WFM UK | HR & Payroll: Absence (Sickness) - SSP Legislation, Eligibility & Calculations

Return to: WFM UK | HR & Payroll: Absence (Sickness)

Overview

This article covers the legislative framework underpinning Statutory Sick Pay (SSP) in the UK, including eligibility, how Average Weekly Earnings (AWE) are calculated, the SSP rate and daily calculation, Periods of Incapacity for Work (PIW), linked absences, the 28 week entitlement cap, and the SSP1 form.

The article is intended for payroll and HR teams who need a clear understanding of the legislation governing SSP, from eligibility criteria through to how SSP is calculated and when it ends.

•  

  The legislation and calculations detailed in this article reflect the SSP rules in place from 6 April 2026, following the reforms introduced under the Employment Rights Act 2025. For a full breakdown of the April 2026 reforms, refer to WFM UK | Payroll UK: Statutory Sick Pay (SSP) New Rules Effective 6th April 2026.

   

Contents

• Statutory Sick Pay (SSP)
  • SSP Eligibility
  • Average Weekly Earnings (AWE)

    • What Counts as Earnings?

    • The Relevant Period

      • New Employees or Insufficient Earnings History

        • The employee has received an exact number of weeks pay

        • The employee has not received an exact number of weeks pay

        • The employee falls sick before receiving any pay

        • No wages paid during the relevant period

        • Zero Hours Employees with No Earnings History

      • Mistimed Payments

      • Overpaid or Underpaid Earnings

  • SSP Rate & Calculation
    • The Weekly Rate
    • The Daily Rate
    • Qualifying Days
    • Calculating SSP for a Period of Absence
    • How SSP is Paid
  • Periods of Incapacity for Work (PIW) & Linked Absences
    • Linked PIWs
    • Series of Linked PIWs Lasting More Than Three Years
    • How the System Handles Linked PIWs
  • SSP Entitlement Period & the 28 Week Cap

    • Tracking the 28 Week Entitlement

    • Approaching the Cap

    • When the Entitlement Resets

  • SSP1 Form
    • When to Issue an SSP1
    • Why the SSP1 Matters
    • Recording SSP1 Details in the System
• Further Reading & Resources

Statutory Sick Pay (SSP)

Statutory Sick Pay (SSP) is the legal minimum amount an employer must pay an employee who is unable to work due to sickness. It is paid by the employer through payroll and is subject to Income Tax and Class 1 National Insurance contributions where applicable. SSP applies to both physical and mental health conditions, and there is no distinction in law between the two. It represents the minimum floor for sick pay; employers can pay above this through Company Sick Pay (CSP), covered later in this article.

The right to SSP is set out in the Social Security Contributions and Benefits Act 1992 and the Statutory Sick Pay (General) Regulations 1982, which together define who is entitled to SSP, the rate at which it is paid, and the periods when it is payable. The Employment Rights Act 2025 introduced significant reforms to SSP, effective from 6 April 2026, covering eligibility, waiting days, and how the rate is calculated.

SSP Eligibility

From 6 April 2026, SSP is a day one entitlement, meaning it becomes payable from the first qualifying day of sickness. The three day waiting period that previously applied has been abolished, and the Lower Earnings Limit (LEL) has been removed, meaning all employees are now eligible for SSP regardless of their earnings level.

To be eligible for SSP, an employee must:

• Have an employment contract and be classed as employed for tax purposes
• Have done some work under their contract. An employee who falls ill before completing any work for their employer does not qualify, even under day one rights
• Be unable to work due to sickness or injury
• Have been sick for at least one full qualifying day

It is also worth noting that an employee can qualify for SSP from more than one job simultaneously, and could be eligible in one job whilst being fit for work in another.

For absences of 7 calendar days or fewer, self-certification is sufficient and a fit note is not required. For absences exceeding 7 calendar days, the employer can require a fit note from a GP or other qualified healthcare professional.

The following employees do not qualify for SSP:

• Employees who have already received the maximum 28 weeks of SSP within a linked period of incapacity
• Employees receiving Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP), Statutory Shared Parental Pay (SHPP), Statutory Neonatal Care Pay (SNCP), Statutory Parental Bereavement Pay (SPBP), or Maternity Allowance
• Employees who are off work for a pregnancy-related illness in the 4 weeks before the week (Sunday to Saturday) that their baby is due. In this scenario, SSP is not payable as the pregnancy-related illness will trigger the start of the employee's maternity leave and Statutory Maternity Pay (SMP) or Maternity Allowance where eligible
• Employees who were in legal custody or on strike on the first day of sickness, including any linked periods
• Employees working outside the EU where the employer is not liable for their National Insurance contributions
• Employees who received Employment and Support Allowance (ESA) within 12 weeks of starting or returning to work

Where an employee does not qualify for SSP, or where their SSP entitlement has been exhausted, an SSP1 form must be issued to notify them. See the SSP1 Form section below for further detail.

