Sickness insurance

What it means

Sickness insurance is one of the branches of social insurance administered by the Social Insurance Agency. It protects insured people who cannot work, and lose income, because of illness, pregnancy or caring for a relative.

Sickness insurance pays four benefits: sickness benefit during temporary incapacity for work, carer’s benefit for looking after a sick family member, maternity benefit, and a compensatory benefit for a pregnant employee moved to lower-paid work.

Both employee and employer pay the premium on wages as part of contributions. A sole trader has compulsory sickness insurance only once compulsory social insurance for the self-employed has arisen; otherwise they can pay voluntary insurance.

How it works in practice

For employees, the employer pays income compensation for the first ten days of sick leave, and from the eleventh day the Social Insurance Agency pays sickness benefit. In payroll we therefore record the start and end of sick leave every month so that the compensation is calculated correctly and nothing is counted twice.

Benefits are calculated from the daily assessment base over the reference period, usually the previous calendar year. For clients planning maternity leave or longer treatment we check in advance that they have the required insurance period and what base the benefit will be calculated from.

For sole traders we monitor whether the insurance is in force and paid on time. They are entitled to sickness benefit only if they pay properly, and on the minimum assessment base the benefit is low too, so we work out with clients whether paying on a higher base would be worthwhile.

What to watch out for

A sole trader with contribution arrears is not paid sickness benefit until the debt is settled. During a longer illness that can mean losing all income, so we advise having no arrears at all with the Social Insurance Agency.

An employee on sick leave must not break the treatment regime, and the Social Insurance Agency may check on them. The employer, for its part, must not press a sick employee to work and must respect that, as a rule, an employee on sick leave cannot be dismissed by notice.