Long Term Sickness in a Small Business image

Long Term Sickness in a Small Business

Staff Squared date icon30th October 2014

Tag iconManaging staff

If you are a small business with only 4 or 5 employees, when one of those employees goes on long term sick leave it can have a huge impact on your business financially.

Even if you are a small business you need to ensure that you have the appropriate policies and procedures in place to cover you whilst the staff member is off, especially around sickness absence. You need to decide from the point of view of your business what it can afford if a valued member of staff is off sick for several weeks or months.

 What are your options for paying staff on long term sick leave?

So what are the options? You could pay their full salary or make them take Statutory Sick Pay? You could state in their contract that you do not pay sick pay at all or that it is discretionary, or you could state that you will pay their salary for the first X weeks and then they will have to go on to SSP. Another alternative is to offer half pay, rather than full pay, which will limit your liability to a certain extent. There are many alternatives but you need to be sure that what you are offering your company will be able to afford in the long term and that staff will not take advantage of your generosity.

The reason this needs careful consideration from the outset is although your company is thriving at the present time, having to pay a member of staff for a long term sickness absence can have a serious impact on your cashflow.

Think carefully about what you will do whilst they are absent. Who will do their job – you? Will you be able to afford to pay someone else to do their job whilst they are away, or will you have to call on the goodwill of your other employees to share the workload? Will this cost you even more in overtime?

 What about Statutory Sick Pay (SSP)?

If you do not pay sick pay at all, your staff member will be entitled to SSP.   This takes effect once the employee has been sick for 4 days in a row (including non-working days). The current SSP is £92.05 per week and this can be paid for up to 28 weeks.   What most companies are not aware of is that you cannot now claim this back, and this became law in April 2014, but you can reclaim the difference if SSP was more than 13% of your Class 1 National Insurance in a tax month.

If you have paid any SSP during 2013/14, you have until the end of 2015/16 to recover these amounts.

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