Average Weekly Earnings

Average Weekly Earnings (AWE) no longer determines SSP eligibility following the removal of the Lower Earnings Limit in April 2026. All employees now qualify for SSP regardless of their earnings level. However, AWE remains central to determining the rate at which SSP is paid. SSP is paid at the lower of the statutory weekly rate or 80% of the employee's AWE, making the accurate calculation of AWE essential to ensuring the correct amount is paid.

What Counts as Earnings?

AWE is based on all earnings subject to Class 1 National Insurance contributions, or earnings that would be subject to them if the employee earned enough. In practice this covers basic pay, overtime, commission, bonuses, and any statutory payments such as SMP or SPP that fell within the relevant period. Expenses, benefits in kind, and payments not subject to Class 1 NI contributions are excluded.

•  

  Where benefits are provided under a salary sacrifice scheme, AWE should be calculated using earnings actually paid during the relevant period, minus the salary sacrifice amount.

   

The Relevant Period

The relevant period is the window of pay used to calculate AWE, and it ends on the last normal pay day before the employee's first day of sickness. The frequency at which the employee is paid will determine how the calculation looks, but in all cases it comes back to the same principle of the last 8 weeks of earnings before the sickness began.

Fourth UK HR & Payroll supports four pay cycles outlined below: weekly, fortnightly, four weekly, and monthly. The system will automatically apply the relevant calculation based on the pay cycle configured for the employee.

Weekly Paid

1. Add up all earnings paid during the relevant period (the 8 weeks preceding the last payday before the first day of sickness)
2. Divide the total by 8 (the number of weeks in the relevant period)

Fortnightly Paid

1. Add up all earnings paid during the relevant period (the 4 fortnightly pay periods preceding the last payday before the first day of sickness) 
2. Divide the total by 8 (to convert to a weekly figure)

Four Weekly Paid

1. Add up all earnings paid during the relevant period (the 2 four-weekly pay periods preceding the last payday before the first day of sickness) Divide the total by 8 (to convert to a weekly figure)

Monthly Paid

1. Add up all earnings paid during the relevant period (the 2 monthly pay periods preceding the last payday before the first day of sickness)
2. Divide the total by 2 (the number of months in the relevant period)
3. Multiply by 12 (the number of months in the year)
4. Divide by 52 (the number of weeks in the year)

New Employees or Insufficient Earnings History

The standard relevant period calculation assumes the employee has at least 8 weeks of earnings history. Where this is not the case, a different approach applies. This covers situations where an employee has not yet been with the organisation long enough for the normal rules to apply, or where their previous contract does not link with their current one.

Where the last normal payday before the first day of sickness is known but there are fewer than 8 weeks of earnings available, or the employee falls sick before receiving their first payday, the relevant period becomes all earnings paid under the current contract before the first day of sickness.

The employee has received an exact number of weeks pay

Divide the total earnings before the first day of sickness by the number of weeks in the relevant period to arrive at the AWE.

For example, if an employee has received 5 weeks of earnings, divide the total of those 5 weeks by 5.

The employee has not received an exact number of weeks pay

Divide the total earnings before the first day of sickness by the number of days in the relevant period, then multiply by 7. This applies regardless of how many days per week the employee is contracted to work.

For example, if an employee has received 2 weeks and 3 days of earnings (17 days), divide the total earnings by 17 and multiply by 7.

The employee falls sick before receiving any pay

Where the first day of sickness falls before the employee has received any pay at all, AWE should be based on the employee's contractual earnings, using the rate of pay set out in their contract.

No wages paid during the relevant period

Where an employee has not been paid any wages they were entitled to during the relevant period, their normal contractual earnings must be used to calculate AWE. The absence of payment does not remove the employer's liability to pay SSP.

Zero Hours Employees with No Earnings History

Where an employee on a zero hours contract falls sick before receiving any pay and has no contracted hours to use as a fallback, there is no AWE figure available to base the calculation on. In this scenario, SSP liability may be nil as neither actual earnings nor contractual earnings can be established. This is a known complexity for variable hours workers and employers should seek guidance from HMRC or an employment law specialist where this situation arises.

Mistimed Payments

A mistimed payment occurs when earnings are paid earlier or later than the employee's normal contractual payday, for example where pay is advanced ahead of a bank holiday or annual leave. This is distinct from a payroll error, where a mistake results in a shortfall of pay in the relevant period.

Where a mistimed payment has occurred, the AWE calculation is adjusted. Rather than dividing total earnings by the number of weeks in the relevant period, divide by the number of weeks wages actually paid within it.

