7. Sick pay and sickness absence
Agency workers on contracts of three months or less are not entitled to statutory sick pay
The Social Security Contributions and Benefits Act 1992, which sets the terms under which employers must pay Statutory Sick Pay (SSP), initially excluded employees on contracts of three months or less from receiving SSP. This exclusion was removed by the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations (FTER) in 2002.
Her Majesty’s Revenue and Customs (HMRC), which is responsible for deciding whether employers must pay SSP, claimed that an agency was obliged to pay SSP to an agency worker on a three-month contract. Among its arguments was that, since agency workers have to pay National Insurance contributions (which go towards paying for SSP), they should also be entitled to benefit from it.
The Court of Appeal held that, as agency workers are specifically excluded from the FTER, the exclusion still applies to them — so those on contracts of three months or less are not entitled to SSP.
(Note that agency workers do become entitled to SSP if their work is extended beyond three months; visit www.hmrc.gov.uk for details.)
HMRC v Thorn Baker Ltd and others  EWCA Civ 626
See also NCH Scotland v McHugh and O’Hanlon v Commissioners for HM Revenue & Customs in Chapter 6 on sick pay for disabled workers.