Freelancers and Sick Pay Basics
TL;DR:
- Freelancers don't get automatic sick pay like employees do
- You need to create your own safety net through savings or insurance
- Many freelancers build sick pay costs into their day rates
- Planning ahead is the only way to avoid financial stress when illness hits
- Being upfront with clients about your rate structure builds trust
When you're freelancing, there's no HR department sending you a payslip when you're laid up with flu. You're on your own when it comes to covering sick days, which means getting organised before you need it.
Creating Your Own Safety Net
The most straightforward approach is building a dedicated fund for sick days. Work out how many days you're typically ill each year (most people average 4-6 days) and multiply that by your daily rate. That's your target fund.
If you prefer the insurance route, income protection policies can cover a percentage of your earnings after a waiting period. Shop around though – premiums and terms vary wildly between providers.
Building Sick Pay Into Your Rates
This is where most experienced freelancers land. Instead of scrambling for cover when you're unwell, factor sick pay into your standard rates from the start.
Here's the maths: if you work 220 days a year but need to account for 6 sick days, you're effectively earning across 226 days. Divide your target annual income by 220 working days, not 226. The difference covers your sick pay.
The bonus here is that clients never see a separate line item for sick pay. It's just part of your professional rate structure.
Managing Client Expectations
When you're unwell, let clients know as early as possible. Most understand that illness happens, especially if you've been professional about deadlines in the past.
Having backup plans helps too. Whether that's a trusted freelancer who can step in, or simply being realistic about project timelines from the start, a bit of forward planning goes a long way.
FAQs
Do freelancers get any sick pay at all?
No automatic sick pay, but you might qualify for Statutory Sick Pay if you have a contract that meets specific criteria. Most freelancers don't qualify though.
What happens if I'm off sick for weeks rather than days?
This is where income protection insurance becomes essential. Serious illness can derail freelance income for months, so having proper cover matters more than worrying about a few days here and there.
Should I tell clients I've built sick pay into my rates?
You don't need to break down every element of your pricing, but being transparent about your professional approach to rate setting usually works in your favour.
Can I claim sick pay costs as a business expense?
Insurance premiums for income protection are typically allowable business expenses. Money you put aside in savings isn't deductible, but the interest earned might be taxable.
Jargon Buster
Income Protection Insurance – Cover that pays a percentage of your income if you can't work due to illness or injury, usually after a waiting period
Statutory Sick Pay (SSP) – Government-mandated minimum sick pay that some freelancers might qualify for under specific contract arrangements
Day Rate – The amount you charge for a full day's work, as opposed to hourly or project-based pricing
Wrap-up
Sick pay as a freelancer boils down to planning ahead and being realistic about the costs of running your own business. Whether you save money each month, pay insurance premiums, or build the costs into your rates, the important thing is having a system that works before you need it.
The reality is that getting ill when you're freelancing will always be more complicated than when you're employed. But with a bit of preparation, it doesn't have to derail your finances or damage client relationships.
Join Pixelhaze Academy to learn more about managing your freelance business effectively.