Sickness benefit

What it means

During incapacity for work the employer pays income compensation for the first ten days; from the eleventh the Social Insurance Agency pays sickness benefit.

The amount derives from the daily assessment base, meaning the income on which contributions were paid. Understated pay therefore shows up here too, not only in a future pension.

Sickness benefit concerns the illness or injury of the insured person themselves. When an employee looks after a sick child or family member, it is nursing benefit, which the Social Insurance Agency pays from the first day, and the employer pays no sick pay for those days. Both benefits belong to sickness insurance, but in payroll they are recorded as two different obstacles.

How it works in practice

The employee reports incapacity without delay; the process is electronic today, so the employer sees the record in the system. Payroll treats it as an absence and it is logged in attendance.

Notice cannot be given during the protected period of incapacity, save for the exceptions the law lists. Plans for organisational change often overlook this.

A self-employed person has no employer to cover the first days and is entitled to sickness benefit only if sickness insurance is in place and contributions were paid on time. For the sole traders we look after we therefore check that the insurance arose and that payments go out on time, so a longer illness does not leave them without income.

What to watch out for

Compensation for the first ten days is the company’s cost, and long absences in a small team weigh on the budget. It is based on average earnings rather than base pay, so it runs higher than expected.

If the employer reports the wrong income to the Social Insurance Agency or sends the monthly report late, the benefit is calculated from the wrong assessment base or paid late. The employee then turns to the company, and putting it right means a corrected report, a top-up of the benefit and sometimes a fine for late reporting.