Can you get sick pay if you are self-employed?
Many workers are drawn to the idea of going self-employed. But one of the things that can deter people from making the jump is the question of what happens if you get sick. After all, self-employed workers don’t usually have the same entitlements and benefits as employees.
In this blog post, we set the record straight on the sick pay rights of self-employed individuals. We look at entitlements of limited company directors, sole traders, partners and freelancers, including Employment and Support Allowance. We also discuss the benefits of having adequate business insurance in place.
Can self-employed individuals claim sick pay?
Unfortunately, the issue of sick pay is not quite as straightforward for self-employed workers as it is for employees. If you’ve ever worked for an employer, you may already know that employees are entitled to Statutory Sick Pay (SSP) if they’re too sick to work and they meet the eligibility criteria. Some employees may also benefit from company sick pay schemes.
If you are self-employed, however, your entitlements may look very different. Your options will depend on the legal structure of your business.
Let’s take a look at how sick pay works for some common types of self-employment.
Limited company directors
If you have chosen to set your business up as a limited company, you - as a director - are viewed as an office holder and are classed as an employee for sick pay purposes. This means that you may be eligible for SSP. However, you must meet the following criteria:
- You must earn an average of at least £123 a week*
- You have been ill for at least four consecutive days (including non-working days)
When calculating your average weekly earnings, you need to take any money you earn from your business into account, including wages, dividends and directors fees.
SSP is paid at a rate of £116.75 per week. You can get it from the fourth day you’re off work and you can claim it up to a maximum of 28 weeks.
Sole traders, partners and freelancers
If you have gone down the route of becoming a sole trader (including a freelancer) or a partner, you will not be classed as an employee for tax purposes. This means that you will not usually be entitled to SSP. However, you may be eligible for Employment and Support Allowance.
What is Employment and Support Allowance?
Self-employed workers may be entitled to Employment and Support Allowance (ESA) if they meet certain criteria. This benefit is designed to support people who live with disabilities or health conditions that impact on their ability to work. It provides money to help with living costs if you can’t work, as well as support to return to work if you’re able to.
Employment and Support Allowance eligibility: who can apply?
ESA is open to applicants who are self-employed, employed or unemployed. You will need to have a disability or health condition that affects how much you can work in order to qualify for this support.
You’ll also need to:
- have paid enough National Insurance Contributions
- reside in England, Scotland or Wales
- be aged 16 or over
- be below the State Pension age.
How much do you get on Employment and Support Allowance?
The amount of money you’ll receive will depend on the status of your claim.
While your claim is being assessed, you can expect to receive:
- A maximum of £71.70 if you’re under 25 years old
- A maximum of £90.50 if you’re over 25 years old
The assessment rate usually lasts for 13 weeks but if your assessment takes longer than this, you’ll continue to receive this rate until a decision has been made on your claim or you no longer need ESA.
If your claim is accepted and you are found to be entitled to ESA, you’ll be categorised according to your fitness to work in future. If it’s decided that you will be able to return to work in future, you will be placed in the work-related activity group. If you aren’t able to work in the future, you’ll be put in the support group.
● Claimants in the work-related activity group can expect to receive a maximum of £90.50 per week.
● Claimants in the support group can expect to receive a maximum of £138.20 per week.
This payment will be made every two weeks.
Markel Business Hub
You can find more information regarding sick pay, including templates for employers, on the Markel Business Hub which Markel Direct customers can enjoy free access to.
How business insurance can help
At Markel, we provide business insurance for self-employed workers so you’re financially protected should the worst happen. For example, if you get injured due to an accident at work and find yourself unable to work as a result, our occupational personal accident insurance will provide you with weekly payments to support your income.
It’s also sensible to think about what you would do if one of your employees were to become ill or sustain an injury as a result of the work they do for you. In this case, it pays to have employers’ liability insurance in place. This insurance can help protect your finances if an employee makes a claim for compensation due to an illness or injury. If you have employees, by law you must have at least £5 million worth of cover in place.
*The figures mentioned in this article are correct as of May 2024. Please visit www.gov.uk for more information.