Understanding UK Sick Pay: A Guide for Employers

As much as we’d love to be in full health all the time, everyone gets sick – and sometimes that means taking time off work. In fact, recent research from the CIPD has found that UK employees were off sick for nearly two full working weeks on average in the last 12 months. So, it’s vitally important that employers need to understand how sick pay works.

Statutory Sick Pay, or SSP, is a legal right for eligible employees. Currently, that means that employers must pay SSP of £118.75 per week to eligible employees for up to 28 weeks after their first three days of sickness absence. But, bear in mind that is all set to change in April 2026, when the Employment Rights Bill becomes law and gives employees the day-one right to SSP.

As well as the legal responsibilities, employers also have a moral responsibility to manage employee sickness absence correctly. Not paying employees sick pay when they’re entitled to it can cause financial hardship and unnecessary anxiety – and since nearly 10% of adults took time off for mental health reasons in 2023, you don’t want to make these problems any worse.

If you haven’t got one already, you may want to consider having a company sick pay policy that ‘tops up’ Statutory Sick Pay. It can reduce employee stress, helping them to recover more quickly, and may reduce workplace disputes, too.

In this guide, we’ll explain what UK sick pay is, the differences between SSP and company sick pay, and the common challenges regarding sick pay and how you can handle them.

What is sick pay?

Sick pay in the UK is pay that employees receive when they are too unwell to work. It’s there to provide a minimum income to employees while they are off sick.

In the UK, sick pay comes in the form of Statutory Sick Pay (SSP) and company, or contractual, sick pay. While SSP is a legal right and all eligible employees will be automatically entitled to it, company sick pay works differently – it’s decided by the company, which means employees aren’t automatically entitled to it.

There are common misconceptions surrounding sick pay, which Direct Line highlighted in their research in 2018. They found that 2.5 million workers were unaware that they would face a significant salary shortfall if they were off sick, and many mistakenly assumed that their employer would continue to pay their full salary for three and a half months if they were off work.

In reality, 43% of employers pay company sick pay for just two weeks of sickness absence, while 16% of firms immediately switch to paying SSP once an employee has been off work for four days. 

Let’s look at the difference between SSP and company sick pay.

Statutory Sick Pay SSP

Statutory Sick Pay is a legal right for eligible employees. As of April 2025, it’s set at £118.75 per week and is paid by employers for up to 28 weeks, after the first three days of absence. But that’s set to change next April – more on that later.

To be eligible for SSP, employees must:

• Be classed as an employee and have done some work for their employer
• Earn at least £125 per week on average
• Have been ill for more than three days in a row, including non-working days

There are some circumstances where SSP doesn’t apply. These include:

• If the employee has already received the maximum 28 weeks of SSP
• If they are getting Statutory Maternity Pay
• If they have a continuous series of linked periods of sickness that last more than three years

Under UK employment law, you must ensure that you pay eligible employees the correct amount of SSP if they are off work.

You can use the government’s SSP calculator to work out the actual amount.

Your legal responsibilities with SSP

The Employment Rights Act 1996 sets out employees’ entitlement to SSP and protects their right not to be unfairly dismissed or treated less favourably because of sickness absence.

The Equality Act 2010 also applies when sickness is linked to a disability. Employers have a legal duty to make reasonable adjustments to support disabled employees and prevent them from being put at a disadvantage – for example, through flexible working arrangements, adjusted duties, or a phased return to work.

Mishandling sick pay or absence management can carry serious risks for employers. Failing to make reasonable adjustments, wrongly withholding SSP, or dismissing an employee unfairly because of sickness absence could lead to discrimination or unfair dismissal claims at an employment tribunal. It can also damage employee trust, morale and your organisation’s reputation.

The government says that you don’t need to keep records of the SSP you pay to employees, and you can choose how you keep records of your employees’ sickness absence. However, HMRC may need to see your records if there is a dispute over the payment of SSP, so we always recommend that you keep detailed records that include the amount paid, payment dates and any deductions.

What are the new rules for Statutory Sick Pay?

