Having to take time off work sick is naturally concerning for contractors, especially in the midst of the cost of living crisis. So, what are the self-employed entitled to in terms of financial support when they are sick?
Depending on whether you’re operating under a personal service company (PSC) or as a sole trader, you may be eligible for different types of support. We have drawn up this useful guide so that wondering what will happen to your income isn’t a stress you have to deal with when you’re already unwell.
Limited company contractors
If you are operating under a PSC and, as such, pay yourself a salary, you will be eligible for Statutory Sick Pay (SSP). This is a payment of £99.35 per week that is payable from the fourth day you are off sick for up to 28 weeks. Tax and National Insurance will be deducted
However, as you are the employee of your own limited company, this means you are paying yourself your SSP. This means two things:
- You should always keep money in the business to cover sick pay where needed;
- If you have ample reserves, you can pay yourself more than the minimum £99.35 per week if you so choose.
To be eligible for SSP you must:
- Be classed as an employee – which you are as you’re an employee of your own limited company;
- Earn at least £123 per week on average;
- Have been ill for at least four days in a row.
You also need to tell your employer (you) that you’re sick and are unable to work. Again, this might seem a bit weird since you’re basically telling yourself something you already know, but it’s important to have the right paper trail in place when it comes to SSP. Similarly, if you’re off for more than seven days together, you will need to provide yourself with a fit note from your GP or other healthcare professional.
You can find more information on SSP on GOV.UK.
Sole traders
If you are registered as a sole trader (usually applicable if you are a freelancer) you are not eligible for SSP, but you may be eligible for Employment and Support Allowance (ESA). To claim this, you need to have both:
- Worked as an employee or have been self-employed;
- Paid enough National Insurance contributions (NICs) in the last two-to-three years. National Insurance Credits (such as those you get while claiming Maternity Allowance) also count towards this.
What you will actually receive depends on what stage your application is at. For the first 13 or so weeks you will get the ‘assessment rate’ while your claim is being processed. This will be:
- Up to £61.05 per week for under-25s;
- Up to £77 per week if you’re over 25.
Once you’ve been assessed you will be placed into one of two categories:
- The work-related activity group which receives up to £77 per week;
- The support group which receives up to £117.60 per week.
ESA is paid every two weeks and you could claim Universal Credit at the same time if you are eligible. You can find more information on ESA on GOV.UK.
What can I do if I get sick?
Getting sick is a fact of life – it happens to us all from time to time and sometimes it will impact our work lives. You can’t stop it but you can prepare for it.
If you’re a limited company contractor, you should make sure there is money kept in your business so that you can pay yourself sick pay. It could also be worth budgeting to pay a substitute to take over if need be, ensuring that a) your project stays on track and b) you exercise your right to substitution.
If you’re a sole trader, it’s worth skimming some savings off each payment you receive to build a ‘sick pay’ fund so that you have money to live off should you need to take time to recover from illness.
Whether you’re a PSC contractor or a sole trader, it’s also worth speaking to your accountant to find out what support you are eligible to claim so you are prepared should you fall ill.
It’s also worth remembering that if you hold Kingsbridge’s insurance for contractors and have an accident while doing your job that resulted in you being unable to work, you will have personal accident cover that you can make a claim on. This would give you a set weekly income for up to 52 weeks, alleviating your worries and allowing you to focus on a speedy recovery.
