Can I Claim SSP Back as an Employer?

If you’re wondering whether you can claim SSP back as an employer, the short answer is no. The UK government permanently removed the ability for most employers to reclaim statutory sick pay costs in April 2014, fundamentally changing how businesses manage sickness-related expenses. While a temporary rebate scheme existed during COVID-19, this ended in March 2022, leaving employers to absorb all statutory sick pay costs as part of their regular employment expenses.

Understanding these changes and their implications is crucial for effective business planning, particularly for small employers who may face significant financial pressure from employee sickness absence. This comprehensive guide will explain the current rules, explore what changed historically, and provide practical strategies for managing SSP costs without the ability to reclaim them from the government.

The Quick Answer

No, employers generally cannot claim back Statutory Sick Pay (SSP) from the government. This fundamental change occurred in April 2014 when the Percentage Threshold Scheme was abolished, transferring the full financial responsibility for statutory payments to employers.

The only exception was a temporary COVID-19 rebate scheme that operated from March 2020 to March 2022, allowing small employers with fewer than 250 employees to reclaim up to two weeks of COVID-related SSP per eligible employee. However, this emergency measure has now closed permanently.

Today, employers must budget for SSP costs as part of their standard employment expenses, similar to how they plan for normal wages, tax and national insurance contributions, and other statutory payments like statutory maternity pay or statutory adoption pay. This shift has particularly impacted small employers who may lack the financial reserves to easily absorb unexpected sickness costs.

Key changes affecting employers:

• April 2014: Percentage Threshold Scheme removed permanently
• March 2020-2022: Temporary COVID-19 SSP rebate for small employers
• Current position: No general scheme to reclaim SSP exists
• Future: No government plans to reintroduce SSP recovery mechanisms

Historical Context: When SSP Was Reclaimable

Before April 2014, UK employers could reclaim SSP through the Percentage Threshold Scheme (PTS), which provided crucial financial support for businesses facing high levels of employee sickness. Under this scheme, employers could recover SSP costs that exceeded 13% of their gross Class 1 national insurance contributions liability for the tax year.

The PTS was designed to protect employers from unexpected financial burdens arising from employee illness, particularly benefiting small employers who might struggle to absorb significant sick pay costs. Employers claim under this scheme by submitting detailed records of SSP payments and demonstrating that their annual SSP costs exceeded the qualifying threshold.

How the Percentage Threshold Scheme worked:

1. Threshold calculation: 13% of annual gross Class 1 national insurance contributions
2. Recovery mechanism: Claims submitted annually through employer returns
3. Documentation requirements: Detailed records of all SSP payments and periods
4. Benefit focus: Primarily supported small employers with high sickness rates

The scheme was abolished as part of government efforts to simplify statutory payments administration and reduce public spending. Policymakers argued that transferring SSP costs entirely to employers would create incentives for better absence management while reducing administrative overhead for both businesses and government agencies.

The COVID-19 Exception

From 26 March 2020 to 17 March 2022, the government introduced a temporary SSP Rebate Scheme specifically to support small employers during the coronavirus pandemic. This emergency measure recognized that COVID-19 created unprecedented levels of sickness absence that could severely impact business finances.

COVID-19 rebate scheme details:

• Eligibility: Employers with fewer than 250 employees as of 30 November 2021
• Coverage: Up to 14 days (two weeks) of COVID-related SSP per employee
• Claim period: Within six months of making the SSP payment
• Application process: Online claims through HMRC’s dedicated portal
• Documentation: Evidence of COVID-related absence and SSP payments required

The scheme was deliberately narrow in scope, covering only coronavirus-related absences rather than general sickness. Employers had to demonstrate that the employee’s absence was specifically due to COVID-19 symptoms, self-isolation requirements, or government shielding advice. This targeted approach helped control costs while providing meaningful support during an exceptional health emergency.

Claims under the COVID-19 scheme required careful documentation, including records showing the employee met SSP eligibility criteria, evidence of the COVID-related reason for absence, and accurate calculation of the rebate amount. Many employers used payroll software to track these claims efficiently and ensure compliance with the strict documentation requirements.

Current SSP Rules for Employers in 2025

Under current legislation, employers must pay SSP directly to eligible employees without any mechanism to reclaim these costs from the government. The SSP rate is £118.75 per week from April 2025, representing a modest increase from previous years but still below average earnings for most workers.