In April 2026, man parts of the Employment Rights Bill (ERB) becomes law. Amongst other changes, the ERB aims to make SSP fairer by:

• Making all workers eligible, no matter their income
• Giving day-one entitlement, meaning SSP will be payable from the first day of an employee’s sickness absence (not the fourth)
• Offering support for lower earners, by requiring employers to pay employees earning below the flat-rate SSP 80% of their average weekly earnings, or the standard SSP rate – whichever is lower

Changes to SSP: what employers need to do next

These new rules may mean that you need to make adjustments to your current policies and procedures. You can start preparing for the ERB now by:

• Budgeting for potential increases in SSP costs
• Training managers on the new rules and what this means for record-keeping
• Checking that any HR and payroll software you use can handle day-one SSP payments with no earnings threshold
• Reviewing your sickness absence policy and amending it to align with the new rules, along with your company sick pay scheme if you have one

Company (contractual) sick pay

Company sick pay, often called contractual sick pay, is an optional benefit that you can offer to your employees when they are off work due to illness. It’s different to SSP because it’s not a legal requirement, and it usually pays much more than SSP.

Many organisations offer company sick pay to attract and retain staff. And since 67% of people said that sick pay is the employee benefit that they value most, it’s worth considering implementing a contractual sick pay scheme for your organisation.

Typical company sick pay schemes

Typical company sick pay schemes tend to include things like:

• A minimum service period, such as three months, or after a probation period has been completed
• Tiered payments, such as full pay for an initial period e.g., four to 12 weeks, then a reduced rate of half pay for further period e.g., a further 12 weeks
• Requiring proof of illness such as a fit note after the self-certification period of seven days
• Capped entitlement, such as a limit on the amount or duration of sick pay an employee can receive in a year
• Discretionary policies, which means that payments are at the employer’s discretion and can be refused in some circumstances

If you want to establish a company sick pay policy in your organisation, it’s crucial that you decide exactly how you want the policy to work:

• How much will employees receive?
• When do they become eligible?
• What restrictions or limitations might there be?
• What reference period is used? e.g., a rolling 12-month period

As company sick pay isn’t a legal requirement, it’s up to you and your leadership team to decide. But here are our tips for designing a fair and consistent contractual sick pay policy:

• Reference the sick pay scheme in your employment contracts then detail the terms in your staff handbook
• Detail what you will offer, including how much you will pay, for how long and whether it resets each year or works on a rolling monthly basis
• Define eligibility to avoid disputes, such as requiring a minimum period of service – but remember that it must be available to all employees, both full- and part-time, once they meet the eligibility criteria, otherwise it could be classed as discrimination
• Be clear about your reporting procedure, such as who employees should contact when they are ill, what method they should use, and how much notice they should aim to give
• Set exceptions if you want to – such as not paying company sick pay when the absence is due to misconduct, not following the correct reporting procedure or when an absence is unauthorised

Being honest about your company sick pay procedure will ensure that your team understand what they’re entitled to and reduce the likelihood of disputes.

The sick pay process: what employers need to do

Whether you offer contractual sick pay or SSP, you’ll need to follow a detailed process to ensure you meet your legal obligations and protect yourself from disputes and employment tribunal claims.

We recommend that you follow this process to keep your records up to scratch and problems to a minimum:

1. Gather medical evidence

Your employees can self-certify their absence for the first seven days they are off work, including non-working days. But after that, you can ask for a fit note (sometimes called a sick note, Fitness for Work Certificate, or MED3).

A fit note can be issued by a GP or hospital doctor, registered nurse, occupational therapist, pharmacist or physiotherapist. If your employee is late giving you a fit note, you can’t withhold SSP, so make sure you continue to pay it.

2. Keep detailed records

Keep comprehensive records of all employee sick leave, including the dates of absence, the reason for illness, and any evidence provided.

You should also keep a record of the SSP made to employees, including the amount paid and any deductions, so you can track if they reach their 28-week entitlement.

