid and other payments of earning
but use the date they were paid (rather than date of AGM) to
determine earnings in the relevant period

Paid both contractually and by formal vote

As for any other employee, but only include monies
voted by formal voteif the date of the vote falls
in the period

Paid only by formal vote As with any other employee, but substitute the dates
of the formal vote in place of normal paydays
Monies drawn in anticipation of a formal vote Don’t include these when working out AWE even
if NICs were deducted.

 

Casual employees and agency workers

If you deduct PAYE tax and Class 1 NICs from a casual worker’s or agency worker’s earnings (or would do if they were high enough) you must pay them SMP, SPP or SAP if they satisfy the qualifying conditions.

Agency workers can also still get SPP if you did not have work to offer them, or you offered work but they are unavailable due to sickness, injury, paid or parental leave.

The period for which SSP is payable depends on whether the employee has had 3 months of continuous employment with you:

  • If they have then SSP entitlement continues for the whole of the Period of Incapacity for Work (PIW) unless they have been given written notice that the contract has come to an end or entitlement stops for some other reason.
  • If they haven’t then SSP entitlement continues to the end of any assignment they had agreed to work.

Other types of employee

Special rules also apply to statutory payments made to other types of worker, including:

  • Agricultural workers
  • Educational term-time workers
  • Mariners
  • Employees with two contracts
  • Employees with more than one job
  • Employees working outside the UK
  • NHS employees
  • Supply teachers, seasonal workers and other sporadic employment

See the following HMRC notes for details:

Statutory Maternity Pay

Statutory Sick Pay

Statutory Paternity Pay

Statutory Adoption Pay

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