Essential SSP requirements for employers:

• Weekly rate: £118.75 per week (subject to annual review)
• Maximum duration: 28 weeks per period of incapacity for work
• Waiting days: First three consecutive days are unpaid (non working days don’t count)
• Payment method: Alongside regular wages through PAYE system
• Tax treatment: SSP is subject to tax and national insurance deductions

Employees can receive SSP for up to 28 weeks during each period of incapacity, potentially costing employers £3,185 per employee (28 weeks × £118.75) for a single extended illness. This maximum liability represents a significant financial commitment that employers must factor into their employment cost budgets and cash flow planning.

SSP is payable after four consecutive days of sickness, including weekends and other non working days in the calculation. For example, if an employee works Monday to Friday but falls ill on Thursday, the qualifying days would include Thursday, Friday, Saturday, and Sunday, making Monday the first day for SSP payment if the illness continues.

Who Qualifies for SSP

Understanding SSP eligibility criteria helps employers accurately determine their payment obligations and avoid costly compliance errors. The rules apply broadly across different employment arrangements, ensuring most workers receive financial support during illness periods.

Employee eligibility requirements:

• Earnings threshold: At least £125 per week average earnings before tax
• Sickness duration: Four or more consecutive days of incapacity for work
• Employment status: Employees on employment contract (not self-employed contractors)
• Notification requirements: Inform employer within company rules or seven days maximum

The lower earnings limit of £125 per week captures most part-time and zero-hours contract workers, ensuring broad coverage across different employment arrangements. This threshold is reviewed annually alongside other benefit rates and may increase in line with inflation or government policy priorities.

Sickness certification requirements:

• Days 1-7: Employee self-certification sufficient
• Day 8 onwards: Medical fit note from qualified healthcare professional required
• Fit notes: Must specify period of incapacity and any recommended adjustments
• Record keeping: Employers must retain all certification documents for compliance

SSP applies equally to full-time employees, part-time workers, and those on zero-hours contracts who meet the earnings and sickness duration criteria. This inclusive approach ensures consistent protection across different employment arrangements, though it can create significant costs for businesses with high absence rates or vulnerable worker populations.

Impact on Employers and Small Businesses

The inability to reclaim SSP creates substantial financial pressures, particularly for small employers who may lack the resources to easily absorb unexpected sickness costs. Unlike larger corporations that can spread these risks across many employees, small businesses often face concentrated financial impact when key workers become ill for extended periods.

Annual SSP cost scenarios for employers:

Small employers must particularly consider the cumulative effect of multiple employees receiving SSP simultaneously. During winter illness peaks or local health emergencies, several workers might qualify for sick pay concurrently, creating significant short-term financial pressure that could affect business operations and cash flow management.

Beyond direct payment costs, employers face administrative expenses related to SSP management, including payroll software updates, fit note processing, return-to-work interviews, and potential occupational health referrals. These indirect costs can be substantial for businesses without dedicated HR resources or sophisticated payroll systems.

Financial planning considerations:

• Budget allocation: Include estimated SSP costs in annual employment expense budgets
• Cash flow management: Maintain reserves for unexpected absence peaks
• Insurance options: Consider income protection policies for long-term absence coverage
• Absence monitoring: Implement systems to track patterns and identify cost control opportunities

Managing SSP Costs Without Reclaiming

Since employers cannot reclaim SSP, effective absence management becomes crucial for controlling costs while maintaining legal compliance and employee relations. Proactive strategies can reduce both the frequency and duration of sickness absence, delivering significant financial benefits over time.

Effective absence management strategies:

1. Clear absence policies: Define expectations, notification requirements, and return-to-work procedures
2. Early intervention: Prompt occupational health referrals for employees with recurring absence
3. Workplace adjustments: Address health and safety issues that may contribute to illness
4. Return-to-work support: Facilitate gradual return through phased hours or modified duties

Many employers find that investing in employee wellbeing programs, occupational health services, and workplace improvements can reduce overall absence rates sufficiently to offset program costs. These preventive approaches often prove more cost-effective than simply paying statutory sick pay without attempting to address underlying health and safety issues.