For example, a weekly paid employee takes 2 weeks holiday and receives 3 weeks pay in advance on the last payday before their leave. Six weeks later they fall sick. The 8 week relevant period only contains 6 weeks of wages, as the other 2 weeks were paid in advance outside of it. In this case, divide the total earnings paid in the relevant period by 6, not 8.

Overpaid or Underpaid Earnings

AWE is always based on earnings actually paid within the relevant period, regardless of whether those earnings were over or underpaid. Where an over or underpayment has occurred, it is treated in the same way as any other earnings paid in that period.

However, where both of the following apply, agreed earnings should be used instead of actual earnings paid:

• The wrong amount was paid and this creates a disadvantage for either the employer or the employee
• There is written evidence of an agreement between the employer and employee confirming what the correct earnings should have been

Where no such written agreement exists, the calculation must use the earnings actually paid.

Qualifying Days

SSP is only payable for qualifying days, which are the days on which the employee is contracted or expected to work, or for those with an irregular working pattern, the days they are assumed to usually work. Days outside of the employee's normal or assumed working pattern do not attract SSP. Qualifying days are defined by the Days Usually Worked configuration on the absence record, as covered in the absence creation articles (Days or Hours).

Calculating SSP for a Period of Absence

To calculate the total SSP due for a period of absence:

1. Establish the employee's AWE using the relevant period calculation
2. Determine the applicable weekly rate: the lower of £123.25 or 80% of AWE
3. Divide the weekly rate by the number of qualifying days per week to arrive at the daily rate
4. Multiply the daily rate by the number of qualifying days within the absence period

Example 1

• Working pattern: Monday to Friday (5 qualifying days per week)
• AWE: £300 per week
• 80% of AWE: £240, which exceeds £123.25, so the weekly SSP rate is £123.25
• Daily rate: £123.25 ÷ 5 = £24.65
• Qualifying days absent: 10 (7th April 2026 to 20th April 2026)
• Total SSP due: £24.65 x 10 = £246.50

Example 2

• Working pattern: Monday to Wednesday (3 qualifying days per week)
• AWE: £90 per week
• 80% of AWE: £72, which is lower than £123.25, so the weekly SSP rate is £72.00
• Daily rate: £72.00 ÷ 3 = £24.00
• Qualifying days absent: 6 (14th April 2026 to 22nd April 2026)
• Total SSP due: £24.00 x 6 = £144.00

How SSP is Paid

SSP is paid by the employer through the normal payroll process and is subject to Income Tax and Class 1 National Insurance contributions in the same way as regular earnings. There is no mechanism for employers to reclaim SSP from the government.

• Note: SSP is always included in qualifying earnings for auto-enrolment assessment purposes, and for pension schemes using a qualifying earnings basis for deduction calculations. For pension schemes using a pensionable earnings basis, the Make SSP Pensionable global setting controls whether SSP is included in pension deduction calculations. This is enabled by default, but can be disabled where a scheme's rules specifically exclude payments such as SSP from pensionable earnings.

Periods of Incapacity for Work (PIW) & Linked Absences

A Period of Incapacity for Work (PIW) is the term used to describe a period of sickness for which SSP may be payable. From 6 April 2026, a PIW is formed from a single calendar day of sickness, meaning even a one day absence can constitute a PIW and attract SSP. Prior to April 2026, a PIW required at least 4 consecutive calendar days of sickness before SSP became payable.

Linked PIWs

Where two or more PIWs are separated by a gap of 56 days (8 weeks) or less, they are treated as a single continuous PIW for SSP purposes. This is known as a linked absence. Linking has two important implications:

• The 28 week SSP entitlement continues from where it left off in the previous PIW, rather than resetting
• SSP is payable from the first qualifying day of the new absence without any waiting period, as waiting days served in the first PIW carry forward to any linked PIW. This was the case under both the old and new rules, though waiting days have been abolished entirely from April 2026.

The gap between two PIWs is measured from the last day of the first PIW to the first day of the second PIW. Non-qualifying days count towards the gap.

Where two absences are linked, the AWE from the first PIW is used for the duration of the linked period. The AWE is not recalculated at the start of each linked absence, even if the employee has received a pay increase in the intervening period. A fresh AWE calculation is only performed when the link is broken and a new PIW begins.

A gap of 57 days or more between two periods of sickness breaks the link entirely. Where the link is broken, the subsequent absence is treated as a brand new PIW, a fresh 28 week SSP entitlement begins from the first qualifying day of that absence, and a new AWE calculation is performed based on the relevant period before the new PIW.

Series of Linked PIWs Lasting More Than Three Years

Where a series of linked PIWs with the same employer continues for more than three years, SSP entitlement ends regardless of whether the full 28 weeks of SSP has been paid. This is an important edge case for employees with long term or recurring conditions, and employers should monitor entitlement carefully in these situations.

