income payment protection taken out be employer

Hi I have a client who is off on long term sick. He is still employed. After 12 weeks of OSP (which should have included SSP but employer denies this), the IIP kicked in. It is paid directly from the insurance provider, not the employer. Reg 66 seems to imply it is counted as unearned income, but does not stipulate whether this has been taken out by the employer or employee. The amount is still subject to tax, NI contributions and pension contributions so should it be treated as earned income? Any ideas anyone? Many thanks

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