Q&As

What happens to pension contributions when an employee is on Statutory Sick Pay?

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Published on LexisPSL on 06/09/2016

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • What happens to pension contributions when an employee is on Statutory Sick Pay?

All employees, irrespective of age, are entitled to claim a statutory sick pay (SSP) as long as they have average earnings of at least £112 per week (from 6 April 2016). SSP is paid at the current rate of £88.45 per week for up to 28 weeks. Employers can opt out of SSP if they operate their own scheme (contractual sick pay) but payments must be at least equal to what would be received under the statutory provisions.

For further information generally on SSP, see Practice Note: Sick pay.

SSP is treated as relevant earnings for tax purposes in relation to deductions of National Insurance contributions (NICs) and Pay As Your Earn (PAYE) income tax as well as other documents made from pay such as pension contributions.

However, unlike statutory maternity leave, where the employer makes pension contributions based on the pay the employee would have received had she been working normally, there is no requirement for a private sector employer to continue making employer pension contributions during a period of SSP.

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