Your National Insurance Contributions entitle you to certain state benefits, such as statutory sick pay (SSP), statutory maternity pay (SMP) and unfair dismissal...

As an employee on PAYE you have the same rights as any other employee working in the UK and your National Insurance Contributions entitle you to certain state benefits.

Protection Against Unfair Dismissal
If you started work before 6th April 2012 and have been in continuous employment (i.e. working for the same employer) for at least one year you are automatically protected against unfair dismissal. Employees who started work on or after 6th April 2012, gain protection against unfair dismissal after two years of continuous employment.

Statutory Sick Pay (SSP)
As an employee you are entitled to SSP if you are sick for three days or more.

  • Normally the three waiting days do not include non-working days (weekends or days not normally worked)
  • Working days lost prior to SSP commencing are paid at your employer’s discretion
  • Your employer may be able to reclaim some of the costs from the state

Statutory Maternity Pay (SMP)
If you are pregnant and have been working for the same employer for at least nine months prior to the baby’s due date your employer is obliged to administer SMP on your behalf.

If you choose to resume your employment following your maternity leave you are fully entitled to do so, with the same terms and conditions as before. In most cases your employer can reclaim all costs of operating and paying SMP from HMRC.

Statutory Adoption Pay (SAP)
If your are adopting a child you have a right to 26 weeks Statutory Adoption Pay (SAP), providing you have been in continuous employment (working for the same employer) for at least 26 weeks by the date the adoption is approved.

Statutory Paternity Pay (SPP)
Effective April 2003 new fathers are entitled to two weeks' Statutory Paternity Pay (SPP), with a right to a further 13 weeks of unpaid leave. In order to qualify you must have been in continuous employment (with the same employer) for at least 26 weeks (six months).

Redundancy Pay
You are entitled to redundancy pay if you have been in continuous employment for a minimum of two years, providing you are not on a fixed-term contract.

State Pension Contributions
By paying National Insurance Contributions you also qualify for State Pension contributions. The State Pension is divided into two parts:

  • The Basic State Pension
  • The State Second Pension

For more information you can either speak to an Independent Financial Advisor or contact the Pensions Helpline on 0845 3000 168.

Holiday Pay
All employees in the UK are entitled by law to 5.6 weeks holiday per year. For a full-time employee that is 28 paid days off per year, of which 4 weeks (20 days) is standard leave and 1.6 weeks (8 days) is all 8 of the bank holidays. 

BEWARE: You Could Lose Out If Your Employer Cuts Corners!
If your employer does not register for PAYE or if they register but only declare part of your salary in order to save themselves money it will directly affect your full entitlement to the above and other state benefits. Also, remember that you will need evidence of declared income in the form of payslips to get a personal loan, mortgage or provide a financial reference to a landlord.

It is never in your interest to agree to any illegal tax-saving arrangement with your employer!

information for domestic workers

Statutory Sick Pay (SSP)

When your employee is off sick for longer than three days you have the responsibility as their employer to administer Statutory Sick Pay (SSP) on their behalf. The first three consecutive days (excluding days not normally worked) of illness are known as 'waiting days' and any payment during this period is at your discretion. From the fourth consecutive day SSP can be paid instead of, or as a part of the normal rate of pay. Please refer to our Rates and Thresholds page for details of the current SSP rate.

Changes to the law from 6 April 2014

From the start of the tax year 2014/15, The Percentage Threshold Scheme (PTS) which allowed, in certain circumstances, employers to recover SSP has been abolished. Employers will no longer be to reclaim SSP although recovery of unclaimed SSP for previous tax years may be possible for a limited period. In replacement of the PTS, the government have announced they will be moving the funding into a new scheme as part of the cross-government Health, Work and Wellbeing Initiative. Under this new scheme, which is expected to launch in 2015, help will be made available to employees who have been incapacitated for four weeks or more, to get them back to work.

Introducing an incentive

Incentives are not a legal requirement but because many employers are dependent on their employees coming to work an increasing number now offer an incentive instead. An incentive can be a Friday afternoon off, a voucher or a meal at a local restaurant. If you decide to offer an incentive make sure you include the terms in the employment contract.