Freelancer & Self Employed Sick Pay Rules

Working for yourself comes with many benefits but it can also have drawbacks. One of the biggest downsides is the lack of employment rights, especially when it comes to being unfit for work and claiming sick pay.

In this guide, we explain the sick pay rules for self-employed and freelance workers and alternative forms of financial support which may be available to you.

Statutory sick pay rules

Statutory sick pay (SSP) is only available to eligible workers. To be able to claim SSP, an individual must be incapable of work by reason of illness or injury, or because they’re legally required to self-isolate, and they must also:

  • be classed as an employee
  • have already started work with their employer
  • earn an average of at least £120 per week before tax
  • have been ill or self-isolating for at least 4 days in a row, including non-working days.

The individual must inform their employer of their incapacity for work within any deadline set by the business, or within 7 days at the very latest. They will also be required to provide a fit note from their GP or hospital doctor certifying their inability to work, but only where they’re off sick for more than 7 consecutive days, again including non-working days.

If an individual is eligible for SSP, this will be paid by their employer at a rate of £96.35 per week, in the same way as their normal wages, for example, weekly or monthly, for up to 28 weeks. An employee may also be eligible for sick pay under an occupational sick pay scheme, although any contractual entitlement must not be less than the statutory minimum.

The number of days that an eligible employee can get SSP will depend on why they’re absent from work. In most cases, the entitlement to SSP will run from the fourth day of their sickness absence. This means the employee will get SSP for every day that they normally would have worked, except for the first 3 days, and continuing up to a maximum of 28 weeks.

If an employee is required to self-isolate because of COVID-19, even if they don’t have symptoms or haven’t tested positive themselves, for example, someone they live with has tested positive but the employee is not yet fully vaccinated, they could get SSP for every day they’re off work. The employee will need to provide an isolation note or notification from the NHS that they’ve been told to self-isolate because they’ve come into contact with someone with COVID-19. Employees will not, however, be eligible for SSP if they’re self-isolating after returning to the UK from a trip abroad and do not need to self-isolate for any other reason.

Self employed sick pay rules

Self employed individuals are not eligible for SSP. This means that if you’re working for yourself, for example, as a sole trader or freelance worker, you will not usually get sick pay.

However, if you’re a director of a limited company, and you’re classed as an employee of your own company, you may be entitled to claim SSP in the same way as other employees.

Any entitlement to SSP will therefore depend on the legal structure of your business, and whether or not you work under a contract of employment.

In addition, an individual may be deemed an employee for employment law purposes, and as such be eligible for SSP, but they may have a different status for tax purposes. Those on casual, short-term or zero-hours contracts may also be eligible for SSP, even if their employer says they are not, provided they meet the other qualifying conditions.

If you’re not eligible for SSP, either because you’re not an employee for employment law purposes, or because you’re a sole trader or freelancer, there are other sickness benefits that you could be entitled to.

You may be able to submit a claim for Universal Credit or Employment and Support Allowance (ESA). If you have a long-term physical or mental health condition, you may also be able to claim Personal Independence Payment (PIP). Equally, employees may be able to claim these benefits once they’ve exhausted any SSP entitlement.

Self employed sick pay rates

The self employed sick pay rates that you may qualify for will depend on the type of benefit claimed and the level of any personal savings that you may have. You may be able to claim Universal Credit at the same time, or instead of, ESA. You may also be able to claim PIP in addition to either of these benefits.

Universal Credit

Universal Credit is a payment from the state to help with your living costs and is paid monthly. This will be made up of a standard allowance and any extra amounts that apply to you, for example, if you have a disability or health condition which prevents you from working, or if you have children or need help paying housing costs.

The monthly standard allowance from 6 October 2021 is:

  • Single and aged under 25: £257.33
  • Single and aged 25 or over: £324.84
  • In a couple and you’re both aged under 25: £403.93 (for you both)
  • In a couple and either of you are aged 25 or over: £509.91 (for you both)

You may get more money in addition to your standard allowance if you’re eligible.

If you have a disability or health condition

You may be required to undergo a Work Capability Assessment to determine how your disability, or physical or mental health condition, affects your ability to work. Depending on the outcome of this assessment you may be eligible for an extra monthly amount on top of your standard allowance of £343.63.

If you have children

If you have either 1 or 2 children, you’ll get an additional amount for each child. If you have 3 or more children, you’ll get an additional amount for at least 2 children. You can only get extra money for more children if they were born before 6 April 2017 or you were already claiming for 3 or more children before this date. Universal Credit will no longer pay you extra for a third or subsequent child born on or after 6 April 2017, unless special circumstances apply. You’ll get an additional amount for any disabled or severely disabled child, regardless of how many children you have or when these children were born.

