Legal FAQs - Statutory Sick Pay

An agency worker has worked for us in short assignments since July 2018. They’re now off sick. The client has terminated the assignment. Does our liability end to pay statutory sick pay?

Agency workers are treated as employees for statutory sick pay (SSP) purposes. HMRC enforce SSP. The judgment given in Brown v Chief Adjudication Officer 1997 stated that if an employee on a short term contract has been on that or a series of contracts for three or more months then they are entitled to treat their contract as being of indefinite duration as per what is now s.86 (4) Employment Rights Act 1996. This means that the contract can only be terminated by giving notice; failure to do so, even if the assignment has ended, will mean that the contract is ongoing for SSP purposes and will allow an employee to claim SSP if they meet the qualifying conditions. Case law from the NHS Professionals v HMRC 2012 case has extended this right to agency workers and will apply to your worker because they have worked for you for over three months.

HMRC take the view that in this scenario because the worker has worked for you for over three months; provided the worker meets the qualifying conditions; that unless you gave notice to end each of their assignments it is likely that the contract will be deemed to be ongoing and you are likely to be liable to pay SSP. SSP entitlement runs for a maximum of 28 weeks unless the entitlement period ends sooner i.e. the worker returns to work, the assignment ends or the period of entitlement ends for some other reason. You will be liable to pay SSP until the period of entitlement ends.

If you terminate the contract to avoid paying SSP it is likely that you will still face liability. It is important that you terminate for a fair reason and not solely to avoid paying SSP. If the client has terminated, you could point to this as a reason for your termination but it may not eliminate your risk of liability to pay SSP. If in doubt contact HMRC for a determination.

Statutory sick pay is a vast and complicated area of law. For more information see the REC’s legal guide

This article was posted by Emma Clapham, Legal Adviser, REC