Ask the Expert: SSP Has Changed But How Do You Actually Calculate It?

Statutory Sick Pay (SSP) has undergone one of the biggest changes we have seen in employment law for many years. SSP is now payable from Day 1 of sickness absence yet many employers are still applying the old waiting-day rules. Most employers applying the new rules are still unsure about how the new calculations work in practice.

The changes affect not only full-time employees but also part-time workers, casual staff and those working irregular hours. Understanding how to calculate SSP correctly will be essential for employers, payroll teams and managers alike.

To help us understand and manage these changes, I’m joined by Ella one of our HR:4UK Consultants to help explain these calculations in plain English.

Before we discuss the new rules, can you remind us how SSP used to work?

Ella: Of course. Until the recent reforms, SSP was relatively straightforward.

To qualify, employees generally had to earn above the Lower Earnings Limit. If their earnings fell below that threshold, they weren’t entitled to SSP at all.

In addition, SSP wasn’t payable immediately. Employees had to serve three “waiting days” before payments started. This meant SSP would usually only become payable from the fourth qualifying day of sickness absence.

Once an employee qualified, they received the standard SSP weekly rate regardless of their salary level.

Whilst the system was simple, it left many lower-paid workers without any financial support when they were unable to work due to illness.

Why did the government decide to change the system?

Ella: The primary objective was to make SSP more accessible.

Under the previous rules, many part-time workers, casual workers and lower-paid employees received no SSP because their earnings fell below the Lower Earnings Limit.

There was also criticism of the three waiting days. If an employee was only absent for a short period, they often received no SSP at all because their absence was covered entirely by the waiting period.

The reforms are designed to ensure that more workers have access to financial support during sickness absence and that support starts from day one.

What are the key changes employers need to understand?

Ella: There are three significant changes.

Firstly, the three waiting days have been removed. SSP is now payable from the first qualifying day of sickness absence.

Secondly, the Lower Earnings Limit has been removed, meaning employees who previously fell below the threshold may now qualify for SSP.

Thirdly, SSP is no longer simply a flat-rate entitlement for everyone. The amount payable is now calculated as the lower of:

• The statutory SSP weekly rate; or
• 80% of the employee’s Average Weekly Earnings (AWE).

This means employers must now understand how to calculate Average Weekly Earnings correctly.

At a glance we can see the Old SSP Rules vs New SSP Rules

Issue	Previous Rules	New Rules
Waiting Days	First 3 qualifying days unpaid	SSP payable from Day 1
Lower Earnings Limit	Must earn above threshold	Removed
Low-Paid Workers	Often excluded	Can now qualify
SSP Calculation	Standard SSP rate	Lower of SSP rate or 80% of AWE
Casual Workers	Frequently ineligible	More likely to qualify

What exactly are Average Weekly Earnings?

Ella: Average Weekly Earnings, commonly referred to as AWE, are used to determine an employee’s SSP entitlement.

The calculation is based on the employee’s gross earnings during the relevant reference period before their sickness absence begins.

Once the average weekly figure has been established, employers calculate 80% of that amount and compare it with the statutory SSP weekly rate.

The employee receives whichever figure is lower.

Whilst that sounds simple, employers need to be particularly careful when calculating AWE for workers whose earnings vary from week to week.

Can you give us a worked example for a typical full-time employee?

Ella: Certainly.

Let’s assume an employee earns £36,000 per year.

Step 1 – Calculate Average Weekly Earnings

£36,000 ÷ 52 = £692.31

Step 2 – Calculate 80% of AWE

£692.31 × 80% = £553.85

Step 3 – Compare Against the Statutory SSP Rate

80% of AWE = £553.85

Statutory SSP rate = £123.25

The end result is that the employee receives SSP at the statutory rate of £123.25 per week because it is the lower figure.

The key point is that most full-time employees will continue to receive SSP at the statutory rate because 80% of their earnings exceeds the SSP cap.

Does that mean many full-time employees won’t notice much difference?

Ella: In terms of the weekly amount they receive, that’s largely true.

Most full-time employees will continue to receive SSP at the statutory rate because their earnings are significantly higher than the cap.

However, they will benefit from SSP being payable from the first day of sickness absence.

For shorter absences, this can result in a noticeable increase in the amount received compared to the previous rules.

How does the calculation work for a part-time employee?

Ella: This is where the reforms start to have a greater impact.

Let’s look at an employee who works part-time and earns £95 per week.

Step 1 – Calculate Average Weekly Earnings

AWE = £95

Step 2 – Calculate 80%

£95 × 80% = £76

Step 3 – Compare Against SSP Rate

80% of AWE = £76

Statutory SSP rate = £123.25

In this worked example, the end result is that the employee receives £76 SSP per week.

Under the previous rules, this employee may not have qualified for SSP at all if their earnings fell below the Lower Earnings Limit.

