A UK Freelancer's Overview of Statutory Sick Pay
One thing which is in abundance during this pandemic is the persistence, resilience and determination of the self-employed.
In fact, even though the government has now formally rejected calls to give Statutory Sick Pay to freelancers during the outbreak of coronavirus, other petitions are still live and actively demanding SSP for the self-employed.
But, asks business rescue expert Keith Tully, of company administration advisory Real Business Rescue, what is Statutory Sick Pay and who qualifies?
SSP: in a nutshell
Statutory Sick Pay (SSP) is a fixed weekly sum which will be paid by your employer if you are too sick to work. This is paid following four days of sickness, including non-working days, and currently stands at £94.25 which can increase if your employer has a sick pay scheme in place. To be eligible, your average wage should be £118 per week and you should inform your employer within the given time frame or seven days if there is no time limit.
There are some exceptions to qualifying for sick pay, the biggest one being you must be classed as employed. This excludes freelancers and self-employed. However, recruitment agency workers will be eligible for statutory sick pay. You are not eligible for statutory sick pay if you:
- are receiving Statutory Maternity Pay
- have received the maximum amount of SSP (28 weeks)
- have continuous series of linked sick periods lasting over three years
For regular bouts of sickness to be classed as linked, the periods must last four or more days each time and be eight weeks or less apart. If you’re off sick for more than seven days in one go, your employer has the right to request a sick note (or fit note).
Who is eligible for Statutory Sick Pay during the COVID-19 pandemic?
If you are under self-isolation as a result of the coronavirus, you will be eligible for statutory sick pay under the same circumstances as to if you were sick from a cough or flu, providing that you are an employee. Emergency legislation, effective from March 13th 2020, will now make Statutory Sick Pay available from day one of sickness, rather than day four.
The government has not announced an extension of SSP for the self-employed or freelancers to protect them from lack of trade during this period of uncertainty. In fact, the government believes “there is no logic” to require the self-employed to pay themselves statutory sick pay.
In a response to a petition calling for SSP for freelancers, the Department of Work and Pensions also said on Saturday: “It would not be appropriate to require the self-employed to pay themselves statutory sick pay, as they are their own employer. The welfare system provides a safety net to support the self-employed.”
More positively for sole traders, in an emergency announcement on March 20th, chancellor Rishi Sunak announced that the self-employed would now able to access universal credit at a rate equivalent to statutory sick pay with no minimum income floor. And this measure will remain in place for the remaining duration of the outbreak (which is currently unknown).
What do freelancers think of Statutory Sick Pay?
Freelancers have regarded sick pay quite highly for a long time; even before this pandemic. But since it hit, the Association of Independent Professionals and Self-Employed has petitioned the Secretary of State for Health, Matt Hancock, and the Secretary of State for Work & Pensions, Therese Coffey, to introduce a mitigation fund for self-employed people affected by the coronavirus to cover loss of income.
Since the petition, the seven measures stated below have been introduced by the government for the self-employed to protect their income as a result of the virus:
- The Self-Employed Income Support Scheme (SEISS), under which self-employed freelancers can claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next three months.Official guidance is available.
- Relaxed measures around Universal Credit and Employment and Support Allowance
- Time to Pay Arrangements have been made more accessible for those struggling to pay HMRC as a result of the coronavirus.
- VAT payments due earlier this month have been deferred to June 30th 2020.
- Self-assessment income tax due this coming July has been deferred to Jan 30th 2021.
- The British Business Bank has launched the Coronavirus Business Interruption Loan Scheme to make finance attainable for business.
- The IR35 private sector reforms have been postponed until April 2021.
How can freelancers protect their income if they fall ill?
Income Protection Insurance is one way that self-employed freelancers can compensate for the loss of earnings as a result of short-term or long-term illness. If your income was to drastically reduce, you can claim against your policy to save yourself from being out of pocket. As freelancers are not eligible for Statutory Sick Pay, insurance as such can replace income. This is typically a monthly payment which can help you maintain your standard of living and meet your living expenses.
Income protection can provide cover until retirement or for six to 12 months. Concerning maximum pay-outs, your policy can vary; it can pay 100 per cent of your income or have a cap of a certain figure per annum. During the current climate of COVID-19, ensure that you confirm that your insurance coverage can protect you in the event of an outbreak.
Employment and Support Allowance
If you are self-employed and unable to work due to a health condition, you may qualify for Employment and Support Allowance (ESA) which is paid every two weeks, providing that you have paid enough National Insurance Contributions in the last two to three years.
While your claim is under assessment, you will get the ‘assessment rate’ which will be:
- up to £57.90 per week if you’re under 25
- up to £73.10 a week if you’re 25 or over
After you have been assessed, you will be placed into either of the following two groups. The work-related activity group refers to those who can get back to work.
- work-related activity group - £73.10 per week
- support group - £111.65 per week
What’s the consensus on SSP for freelancers during COVID-19?
The government has been pushed towards extending Statutory Sick Pay for freelancers because of the coronavirus but, so far, they have resisted. There are suggestions that the SEISS is the government’s action in this area – instead of extending SSP to the self-employed. The refusal to extend SSP to freelancers is despite the now-former leader of the labour party Jeremy Corbyn going further, by demanding a loss of earnings protection for coronavirus-hit freelancers.
Unfortunately, and despite the SEISS and the six other measures (outlined above) to prop up the self-employed, a growing number of industries appear to be closing their doors to freelancers and sole trader suppliers. While full-time workers who are covered by the Coronavirus Job Retention Scheme are also no doubt feeling the adverse effects of Covid-19, the freelance workforce currently makes up 15 per cent of the labour market (and makes up the majority of the creative industries’ labour market), so a significant chunk of freelancers will soon -- if not already -- feel a slump in trading during this economically uncertain, life-threatening and for business soloists, livelihood-threatening outbreak.