Statutory Sick Pay for Employees

Calculating Average Weekly Earnings

Your employer will work out your average weekly earnings to ensure that they are at least equal the Lower Earnings Limit (LEL) for NI purposes, but you might want to check this for yourself. Your earnings will be averaged over a specific period. This is normally 8 weeks, but may vary. It is usually the period ending just before you are sick. Holiday pay, overtime and bonuses will be taken into account as long as they count for NI contributions purposes. Occupational pensions and State Retirement Pensions do not count for NI contributions purposes. 'Pay' means earnings which attract a Class 1 NI contributions liability, or would if they were high enough.

Some employers have a special arrangement with the Inland Revenue to pay Class 1B contributions on some of your earnings. This may mean that your employer may not have counted all your earnings when working out your average earnings. If your employer says you cannot get SSP because your earnings were too low, you should ask your employer if any of your earnings were included in such an arrangement and then ask him to recalculate your earnings as if you had been paying Class 1 NI contributions on them.

If you are paid weekly your employer will usually add together all the pay you got in the eight pay weeks, up to and including the last normal pay day before you fell sick, and divide the total by eight to give your average weekly earnings.

If you are paid fortnightly your employer will usually add together all the pay you got on the four pay days up to and including the last normal pay day before you fell sick, and divide the total by eight to give your average weekly earnings.

If you are paid monthly your employer will usually add together all the pay you got in the period ending on the last normal pay day before you fell sick and starting on the day after the pay day falling at least eight weeks before that. Divide the result by the nearest number of whole months covered by the period between the payment just before you fell sick and the day after the payment at least eight weeks earlier, multiply by 12 and divide by 52. This gives you your average weekly earnings.

If you are a director of a limited company you are treated in the same way as other employees for SSP purposes. You may be paid contractually each week or each month, or you may be voted directors' fees each year or a mixture of these.

- If you are paid contractually
Use the normal rules for working out average weekly earnings if you are paid contractually.
- If you are paid by an annual vote
If you are voted fees each year, any money you draw in anticipation of the fees is not counted as earnings for SSP. Your employer will usually work out your average weekly earnings by counting the number of days between the last payment of fees you were voted before you fell sick, and the payment of fees you were voted at least eight weeks before that. Divide the amount of fees you were voted before you fell sick by the number of days between payments and multiply the result by seven.

If you have just started work or you are paid at intervals other than weekly or monthly the calculation may be different. Ask your employer, or if in doubt, check with your Inland Revenue office.

Check with your employer if you think they have made a mistake in calculating your average weekly earnings. If you are not happy with their explanation, check with your nearest Inland Revenue office.