However, under the reforms therefore extend SSP protection to many lower-paid workers who previously received nothing.

What about casual workers or employees with irregular hours?

Ella: This is where employers need to pay particular attention.

The principle remains exactly the same – calculate Average Weekly Earnings and then apply the 80% rule.

However, because earnings fluctuate, identifying the relevant earnings period becomes much more important.

Many employers assume they simply look at the last eight calendar weeks. In practice, it may be necessary to look back further to identify the relevant weeks containing earnings.

This is why accurate payroll records are essential.

Can you show us a detailed example for a casual worker?

Ella: Absolutely.  This is one of the areas most likely to cause confusion for employers with casual or zero-hours workers.

Another important point for employers to remember is that a zero-hours worker doesn’t automatically qualify for SSP simply because they are on your books. SSP is linked to qualifying days when the individual would otherwise have been expected to work. If the worker had already been allocated shifts, accepted an assignment or was on the rota when they became unwell, SSP may be payable. However, if they had no work scheduled and no expectation of work, there may be no qualifying days against which SSP can be paid. This is often where employers need to look carefully at rotas, shift records and assignment details before making a decision.

Let have a look at an example assuming a casual worker has a 15 week assignment and reports sick in Week 12.   We have to look at the earnings history first.

Earnings History

Week	Earnings
Week 11	£0
Week 10	£180
Week 9	£0
Week 8	£220
Week 7	£160
Week 6	£0
Week 5	£190
Week 4	£210
Week 3	£0
Week 2	£175
Week 1	£200
Earlier Week	£150

If we simply looked at the last eight calendar weeks, several weeks contain no earnings and would distort the calculation.

Instead, we continue looking back until we identify eight relevant paid weeks.

The eight earnings weeks are:

• £180
• £220
• £160
• £190
• £210
• £175
• £200
• £150

Step 1 – Total Earnings

£180 + £220 + £160 + £190 + £210 + £175 + £200 + £150 = £1,485

Step 2 – Calculate Average Weekly Earnings

£1,485 ÷ 8 = £185.63

Step 3 – Calculate 80%

£185.63 × 80% = £148.50

Step 4 – Compare Against SSP Rate

80% of AWE = £148.50

Statutory SSP rate = £123.25

The end result is that this worker receives SSP at the statutory rate of £123.25 per week.

The key point is that employers may need to look back further than eight calendar weeks to identify the relevant paid weeks used in the Average Weekly Earnings calculation.

What happens if a casual worker earns very little?

Ella: Let’s assume a worker’s Average Weekly Earnings are only £75 per week.

Step 1 – Calculate 80%

£75 × 80% = £60

Step 2 – Compare Against SSP Rate

80% of AWE = £60

Statutory SSP rate = £123.25

The end result in this example is that the employee receives SSP of £60 per week.

Whilst the amount may seem modest, the important point is that under the old rules this worker may not have qualified for SSP at all.

How is SSP calculated when someone is only absent for a few days?

Ella: SSP is paid according to qualifying days rather than simply weekly amounts.

Let’s assume an employee normally works Monday to Friday and qualifies for the statutory SSP rate.

Weekly SSP = £123.25

Daily SSP:

£123.25 ÷ 5 = £24.65

If the employee is absent for three qualifying days:

£24.65 × 3 = £73.95

The end result in this example is that the employee would receive £73.95 SSP.

Under the old rules, those same three days would likely have been unpaid waiting days.

What mistakes are employers most likely to make?

Ella: There are several common pitfalls.

Some employers continue to apply the old waiting-day rules.

Others assume that every employee automatically receives the statutory SSP rate.

I’ve also seen businesses overlook lower-paid workers who may now qualify for SSP when they previously didn’t.

Perhaps the biggest risk area is irregular-hours workers, where employers fail to calculate Average Weekly Earnings correctly.

As always, good payroll records are crucial.

What practical steps should employers be taking now?

Ella: Employers should review three key areas.

Firstly, ensure payroll systems have been updated to reflect the new rules.

Secondly, update sickness absence policies and employee handbooks to remove references to waiting days and outdated eligibility requirements.

Thirdly, provide training to managers and payroll staff so they understand the new calculations and can answer employee queries confidently.

Finally, what’s your key message for employers trying to understand the new SSP rules?

Ella: Don’t panic.

Whilst the reforms may appear complex at first glance, the process is actually quite logical.

Remember the basic formula:

1. Calculate Average Weekly Earnings.
2. Calculate 80% of that figure.
3. Compare it with the statutory SSP rate.
4. Pay whichever amount is lower.

For many full-time employees, the statutory rate will continue to apply.

However, the reforms significantly improve access to SSP for lower-paid workers, part-time employees and casual workers who may previously have received little or no financial support during sickness absence.

Understanding the rules now will help employers remain compliant and avoid costly payroll mistakes in the future.