Understanding linked periods of sickness and how they affect payroll

When it comes to Statutory Sick Pay (SSP), most payroll teams are confident in calculating payments for a single period of absence.

However, what happens when an employee has more than one spell of sickness over a short space of time?

This is where linked periods of sickness come into play, and misunderstanding them can lead to errors in entitlement and payment.

What is a linked period of sickness?

A linked period of sickness arises when an employee has more than one absence due to illness, and those absences occur within an eight-week window of each other.

Crucially, for a period to be linked, each absence must qualify as a Period of Incapacity for Work (PIW).

A PIW is formed when the employee has been sick for at least four consecutive days, which can include non-working days.

So, two separate four-day illnesses, occurring a few weeks apart, can be linked for SSP purposes.

Why does this matter?

When periods of sickness are linked, the employee may not have to serve waiting days again, meaning SSP could be payable from the first qualifying day of the subsequent absence.

This can affect how much SSP is due, and when.

If the periods are not linked (i.e. more than eight weeks apart or one is not long enough to form a PIW), the standard three waiting days apply again, and SSP would only be paid from day four.

This rule is set out in section 152 of the Social Security Contributions and Benefits Act 1992 (the Act), and it remains an important consideration for anyone running payroll.

How payroll teams should handle this

·       Keep detailed absence records – Dates of all sickness absences should be recorded and reviewed together to assess whether they fall within the eight-week linking rule.

·       Check for PIW formation – Do not assume every absence counts. Only those lasting four or more consecutive days can be linked.

·       Use payroll software carefully – Make sure your system is set up to apply the linking rules correctly, especially when absences are close together.

·       Watch the SSP cap – All paid SSP counts towards the employee’s 28-week maximum entitlement, even when periods are linked.

Let’s say your employee was off sick from 1 to 7 March (seven days) and then again from 25 to 29 April (five days).

Because both absences lasted over four days and occurred within eight weeks, they are linked.

This means you:

·       Paid SSP from day four of the March absence.

·       Owe SSP from day one of the April absence (no new waiting days).

·       Must track how many total weeks of SSP have been used.

With potential legislative changes on the horizon such as abolishing waiting days and removing the Lower Earnings Limit, it is even more important to understand how the current rules work.

We recommend reviewing your absence and payroll procedures to ensure you are fully compliant and keeping good records.

If you are unsure whether an employee's absence qualifies as a PIW or whether periods should be linked, our payroll team is happy to help you.

Choose To Pay More?

Of course you may feel that, as a company, you want to pay more than the statutory minimum, to support your team and to make your company an attractive place that staff choose to work at – if you do this make sure that your treatment of different staff is consistent and have this policy included in employment contracts and the staff handbook.

Need help reviewing your payroll process for SSP compliance? Speak with our team today.