If any disputes arise, you’ll have a paper trail detailing everything you did to meet your legal and contractual obligations.

3. Manage long-term absence

While most employee absences are short-term, every now and again you will encounter a situation where an employee has to take long-term sick leave.

Long-term absence management can be a sensitive situation and it’s important to show empathy to your employee who is experiencing long-term health problems. When an employee has been absent for a long time, you can request an occupational health assessment to help you understand your employee’s capabilities and any potential barriers to returning to work.

You should always support your employee to return to work, but if their long-term sickness becomes a capability issue, you may need to start a medical capability dismissal process as a last resort.  

Common challenges with sick pay

Most of the time, the employee sickness absence process goes smoothly, and, providing you stick to your internal procedures, you shouldn’t run into any problems. But there are some challenges to be aware of:

• Disputes about eligibility or evidence: As we’ve already mentioned, many employees think they are entitled to more sick pay than they are. Make sure you outline the rules surrounding SSP and any company sick pay scheme in your employee handbook, along with any evidence they are required to provide, to prevent any misunderstandings.
• Sick pay during maternity leave: If your employee is receiving Statutory Maternity Pay (SMP), they’re not eligible for SSP as well. But if you have a company maternity pay policy and a company sick pay policy, they may be entitled to some pay under one of these schemes.
• Sick pay during planned procedures or injuries: If your employee has to have a planned operation or they injure themselves and need time off work to recover, they are eligible for SSP, providing they meet the general criteria. 

Most of these situations can be resolved or handled smoothly by communicating your policies clearly. Ensure your staff handbook is kept up to date and you give new employees time to read it and ask questions during onboarding.

When you make changes to policies, make sure you communicate these changes to all employees. You could ask employees to confirm that they have read the updates using document signing software or by email.

Practical tips for managing sick pay

Managing sick pay can quickly become complicated, especially if you’re dealing with multiple absences, long-term sickness, or complex medical conditions.

Having a consistent and compliant process not only helps you meet your legal obligations, but also builds trust with your team. Here are some practical tips to help you manage sick pay effectively:

1. Use a checklist to set up a compliant sick pay process

A clear process helps you stay compliant and ensures every employee is treated fairly. Your checklist should include:

• Recording each sickness absence accurately, including dates, reasons, and supporting evidence such as self-certification or fit notes
• Ensuring SSP and any company sick pay entitlements are calculated correctly and paid on time
• Keeping detailed records of payments made, as HMRC may request to see them in the event of a dispute
• Following your sickness absence policy consistently for every employee to avoid claims of unfair treatment or discrimination
• Reviewing any adjustments that may be needed to support employees with disabilities or long-term health conditions, in line with the Equality Act 2010

2. Train managers on sickness and absence management

Managers are often the first point of contact when an employee calls in sick, so they need to understand how to handle these conversations sensitively and compliantly. Training should include:

• How to record absences and trigger points correctly
• When and how to request medical evidence such as fit notes
• The importance of maintaining confidentiality when dealing with health information
• How to conduct effective return-to-work meetings that support the employee while gathering the information needed for records
• When to involve HR or occupational health for advice on long-term or repeated absences.

Good management training ensures a consistent approach across your organisation and helps managers feel confident in supporting their teams.

3. Know when to seek HR advice

Most sickness absence cases will be straightforward, but some may be more complex. Don’t leave it too late to seek professional HR advice on sickness absence – we’d recommend getting in touch with us or your HR team when:

• An employee’s absence is long-term and you are considering an occupational health referral or capability process
• You’re unsure how SSP interacts with other types of statutory pay, such as maternity or paternity pay
• An employee disputes their entitlement or you suspect misuse of sick leave
• You need to make reasonable adjustments for an employee with a disability or long-term condition

Getting expert advice early can prevent costly mistakes and help you balance your legal obligations with your duty of care to employees.

At Fitzgerald, we can help you with all aspects of employee relations, including absence management, capability processes and workplace mediation. Contact our team on 0330 223 5253 or office@fitzgeraldhr.co.uk.