Professional payroll services can help ensure accurate SSP calculations and compliance with complex rules around linked periods, qualifying days, and certification requirements. Mistakes in SSP administration can result in HMRC penalties, employment tribunal claims, and additional administrative costs that exceed any potential savings from informal compliance approaches.

Alternatives to SSP Recovery

While employers cannot reclaim SSP from the government, several strategies can help manage the financial impact of employee sickness and provide better support for both business operations and worker welfare. These alternatives require careful evaluation of costs and benefits but can deliver significant value when properly implemented.

Income protection insurance represents one of the most effective ways to transfer long-term sickness risks away from direct employer funding. These policies typically cover a percentage of employee wages after an initial period, helping businesses manage extended absences that might otherwise create unsustainable financial pressure.

Key insurance considerations:

• Coverage scope: Percentage of wages covered and maximum benefit periods
• Waiting periods: Time before coverage begins (often 13, 26, or 52 weeks)
• Premium costs: Balance between coverage levels and affordable premium payments
• Claim procedures: Administrative requirements and medical evidence needed

Group income protection policies often provide better value than individual arrangements, particularly for small employers who can access competitive rates through trade associations or broker arrangements. However, employers must carefully review policy terms to understand exactly what costs are covered and how claims procedures work in practice.

Company Sick Pay vs Statutory Sick Pay

Many employers choose to offer enhanced company sick pay schemes that provide more generous benefits than the statutory minimum. While this increases direct costs, it can improve employee retention, reduce recruitment expenses, and demonstrate commitment to worker welfare that supports broader business objectives.

Designing effective company sick pay schemes:

• Enhanced rates: Higher weekly payments than statutory minimum
• Longer coverage: Extended periods beyond 28-week statutory maximum
• Graduated benefits: Full pay initially, reducing to SSP levels over time
• Integration requirements: Must include SSP entitlement as absolute minimum

Company sick pay policies must be clearly documented in employment contract terms to avoid disputes about entitlements and ensure consistent application across all eligible employees. Poorly drafted policies can create unexpected liabilities or discrimination claims if benefits are applied inconsistently.

Example company sick pay structure:

For more information on how companies manage attendance and absence, see the difference between absence vs attendance management.

Such graduated schemes recognize employee loyalty while controlling costs through service-related entitlements. However, employers must ensure all workers receive at least statutory sick pay entitlements regardless of service length or company sick pay provisions.

Compliance and Record-Keeping Requirements

Proper SSP administration requires meticulous record-keeping and compliance with detailed regulatory requirements. HMRC can audit SSP payments and impose penalties for errors, making accurate documentation essential for all employers regardless of size or sector.

Essential SSP records to maintain:

• Employee details: Names, national insurance numbers, and employment start dates
• Absence records: Precise dates of sickness periods and reasons for absence
• Certification: Self-certification forms and medical fit notes for all absence periods
• Payment records: Detailed calculations showing SSP amounts and payment dates
• Linked periods: Documentation of previous sickness absences within eight-week periods

All SSP records must be retained for at least three years after the end of the tax year in which payments were made. This extended retention period reflects HMRC’s audit powers and the need to resolve any disputes or compliance questions that may arise years after the original payments.

Payroll software integration:

Modern payroll software systems can automate many SSP calculations and compliance requirements, reducing administrative burden and minimizing error risks. Key features to look for include automatic qualifying day calculations, linked period tracking, and integration with fit note management systems.

Quality payroll software should handle complex scenarios like overlapping absence periods, part-time worker calculations, and integration with company sick pay schemes that exceed statutory minimums. Many systems also generate compliance reports and maintain audit trails that simplify HMRC interactions and employment tribunal preparations.

Common SSP Compliance Mistakes

Understanding frequent compliance errors helps employers avoid costly mistakes and potential legal disputes. Many issues arise from misunderstanding basic eligibility rules or inadequate record-keeping rather than deliberate non-compliance.

