Payroll Essentials Frequently Asked Questions
I pay my staff without deduction for any sick pay. How do I record the Sick Pay?
Because different businesses treat sick pay in different ways, it has been necessary to create a few tools so that people can choose which one(s) suit(s) them. We have provided an example of the most popular treatment. This allows you to record SSC payments received by employees, they keep the SSC Sick Benefit cheque and you offset its value and pay them their full pay. If you want to treat sick pay in a different manner you should review these tools and decide how they can be used for your specific purposes. The key to remember is that Tax and Social Security are not charged on any sick benefit received from SSC. See also in the Payroll Help under General there is a topic called Sick Pay Treatment. In the Help we deal with the topic when the employee gives the SSC benefit cheque to the Company. There are two aspects with which to deal: 1. Recording the Sickness Paid on the Sickness / Holiday tab and 2. Record the sick benefit in order to deal with the refund of SSC and Tax deductions. To record either holiday or Sick absence you must select the Sickness / Holiday tab in the Pay detail and record either the hours or days (your choice - but this must always be the same unit) as either paid or unpaid. If you wish your employee to suffer no disadvantage this is how to do it: 1. Create a Pay Type something like Sick Pay Adjustment. 2. When the Employee gets their cheque from Social Secuiry you enter this in the Pay section but you must use a quantity of MINUS 1. You will have to use the minus on the numbers pad. This will have the effect of adjusting the amount paid by the amount received from SSC and reducing the Tax and SSC deductions. We will take an example where an employee normally gets paid 42.50 hours at a rate of £15.50 per hour. In this case normal pay would be 42.50 x £15.50 = £658.75. SSC would be deducted at 6% and say tax is 18%, the SSC would be £39.53 and the Tax would be £118.58. The resulting Final Pay would be £500.64. In our example if SSC pay £150 in benefit we complete the pay details as shown below by adding a pay element using the new Pay Type created but remembering to use the minua sign on the numbers pad. You will see that the overall effect of handling it this way is that the employee gets more money for being off sick. However, this is the effect of refunding the SSC and Tax deducted on the Sickness Benefit element of their pay. In the grid you can see that the net effect that you pay £186 less which is represented by £150 sick benefit and £36 saved from Tax and SSC. The employee gets £386.64 plus their benefit cheque of £150. This gives them £536.64 which is £36 more due to the Tax and SSC refunding.
Back to FAQ list ...