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Statutory sick pay for directors is something that probably never enters your mind – until you’re ill. But can directors claim Statutory Sick Pay (SSP)? While SSP isn’t always as generous for directors as it is for employees, they can claim. 

But if you’re self-employed, we’re sorry to say that you cannot access SSP.

So let’s unpack all that directors need to know.

Taking time off

No one likes to be ill, but it happens to us all at some time. Sickness from work increased by 55% in the past five years – although that includes the ‘pandemic years’, so it’s not entirely surprising. 

For directors, it can be more difficult to have to take time off. With so much to do and many people looking to you to run the business, taking sick leave is often a last resort. But if you’re unwell, it’s wise to stay out of the workplace.

According to Occupational Health experts, transmission of viruses increases when people go to work whilst ill. They say failing to take time off means the sickness of one person can quickly increase to losing a number of employees due to the illness.

Statutory sick pay for directors

As company directors are classed as officers, they are treated as employees for tax purposes. This means if they cannot work through injury or illness, they are entitled to claim SSP. To qualify, directors must:

  • Have been poorly for at least four consecutive days – this includes bank holidays, weekends and non-working days.
  • Be paid weekly average earnings of at least £123 – including wages and dividends.

If the director’s total annual income exceeds the tax-free personal allowance, SSP is subject to the usual income tax and National Insurance payments. The allowance is £12,750 for the current tax year.

SSP payments usually start from the fourth day of absence. The three previous days are classed as ‘waiting days’ and you can only claim SSP for those days if you’ve already received sick pay within the past eight weeks.

The rate of SSP is £116.75 per week for a maximum of 28 weeks. But this all depends on the contract.

If a director is paid by formal resolution or determination of directors, payments differ. HMRC outlines this on their website. The website also includes a SSP calculator.

Should a director take SSP?

As SSP comes from company funds, many directors decide not to take it as it reduces profits. A reduction in profit will mean that they will lose out as the value of their shareholding reduces. 

But SSP could result in a net gain, as your company might be entitled to claim money back from the government. 

Companies with lower wage bills could be entitled to reclaim all or part of the SSP paid, which includes directors, through reduced PAYE payments. A written request can be submitted to HMRC if no PAYE is paid or the entitlement is insufficiently reclaimed.

Ultimately, you have a few things to weigh up if you’re considering Statutory Sick Pay for directors.

Can a director claim Employment and Support Allowance?

People who are struggling to work due to illness or disability can claim a state benefit called Employment and Support Allowance (ESA). This is available to employees and directors as well as the self-employed. To be eligible you must:

  • Have a health condition or disability that affects how much you can work.
  • Not be claiming SSP, statutory maternity pay or Jobseekers’ Allowance
  • Be under state pension age
  • Have paid enough National Insurance contributions (NICs) in the last two to three years. 

How much you receive depends on a number of factors, including your age, household income, savings and whether you are able to return to work.

What about Universal Credit?

If you are ill for a long period of time, you might be eligible for Universal Credit. This is paid for anyone who is unable to work, are on a low income or unemployed. 

What you receive depends on your household income. For more details, check out government’s website.

What should I do if I’m ill?

If you are ill and cannot work, then you should consider claiming SSP. But it’s also worth planning ahead as the benefits may not cover your living expenses. 

For example, you may want to consider income protection insurance. Many large companies set up group income protection (GIP) schemes. These provide income to directors and employees if they cannot work for some time due to ill health or injury.

Directors of small companies can also protect their own income. You can consider:

  • Payment Protection Insurance
  • Critical illness cover
  • Accident, sickness and unemployment insurance
  • Mortgage payment protection insurance

If you would like more details about SSP for directors as well as other payment protection cover, contact our team today. We would love to help you and your business.