Frequent SSP administration errors:

1. Incorrect qualifying day calculations: Failing to properly count weekends and non-working days
2. Waiting period mistakes: Not applying three-day waiting periods correctly for new absence periods
3. Certification issues: Accepting inadequate sickness documentation or missing fit note requirements
4. Linked period confusion: Incorrectly handling absences within eight weeks of previous sickness
5. Payment timing errors: Late SSP payments or incorrect integration with regular wage payments

Many employers struggle with part-time worker calculations, particularly determining average weekly earnings and qualifying days for workers with irregular schedules. Professional guidance can be valuable for businesses with complex workforce arrangements or high absence rates requiring frequent SSP decisions.

Form SSP1 requirements:

When employers decide not to pay SSP, they must provide form SSP1 explaining the decision and informing employees about alternative benefit options like employment and support allowance. Failing to provide this form when SSP is refused can result in penalties and tribunal claims.

The form must clearly explain why SSP was refused and provide information about claiming other benefits if the employee remains unable to work. Common refusal reasons include insufficient earnings, inadequate sickness certification, or failure to meet notification requirements within company policies or legal deadlines.

Future Changes and Considerations

Significant changes to SSP rules are planned for April 2026, including removal of the three-day waiting period that currently prevents payment for the first three days of sickness absence. This change will increase employer costs but provide earlier financial support for employees facing illness.

Confirmed future SSP changes:

• April 2026: Removal of three-day waiting period for all sickness absence
• Under consideration: Elimination or reduction of lower earnings limit
• Ongoing review: SSP rates and maximum payment periods
• Policy monitoring: Impact of changes on small employers and absence patterns

The waiting period removal will require employers to pay SSP from the first day of qualifying sickness absence, potentially increasing annual SSP costs by 15-20% across all eligible absences. Businesses should factor these increased costs into their forward planning and budget preparations.

Government consultations continue to examine whether the lower earnings limit should be reduced or eliminated entirely, which would extend SSP coverage to more low-paid workers but increase employer liabilities accordingly. No firm decisions have been announced, but employers should monitor policy developments that could affect their future obligations.

Preparing for SSP Changes

Employers should begin preparing for increased SSP costs well before the April 2026 implementation date. This preparation should include budget adjustments, payroll system updates, and policy reviews to ensure continued compliance under the new rules.

Preparation checklist for SSP changes:

• Budget planning: Estimate increased SSP costs without waiting days
• Payroll systems: Ensure software can handle rule changes automatically
• Policy updates: Revise absence management procedures for earlier SSP payments
• Training requirements: Update HR and payroll staff on new calculation methods
• Insurance review: Consider whether income protection coverage needs adjustment

Many payroll software providers will issue updates to handle the rule changes automatically, but employers should confirm their systems will be ready before the implementation date. Manual payroll processes will require careful adjustment to ensure compliance with new calculation methods and payment timing requirements.

Impact assessment considerations: When assessing the impact of HR policies, it’s important to consider specific calculations such as calculating holiday allowance for part-time employees.

Businesses with high staff turnover or frequent short-term absences may see disproportionate cost increases when waiting days are removed. Retail, hospitality, and care sectors often experience higher absence rates that could significantly affect their SSP liabilities under the new rules.

Small employers should particularly assess their financial capacity to absorb increased SSP costs and consider whether additional insurance coverage or enhanced absence management programs might help offset the impact. Professional advice can be valuable for businesses concerned about their ability to manage increased statutory payment obligations.

Conclusion

The question “can I claim SSP back as an employer” has a clear answer: no, current UK law provides no general mechanism for employers to recover statutory sick pay costs from the government. This fundamental change, implemented in April 2014 with the abolition of the Percentage Threshold Scheme, shifted full financial responsibility for SSP directly onto employers.

While the temporary COVID-19 rebate scheme provided crucial support for small employers during an unprecedented health emergency, this exceptional measure ended in March 2022 and no similar schemes are currently planned. Employers must now treat SSP as a standard employment cost, similar to wages, tax, and national insurance contributions.

Effective SSP management requires proactive planning, accurate compliance, and strategic consideration of alternatives like income protection insurance and enhanced company sick pay schemes. With significant rule changes planned for 2026, including removal of the three-day waiting period, employers should begin preparing now for increased SSP obligations.

The key to successful SSP management lies in understanding your obligations, maintaining meticulous records, and implementing comprehensive absence management strategies that support both business objectives and employee welfare. While you cannot claim back SSP costs, proper planning can help minimize their impact on your business operations and ensure full compliance with evolving legal requirements.