The monthly rates are:

  • For your first child born before 6 April 2017: £282.50
  • For your first child born on or after 6 April 2017: £237.08
  • For any second child and other eligible children: £237.08 each
  • For a disabled or severely disabled child: £128.89 or £402.41

If you have housing costs

You could get money to help pay towards your housing costs. How much you get will depend on both your age and circumstances. The payment can cover rent and even some service charges. If you’re a homeowner, you might instead be able to get a loan to help with any interest payments on your mortgage or other loans you’ve taken out for your home.

Employment and Support Allowance

You can make a claim for Employment and Support Allowance (ESA) if you have a disability or health condition that affects your capacity to work. You may also be able to claim ESA if you’ve been unable to work while self-isolating because of COVID-19. ESA is payment from the state to help with living costs and is paid every 2 weeks.

The new Style ESA is a contributory benefit. This means you will need to have paid or been credited with enough National Insurance contributions in the two full tax years before the year you’re claiming in, either through employment or self–employment. If you’re eligible for ESA, you’ll earn Class 1 National Insurance credits to help towards your state pension.

How much ESA you will get if you’re unfit for work will depend on how old you are, whether you’re able to get back into work at some point and what stage your application is at. While your claim is being assessed, you’ll usually be paid an ‘assessment rate’ for a period of 13 weeks. If it takes longer to assess your claim, you’ll continue getting this rate until you get a decision or until your claim is due to end. The assessment rate is:

  • up to £59.20 per week if you’re aged under 25
  • up to £74.70 per week if you’re aged 25 or over.

After you’ve been assessed, if you’re entitled to ESA you’ll be placed into one of two groups. If you’ll be able to get back into work at some point in the future, you’ll be placed in the work-related activity group. Otherwise, you’ll be placed in the support group. You’ll get:

  • up to £74.70 per week if you’re in the work-related activity group
  • up to £114.10 per week if you’re in the support group.

After you’ve made your ESA claim, as with Universal Credit, you’ll be told if you need to have a Work Capability Assessment. This assessment is used to determine if your illness or disability affects how much you can work. If you’re claiming both Universal Credit and ESA, you’ll only have one assessment. Your ESA payments can last for up to 365 days if you’re in the work-related activity group. There’s no time limit if you’re in the support group.

Personal Independence Payment

You will be eligible for a Personal Independence Payment (PIP) if you have a long-term physical or mental health condition or disability, and experience difficulty doing certain everyday tasks, such as washing or dressing, or have difficulty getting around. The PIP is designed to help with extra living costs and is paid every 4 weeks.

There are two parts to the PIP: a daily living part, if you need help with everyday tasks, and a mobility part, if you also need help with getting around. Whether you get either or both, and how much you get, will depend on how difficult you find daily living and mobility tasks:

  • Daily living part lower and higher weekly rates: £60 or £89.60
  • Mobility part lower and higher weekly rates: £23.70 or £62.55.

You may be invited to an assessment with a health professional if more information is needed to help determine how your condition affects your daily living and mobility tasks.

Income protection insurance 

While state benefits can provide a financial lifeline if you’re unable to work, it may be that the level of financial support provided may not be enough to cover all of your bills and outgoings, leaving you with a shortfall.

With this in mind, self employed workers may opt to take out insurance to protect their income should they get ill. This is known as income protection insurance for the self employed. Formerly known as permanent health insurance, income protection is an insurance policy that pays out if you’re unable to work because of either injury or illness.

Income protection policies usually pay out until retirement, death or your return to work, although short-term policies, which last for just one or two years, are also available at a lower cost. The terms of these types of policies can vary, but you can expect to receive up to 60% of your usual income with options for short-term or long-term plans.

Income protection is different to critical illness insurance, which pays out a lump sum if you fall seriously ill, although both types of insurance can be taken out together. Other options to provide financial cover in the event of incapacity for work, or even terminal illness, could include mortgage protection insurance or life insurance.

Self Employed Sick Pay FAQs

What benefits can I claim if I'm self employed?

If you’re self employed but unable to work, you may be eligible to claim Universal Credit and the new style Employment and Support Allowance, or both. How much you get will depend on the benefit claimed and your personal circumstances.

Do freelance workers get sick pay?

Freelancers are classed as sole traders and, as with any other self employed individual, are not eligible for statutory sick pay (SSP). This is because only employees can get SSP. They may, however, be able to claim certain state benefits.

Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal or financial advice, nor is it a complete or authoritative statement of the law or tax rules and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission.

Before acting on any of the information contained herein, expert professional advice should be sought.

Freelancer & Self Employed Sick Pay Rules 2
Taxoo is a leading business and financial resource aimed at supporting businesses by providing reliable information and resources that can save business owners time and money.

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