Statutory Sick Pay - Full SSP entitlement restored for agency workers

Written by Ian Congreave - Filed under: Sick Pay on November 3rd, 2008

By means of a minor change to the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, agency workers are entitled to be paid SSP from the start of their employment. The change is effective from 27 October 2008 and corrects a situation that came to light when the Court of Appeal, in a decision published on 27 June 2007, ruled that the statutory sick pay (SSP) legislation excluded agency workers from entitlement to SSP if they had less than three months’ continuous employment.

Schedule 11 to the Social Security Contributions and Benefits Act 1992 provides a list of situations where entitlement to SSP does not arise. As originally enacted, employees whose “contract of service was entered into for a specified period of not more than 3 months” were not entitled to SSP. This exclusion was subsequently removed by the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, when it became unlawful to discriminate in employment between permanent and temporary employees. However, those Regulations stated specifically that “these Regulations shall not have effect in relation to”

fixed term employees on government training schemes,
agency workers engaged under a fixed term contract, and
a fixed term contract of apprenticeship.

In the case under consideration by the Court of Appeal, Commissioners for HMRC v Thorn Baker Limited and Others, two agency workers were refused SSP on this basis by Thorn Baker, the agency that had placed them in their jobs. HMRC’s argument, that the changes made by the 2002 Regulations were not intended to prevent any agency workers from qualifying for SSP, were rejected by the judges. The court held that “the Regulations maintained the restriction on entitlement to statutory sick pay in relation to agency workers on short term assignments.”

HMRC subsequently announced that, as it had never been the policy intention to deprive short-term employees of the right to statutory sick pay, the legislation would be corrected. Accordingly, amendment Regulations prepared by the Department for Work and Pensions have corrected the situation from 27 October 2008. The 2002 Fixed Term Employees Regulations continue not to apply to agency workers, except for the removal of the three-month exclusion. The same change has also been made to the corresponding Northern Ireland Regulations.

The new entitlement applies to any new period of incapacity for work (PIW) that starts on or after 27 October 2008. It does not apply to a PIW on or after 27 October 2008 that is linked to a PIW before this date and which was disallowed because of the exclusion of agency workers from SSP. The liability to pay the SSP falls on the secondary contributor, i.e. the person required to pay National Insurance contributions, or who would be required to pay them if the earnings were high enough.

Although, from 27 October 2008, agency workers engaged for less than three months are entitled to SSP, the exclusion continues to apply to

fixed term employees on government training schemes, and
a fixed term contract of apprenticeship.

The effect is that, if the contracts of such employees or apprentices are for a period of not more than three months, they are not entitled to SSP. However, they can become entitled to Statutory Sick Pay if,

in a single contract,
- they work longer than the original period specified and the total period actually worked exceeds three months, or
- the contract is extended for more than three months, from the time at which the extension is agreed.
two or more such contracts are separated by eight weeks (56 days) or less, and
- the total length of the contracts is more than 13 weeks
- the total period actually worked becomes more than 13 weeks or
- the contracts are extended so that together they can run for more than 13 weeks.

Further information:
The Fixed-term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008
Agency workers and statutory sick pay eligibility

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Written by Ian Congreave -

Filed under: Sick Pay on November 3rd, 2008