How the System Handles Linked PIWs

The system will automatically recognise where two absence records fall within the 56 day linking period and treat them as a linked PIW for SSP calculation purposes. The SSP days paid and entitlement remaining are carried across from the previous absence to ensure the 28 week cap is applied correctly across linked absences.

SSP Entitlement Period & the 28 Week Cap

SSP is payable for a maximum of 28 weeks in any single PIW, or across a series of linked PIWs. The 28 week clock runs from the first qualifying day of the first PIW and continues to count down across any linked absences, meaning the entitlement does not reset each time an employee returns to work briefly between linked absences.

Tracking the 28 Week Entitlement

The remaining SSP entitlement carries over from one linked absence to the next. For example, if an employee has used 20 weeks of SSP entitlement in their first PIW, returns to work, and then falls sick again within the 56 day linking period, only 8 weeks of SSP entitlement remains before the cap is reached, regardless of how long the employee was back at work between the two absences.

Approaching the Cap

Where it becomes clear that an employee's SSP entitlement will be exhausted before they return to work, the employer must issue an SSP1 form on or before the start of the employee's 23rd week of sickness. This gives the employee sufficient time to make a claim for other state benefits such as Employment and Support Allowance (ESA). The SSP1 form is covered in more detail in the SSP1 Form section below.

When the Entitlement Resets

The 28 week entitlement only resets where the gap between two PIWs is 57 days or more, breaking the link entirely. Once the link is broken, a subsequent absence starts a fresh 28 week entitlement with a new AWE calculation. An employee can therefore qualify for a further 28 weeks of SSP after a break of 57 days or more, even if they previously exhausted their full entitlement.

SSP1 Form

An SSP1 form is issued by the employer to notify an employee that SSP is not being paid, or that it is coming to an end. From 6 April 2026, the SSP1 form has been updated to reflect the new rules, including the removal of waiting days and the change to the PIW definition.

When to Issue an SSP1

An SSP1 must be issued in the following circumstances:

• The employee does not qualify for SSP from the start of their absence
• The employee's SSP entitlement has been exhausted at the 28 week cap
• SSP is coming to an end and the employee is still sick. In this case the SSP1 must be issued on or before the start of the employee's 23rd week of sickness, giving them sufficient time to apply for Employment and Support Allowance (ESA) or other state benefits

Why the SSP1 Matters

The SSP1 is important because it allows the employee to make a timely claim for ESA or other state benefits where they are no longer entitled to SSP. Issuing it late or failing to issue it at all can leave the employee without income during a period of sickness and may expose the employer to a complaint or tribunal claim.

Recording SSP1 Details in the System

Where the Record SSP1 Details global setting is enabled, an SSP1 details section is available within the employee's absence record, allowing users to log whether an SSP1 has been issued, the reason for issuing it, and the date it was sent. This is an administrative recording tool only and does not generate or send an SSP1 form automatically.

• Note: For customers using Fourth's payroll bureau service, SSP1 forms will be created by the bureau and provided as a PDF for distribution to the relevant employees. For customers managing their own payroll, automatic generation and submission of an SSP1 form is not currently available within the system.

Further Reading & Resources

This article has covered the legislative framework underpinning SSP, including eligibility, AWE, calculation, PIWs, linked absences, the 28 week cap, and the SSP1 form. For guidance on how the system handles SSP processing, overrides, entitlement tracking, and linked absence management, refer to:

• WFM UK | HR & Payroll: Absence (Sickness) - Return to the main contents page for the full suite of absence articles

UK Government & Legislation

• GOV.UK - Statutory Sick Pay (SSP)
• GOV.UK - Work out your employee's Statutory Sick Pay manually
• GOV.UK - Statutory Sick Pay (SSP): employer guide
• GOV.UK - Eligibility and form SSP1
• GOV.UK - SSP rates and thresholds for employers
• Legislation.gov.uk - Social Security Contributions and Benefits Act 1992
• Legislation.gov.uk - Statutory Sick Pay (General) Regulations 1982
• Legislation.gov.uk - Employment Rights Act 2025
• HMRC - SSP Linking Periods of Incapacity for Work

Return to: WFM UK | HR & Payroll: Absence (Sickness)

The information provided herein is for informational purposes only. It does not constitute legal, tax, accounting, or other professional advice. It describes functionality and configuration options available within Fourth's solutions and services. The appropriate settings for your organisation will depend on your specific circumstances and requirements, and Customers remain solely responsible for all decisions relating to the configuration and usage of Fourth's solutions and services. The information reflects Fourth's understanding of applicable laws and regulations at the time of publication and may not reflect subsequent changes. Customers should seek independent professional advice regarding their specific compliance requirements.