Temporary incapacity for work

What it means

Temporary incapacity for work is the state in which an employee cannot work because of illness or injury and a doctor certifies it. It is an excused obstacle at work, not leave the employee takes on their own.

The certificate is now created electronically: the doctor enters it into the Social Insurance Agency system and the employer sees it there with no paper form. The employee only reports the start and the end to their manager.

When the cause is a workplace injury, the incapacity is treated the same way for benefits, but the employer gains duties: the injury has to be recorded, investigated and reported, and the employee may have a claim against the employer for damages. So it is not enough to know that someone is absent; you need to know why.

How it works in practice

For the first ten days the employer pays sick pay out of its own funds; from the eleventh day the Social Insurance Agency pays sickness benefit. Both are computed from the assessment base, not from net pay.

Payroll has to mark the period as absence, reflect how a long absence affects the holiday entitlement and report the assessment bases correctly in the returns for the insurers. Days of incapacity must never be shown as time worked.

Sick pay for the first days is taxed in payroll as employment income, but no social and health contributions are due on it. When sick leave starts or ends around the month end, we close payroll only after checking the dates in the Social Insurance Agency system, so the days fall into the right month.

What to watch out for

A protective period runs during incapacity, and notice served within it is invalid. A company that dismisses someone on the day their sick leave began normally loses the dispute and pays wage compensation for the whole time it lasted.

Holiday cannot be taken during incapacity, and if an employee falls ill while on holiday, the holiday is interrupted. Payroll that leaves sick days booked as holiday pays holiday pay it should not, cuts the employee’s remaining entitlement, and the difference then has to be corrected across several returns.