Can self-employed get sick pay?

At some point in your working life, there may be a time where you are unable to work due to illness. Being an employee means that you have the safety net of a salary and sick pay benefits, but what about when you are your own boss? If you are self-employed, can you get sick pay? This article will look at the help available to self-employed people for sick leave and answer the following questions:

• What is statutory sick pay?
• Are self-employed people able to get sick pay?
• What is Employment and Support Allowance (ESA)?
• How much is ESA?

Statutory Sick Pay is when employers pay an employee who is unable to work due to illness. The employee can be paid Statutory Sick Pay as long as they pay National Insurance contributions and are off for longer than three days. For sick pay, you will receive £96.36 per week that you are unable to work because of illness, up to 28 weeks. Some companies may also have a sick pay scheme, often called an ‘occupational scheme’ and the details of how much you can get while off sick will be in your employment contract.

So if you are your own employer, how does sick pay work?

Whether you are able to get sick pay depends on how you are set up as a self-employed person and how your business is registered.

If you are a limited company director, you will be able to claim Statutory Sick Pay to cover a period of illness because you are an employee of your own company. You can start to claim Statutory Sick Pay after you have been sick for at least four days (including non-working days), as long as you earn over £120 per week. 

The only exception to this is if you are ill with coronavirus, as the government has allowed Statutory Sick Pay to be paid from the first day you are unable to work.

Sole traders and partners are not able to claim Statutory Sick Pay. This is because you are your own employer. There are other benefits that can cover you during a time of illness that leaves you unable to work, such as applying for the Employment and Support Allowance (ESA).

Employment and Support Allowance (ESA) is a benefit that is paid weekly to help you make ends meet until you can return to work from illness or if you are unable to work due to disability. This is a benefit you can claim from the Department of Work and Pensions (DWP) and is not the same as sick pay from an employer.

Like with any benefit, you have to meet certain criteria, such as:

• You are under state pension age (this is 66 as of 2021, but it can change).
• You have a disability or health condition that affects how much you can work or if you can work at all.
• You cannot be claiming Statutory Sick Pay or Statutory Maternity Pay through an employer at the same time as ESA.
• You can not be claiming Jobseekers’ Allowance at the same time as ESA.

You also need to have paid enough National Insurance contributions through your self-assessment tax return in the last two to three years to qualify. So, if you have been trading for less than a year, you may need to check your eligibility for this particular benefit, which we will cover below.

The most relevant type of benefit for self-employed people who are off with an illness is the ‘New Style’ ESA. To qualify for New Style ESA, you have to have made enough National Insurance contributions, either as an employee at another business before you started your own company or through your self-employed tax return. You can check your record of National Insurance contributions through HMRC to see if you have missed any payments. If you have gaps in your contributions, there may be ways to make this up through voluntary contributions.

To claim New Style ESA, you need to fill out a claim form, contact the Universal Credit helpline, and provide the following information at an appointment with an advisor:

• A doctor’s note for your illness that explains why you are unable to work
• Both ID and proof of address (e.g. passport, drivers licence, utility bill)
• Proof of any pension or health insurance payments you already receive

Your assessment with a Department of Work and Pensions advisor will determine how much you can get through ESA. The amount you can receive will differ depending on certain factors in your application, such as your age and what type of illness you have, because some long-term illnesses could affect the likelihood of you being able to return to work full-time again.

If you can only return to work part-time due to your illness, then you can still make up some of your income and claim ESA as your ‘sick pay’. This is acceptable for the DWP as long as you work 16 hours or less and earn less than £143 per week. 

Financial worries can be a big part of any self-employed person’s working life. An app like Countingup could help make it easier for you to manage your finances.

Countingup provides a business current account and accounting app that offers instant invoicing and automated bookkeeping features. It is saving business owners hours of time-consuming work and helping thousands keep on top of their finances. 

Find out more here to save yourself hours of accounting and financial admin. Countingup can take care of your accounting and give you one less thing to worry about.