Contractor’s Guide to Umbrella Company Sick Pay

Umbrella company statutory sick pay: What you need to know

If you are an umbrella contractor or are considering taking this route, it’s important to understand exactly what benefits you are entitled to when it comes to your statutory rights such as sick pay. After all, nobody can predict the future, so knowing what rights you have can help ease your mind should the unexpected happen.

In this guide, Umbrella Supermarket explains what your statutory rights are as an umbrella contractor, from whether you qualify for sick pay to the range of other benefits available to you, to equip you with everything you need to know.

Umbrella Company Sick Pay

An umbrella company makes the contractor their employee. This means they can offer the contractor a range of benefits - from being taxed through the PAYE system meaning no complex tax returns, paying them a regular salary and giving them statutory rights.

Among these statutory rights is the entitlement to sick pay.

So, if a contractor should unexpectedly fall ill and cannot work, they will receive paid sick leave from the umbrella company. This is in contrast to the likes of limited company contractors, for example, who are self-employed and therefore do not receive paid sick leave. In the instance that these limited company contractors fell ill, they would have to take unpaid time off their contract work.

How much sick pay are contractors entitled to?

The standard rate of umbrella company sick pay is £95.85 per week up to 28 weeks. This will be paid to the contractor by the umbrella company if they are too ill to work.

Are all umbrella contractors eligible for sick pay?

Umbrella contractors will only receive sick pay if they meet certain criteria.

Firstly, a contractor must have been ill for 4 consecutive days which includes weekends. That means if a contractor is ill from Friday through to Monday, they are eligible for sick pay.

However, the first 3 days of illness do not qualify for payment and you will only ever be paid for the days they would have been in work, in this case, Monday and Friday. These are known as ‘qualifying days.’

To be eligible for sick pay the contractor must earn an average of £120 per week before tax and National Insurance. This is worked out over 8 weeks ending with the last date you were paid before your illness began. You will still qualify if you have recently started your job and haven’t yet received 8 weeks’ pay.

Contractors are required to tell the umbrella company that they are ill within 7 days. If you are ill for longer than 7 days you will need a sick note from your doctor.

There are a few exceptions which will mean you won’t qualify for statutory sick pay:

  • If you have received the maximum amount of statutory sick pay for 28 weeks
  • You are receiving statutory maternity pay
  • You are self-isolating having entered or returned to the UK and do not need to self-isolate for any other reason

Do I receive statutory sick pay if I am required to self-isolate? 

Contractors that are required to self-isolate because they, or someone they live with, shows coronavirus symptoms or have tested positive will be eligible for statutory sick pay.

If you have been advised by the NHS authorities that you have been in touch with someone with the virus, or someone in your support bubble has tested positive, you will also qualify for statutory sick pay as you will be required to self-isolate.

You can get an Isolation Note online from NHS 111 if you are off work for more than 7 days which acts as proof that you have been asked to isolate.

Likewise, if you are required to shield due to the coronavirus, you will receive a letter from your doctor notifying you of this which holds as proof of your eligibility for statutory sick pay for the time you cannot work.

In both cases, you can receive statutory sick pay for every day you are off work.

So, that’s what umbrella company statutory sick pay looks like, so what other benefits are contractors entitled to?

Umbrella company: Other statutory benefits

 

Holiday Pay

As well as sick pay, umbrella contractors also receive holiday pay.

Every PAYE worker in the UK is entitled to 5.6 weeks’ paid holiday each year, this is worked out pro-rata if you work part-time. This includes all umbrella contractors who are paid through the PAYE system.

This translates into:

  • If you work 5 days a week you will receive 28 days’ holiday
  • If you work 4 days a week you will receive 22.4 days’ holiday
  • If you work 3 days a week you will receive 16.8 days’ holiday

 

The amount of holiday pay you receive is the same rate as your basic pay. This is the rate you are paid by your umbrella company, not the rate you charge the client.

If like many contractors, you work differing hours or days, your holiday pay will be worked out as an average based on the 12 weeks running up to your holiday.

Maternity/Paternity Pay

Under an umbrella company, contractors will also receive maternity and paternity pay.

With maternity pay, the amount you qualify for is based on your salary. This is worked out as follows:

  • For the first 6 weeks, you will receive 90% of your average weekly pay.
  • For the next 33 weeks, you will receive either 90% of your average pay or £151.20 a week based on which amount is lowest.

 

For paternity leave, contractors can take 1-2 weeks’ paid leave following the birth of the child. Paternity pay is also set at a rate of 90% of the contractor’s average weekly pay or £151.20, depending on which amount is lowest.

Now you know your rights, find the best umbrella company to work with

Using Umbrella Supermarket’s award-winning quick and easy umbrella company comparison tool, you can find the best umbrella company for your needs in just 2 minutes. Try it yourself and find your perfect match today.

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