Working for yourself has so many benefits with the big one being the flexibility to work how you want. But it can also have some big worries attached such as, “what happens to my income if I get sick?”
One benefit of being an employee is that you know exactly what will happen if you have to take time off sick, as it’s all laid out in your employment terms and you can always ask someone if you’re not sure. When you’re your own boss, you’re the one in charge so you don’t have anyone to ask. Thankfully, we’re pretty clued up on how these things work – so you can ask us instead.
Do I get sick pay when I’m self-employed?
As an employee of your own Limited Company, you’re entitled to Statutory Sick Pay (SSP). Currently, this stands at £94.25 per week for up to 28 weeks, once you have been off sick for four or more days in a row.
The idea is that you pay yourself SSP and then reclaim it from payroll liabilities or HMRC directly as an employer. However, because most contractors opt for a low salary, high dividends model when it comes to paying themselves, this can result in little or maybe even no payroll liability. If this is the case for you, you may need to discuss your options with your accountant or HMRC.
Can I get sick pay as a sole trader?
As a sole trader (which will apply to freelancers moreso than contractors) you are not entitled to SSP, but you may be entitled to Employment and Support Allowance (ESA) for longer term health conditions that affect how much you can work. You can find out more about ESA from GOV.UK.
What other options do I have?
A big issue we see time and again with contractors and freelancers is that SSP and ESA don’t come anywhere near their usual income, resulting in many contractors working when sick and making themselves worse. We would always advise contractors:
- Have some savings set aside to cover your outgoings if you’re ill
- Ensure, where relevant, that your Limited Company has a healthy cash balance
- Take out contractor insurance that includes Occupational Personal Accident Cover (ours does) so that your income is covered should you have to take time off to recover from a work-related accident
And, of course, there are steps you can take to ensure you stay fighting fit and don’t need to take time off sick.
- Maintain a healthy diet
- Take up regular exercise
- Get the flu jab every winter. This can be done at most high street pharmacies for around £20 – some people are eligible to have it for free through the NHS
- Check you’re up to date with other routine immunisations and see if there are ones that might be appropriate for you. For instance, if you’ve never had chickenpox and have small children who are likely to bring it home, you may want to look into the vaccine
- Get a good night’s sleep every night
- Allow yourself to take rest days so you don’t get run down
If you’d like to talk to us about Occupational Personal Accident Cover and other aspects of contractor insurance, give us a call on 01242 808740.