Sick Pay Entitlement

Most employees who are absent from work due to illness are entitled to some kind of sick pay. Broadly speaking, an employees’ sick pay could take one of two forms, Statutory Sick Pay (SSP) or occupational sick pay. SSP is the legal minimum sick pay requirement, while occupational sick pay is a contractual term specific to the employer.

There are a number of instances when an employee may not qualify for either their employers’ occupation sick pay policy or even SSP. Similarly, sick pay entitlement can be affected due to contractual reasons or an employee failing to meet certain criteria.

Employers can easily over or under pay their employees which risks costing your company money or violating workers’ rights legislation, resulting in legal disputes with the employee.
Common pitfalls include not only the payment of sick pay while an employee is absent from work, but also the management of an employee’s return to work, or determining when and whether to terminate an employees’ contract.

Failing to meet your employer responsibilities, employee rights, and the specific entitlement criteria, can be costly to your business. To ensure you manage employee illness legally and efficiently, it is recommended you seek legal advice on your sickness policies and procedures.

SSP; employee eligibility and employer responsibilities

SSP is a basic legal requirement under UK law and the minimum most UK employees are entitled to.

Employees are eligible for SSP if:

  • The individual is classified as an employee and has done some work for the employer.
  • Illness has prevented them from attending work for 4 or more days in a row
  • The employees wage is £113 or higher per week
  • The employee informed the employer of their illness either within the notice period set out in their contract, e.g. by 9am in the morning of the first day, or within 7 days of falling ill if their contract does not specify a deadline
  • Once the employee has been ill for 7 days or more they provide the employer with a note from their GP

As a national legal employee entitlement, SSP is something which concerns every business owner. It is the minimum legal responsibility an employer has to provide income and support for employees unable to work due to sickness. Not providing SSP for eligible employees without offering an occupational sick pay alternative can result in legal disputes and court cases, making it essential that you understand the rights and responsibilities of both employer and employee.

If an employee qualifies for SSP and has been ill from work for 4 days or more in a row, their minimum entitlement is £89.35 per week for up to 28 weeks or until they return to work. Part-time employees’ SSP entitlement is worked out on a pro-rata basis.

Employees can cease to be eligible for SSP if they fail to uphold their responsibilities, such as informing the employer of their illness in time and providing Dr’s notes. In addition, there are certain exceptions to SSP eligibility.

If an employee has repeatedly taken over 4 days off due to illness at a rate of less than 8 weeks apart, this will qualify as “linked periods of sickness”. Linked periods of sickness lasting over 3 years nullify the employees’ right to SSP.

Similarly, if the employee is receiving Statutory Maternity Pay (SMP) at the time of sickness they cannot also receive SSP. Employees cannot receive multiple employment benefits at one time, even for different causes. For the duration that an employee is receiving SMP their eligibility for SSP is nullified.

SSP is only available for employees for a maximum of 28 weeks. Once the employees’ absence from work has exceeded this time period the company is no longer responsible for providing SSP. However, depending on the company policy and employees’ contract, they may still qualify for some form of occupational sick pay.

Common misconceptions around SSP include:

  • The employee must have a Dr’s note if they miss more than 4 days. Employees qualify for SSP after missing 4 days of work due to illness, but need not provide a Dr’s note unless they have missed 7 days or more.
  • The employee started their employment too recently to qualify. Even if an employee has started very recently, including those who have not yet received 8 weeks pay, in many cases they still qualify for SSP.
  • Zero-hour contract employees don’t qualify for SSP. Although some zero contact employees are not eligible for SSP, many are. Zero-hour contract employees need to request sick pay and it is your responsibility as an employee to inform them if they do not qualify for SSP.

Occupational or Contractual sick pay:

Occupational sick pay, also known as contractual sick pay or company sick pay, is a sick pay policy created and implemented by your company.

Occupational sick pay schemes are benefits you will have developed and included in an employees’ contract when you took them on and are a critical part of your HR policy.

How your business approaches employee illness needs to be carefully considered. Having a good sick pay scheme can help businesses attract top quality employees, reduce employee turnover, and improve company loyalty and workforce moral. However, the contractual responsibilities of a company towards employees who are off sick can be doubly draining on the business fiscally. Not only is there the loss of productivity and potential cost of cover while the employee is absent, overly generous occupational sickness policies can end up very costly for the company.

One mediating factor regarding sick pay is that a business can opt out of paying SSP for an employee if the occupational sick pay exceeds the their SSP entitlement in amount and duration. If SSP is not being paid to an employee for this reason, you should still keep a comprehensive sickness record.

Another benefit of occupational sick pay is that the company are able to determine the terms, amount, duration, evidence required etc. This can help to instil a good work ethic and ensure that generous occupational sick pay policies are not taken advantage of and overly costly to the company. However, if an employee is not covered by the companies’ occupational sick pay, they will still be eligible for SSP instead.

If you do not currently have an occupational or contractual sick pay scheme, you may want to consider setting one up. Before making any changes to your existing HR policy, including any changes to or introductions of an occupational suck pay scheme, you should seek legal advice to ensure that you comply with existing workers’ rights legislation and operate in the most beneficial way for your business.

A common template for occupational sick pay is one where, after a predetermined minimum employment period, such as a 3-month probation, an employee is paid their normal wage for a certain number of weeks. After which, occupational sick pay often reduces to half-pay until either the employee has returned to work or their entitlement to sick pay has expired.

Employer discretion means that, in certain circumstances, an employer may decide to either withhold or extend sick pay entitlement. Employers should be cautious as their decisions regarding sick pay. Refusing sick pay can be used as evidence of employee discrimination. Equally, extending sick pay too often could be used in a case of “custom and practice”, forcing the company to make a costlier sick pay scheme standardised across the business. Before making any discretionary decisions around sick pay, it is best to seek legal advice.

Managing return to work:

There are instances where allowing employees to take a phased return to work benefit both the company and the employee.

Phased returns are authorised by the employees’ Dr or Occupational Health professional. A phased return can include both a reduced number of working days and reduced responsibilities which are increased gradually until the employee is at full productivity. Phased returns need to be negotiated between the manager, employee and HR department to ensure all parties are happy with the arrangement.

While an employee is undergoing a Phased Return to Work, the company may still be required to pay sick pay. Company sick pay schemes will vary, but if the employee does not receive company sick pay they may still be entitled to SSP. SSP must be paid for non-working days in instances where there are 4 consecutive days of absence. If an employee is working 3 or less days per week, they will be entitled to SSP for the non-working days as long as those days are consecutive. Once an employee is working 4 days a week their entitlement to SSP ends.

Why seek legal advice:

From creating a company sick pay policy which walks the line between employee needs and businesses profitability, to determining an employees’ entitlements, to managing return to work, employee sick pay is a complicated area to navigate.

With the risk winding up in court cases accused of discrimination or forced to broaden a company sick pay scheme, and the cost of employee illness contributing so much to profit loss, it is essential that your business understands and implements an effective sick pay policy.

Seeking legal advice when creating a sick pay policy, or managing an individual employee’s entitlement, is the best way to ensure you fulfil your responsibilities both to the individual employee and the business as a whole.

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