There are many benefits to working through an umbrella company for contractors in the UK.
By employing the contractor, the umbrella company subsequently takes on the contractor’s invoicing duties, pays the contractor a salary, calculates and deducts their tax contributions and entitles them to statutory benefits such as sick pay.
Umbrella company sick pay is a huge appeal for many contractors. After all, nobody can predict the future, so having the security of paid sick leave is a welcomed safety net to many.
That’s why thousands of contractors choose the umbrella route. Operating through an umbrella company gives contractors the freedom and flexibility that is part and parcel of contracting, whilst also giving them the security of knowing that if the unexpected happened, they will qualify for statutory rights.
So, what exactly are contractors entitled to when it comes to umbrella company sick pay? In this guide, Umbrella Broker outlines everything you need to know about your statutory rights as an umbrella contractor.
What is umbrella company sick pay?
When a contractor chooses to work with an umbrella company, they are in turn made an employee of that company.
As an employee, the contractor qualifies for a range of statutory benefits, including paid leave should they fall ill.
So, unlike in the case of a limited company contractor, if the contractor is too sick to carry out the contract, whether that be for 1 week or 28 weeks, they will receive paid leave for the time they cannot work.
How much is umbrella company sick pay?
The standard rate of sick pay is £95.85 per week, covered for up to 28 weeks. This is the case for all UK employees.
What entitles me to umbrella company sick pay?
You will qualify for umbrella company sick pay if you meet the following criteria:
- You have been ill for 4 consecutive days, including weekends. However, you will only be paid for the days you would have been in work. These are known as qualifying days.
- You must be earning an average of £120 per week before tax and National Insurance. This is worked out over an 8-week period. If you have recently started a job and have not yet received 8week’s pay, you can still qualify for sick pay.
- You must notify the umbrella company of your illness within 7 days.
- If your illness lasts longer than 7 days, you will need to provide a sick note from your doctor or GP.
You will not be eligible for sick pay if the following applies to you:
- You are receiving statutory maternity or paternity pay
- You have received the maximum of 28 week’s sick pay
- You are self-isolating only because of the fact that you have entered or returned to the UK and do not need to isolate for any other reason
Umbrella company sick pay and COVID-19
As we are living through unprecedented times, it is only natural that many contractors will be worrying about the global pandemic and how it could impact their work.
That’s why it’s important to understand exactly what you are entitled to when it comes to umbrella company sick pay at this time.
Contractors that have to self-isolate because they, or someone they live with, exhibits covid-19 symptoms or have tested positive for the virus, will automatically qualify for statutory sick pay.
Likewise, if you are required to self-isolate because you have been notified by NHS authorities that you have been in touch with someone with the virus, you will also receive statutory sick pay because you are forced to self-isolate.
Contractors can acquire an Isolate Note from NHS 111 online if they have to isolate for more than 7 days. This acts as proof to the umbrella company that you have been asked to self-isolate and cannot attend work.
The same goes for those contractors that have to shield to protect themselves and therefore cannot work. These contractors will receive a letter from their doctor notifying them of this which acts as proof to your umbrella company that you can’t work.
So, if the unexpected does happen to you, you can be safe in the knowledge that you can receive help and support in the form of umbrella company statutory sick pay.
Other statutory benefits
As well as sick pay, there are a range of other statutory benefits that umbrella contractors are eligible for, these include:
- Holiday pay: umbrella contractors qualify for paid holiday pay. This is also a big appeal for many contractors, meaning they can take a well-earned break without having to miss out on income. Umbrella contractors are entitled to a minimum of 5.6 weeks’ paid holiday each year pro-rata. This is in line with the minimum requirement for PAYE workers in the UK. The amount of holiday pay you will receive is the same as your basic rate of pay. This is what you are paid by the umbrella company, not what you charge the client.
- Maternity and paternity pay: umbrella contractors also qualify for maternity or paternity leave. The amount you will be paid is worked out based on your salary. For maternity leave, in the first 6 weeks, you will be paid 90% of your average weekly pay. For the following 33 weeks, you will be paid either 90% of your average pay or £151.20 per week depending on which amount is lowest. For paternity leave, you are eligible to take 1-2 weeks’ paid leave. This is also set at 90% of your weekly pay or £151.20, depending on which is lowest.
- Workplace pension: finally, umbrella company contractors are also entitled to a workplace pension.
Now you know what your statutory rights are as an umbrella contractor, it’s time to choose the best umbrella company for you.
