Managing employee leave is one of the most critical and complex responsibilities for any HR and payroll team. When an employee needs to take time off, whether for sickness or to welcome a new child, ensuring they are treated fairly, paid correctly, and that your business remains compliant is paramount.
Mistakes in these areas can lead to significant financial penalties and, just as importantly, can damage trust with your employees. This guide breaks down the key considerations for managing Statutory Sick Pay (SSP) and Parental Leave, helping you navigate the rules with confidence.
Navigating Sickness and Statutory Sick Pay (SSP)
When an employee is unable to work due to illness, a clear and compliant process is essential. Here’s what you need to focus on.
1. Getting Average Weekly Earnings (AWE) right
The calculation of an employee’s AWE is the foundation for determining their SSP entitlement. It’s crucial to get this right. Remember that AWE is dependent on the specific earnings period linked to the absence. If there are linked Periods of Incapacity for Work (PIW), you must use the AWE from the original linking period. A common pitfall is when a new employee is off sick before any payments have been made; in this case, you must calculate a notional AWE based on their expected earnings.
2. Ensuring timely and accurate payments
Once entitlement is confirmed, payments must be made in line with your standard payroll deadlines. This process begins as soon as you receive either a Self-Certification form (for the first 7 days) or a fit note (for any absence longer than 7 days). Should there be any delays in notification, ensure any arrears are settled in the next available pay run. It’s also vital to track the 28-week SSP limit, including any linked PIWs. If an employee is not entitled to SSP or has exhausted their entitlement, you must provide them with an SSP1 form so they can make a claim for other benefits.
3. Meticulous record-keeping and clear policies
Accurate record-keeping is non-negotiable. An employee’s sickness absence starts on the day they are unwell and ends the day before they return, regardless of their working pattern. Finally, clear communication is key. Make sure your policies are up to date and that employees clearly understand how you calculate sick pay, what qualifying days you use, and how their salary and benefits may be affected.
Managing Parental Leave and Pay
Welcoming a new child is a major life event. A supportive and clear process for managing parental leave builds immense goodwill and aids retention.
1. Understanding leave rights vs. pay rights
This is a critical distinction. All employees have a “day one” right to take parental leave without penalty. However, to receive statutory pay, they must pass specific employment and earnings checks. Typically, this means they have been employed for at least 26 weeks and earn on or above the Lower Earnings Limit (LEL) for a qualifying period of 8 weeks.
2. The importance of flexibility
While statutory rules require employees to give notice, the arrival of a child can be unpredictable. Being as flexible as possible around start dates, end dates, and how blocks of leave are taken is crucial. This supportive approach helps employees feel valued and makes them more likely to return to work after their leave.
3. Accurate payments and reclaims
Statutory parental pay should be made in line with your normal payroll schedule. If an employee decides to leave during their parental leave, you must offer them the option to receive their remaining statutory pay as a lump sum. Crucially, don’t forget to make your reclaim through your Employer Payment Summary (EPS) submission. All employers can reclaim at least 92% of statutory parental pay, and those entitled to Small Employers’ Relief can reclaim 108% (from the 25/26 tax year).
By mastering these details, you can ensure your business remains compliant while providing the vital support your employees need during important life events.
