Paying sick pay to employees is an area of employment law that often causes confusion for managers and business owners. I regularly speak to employers who are unsure when they need to pay Statutory Sick Pay (SSP), what happens when contractual sick pay comes into play and how absence policies should fit around the rules. The law looks straightforward at first, but in practice it rarely is. That is why I want to share some guidance, together with examples I have seen in real workplaces, to help you avoid common pitfalls.
Understanding the Basics of Paying Sick Pay to Employees
At its simplest, SSP applies when an employee has been off work due to illness for four or more consecutive days. Provided they earn at least £123 per week and meet the other qualifying criteria, they are entitled to SSP for up to 28 weeks. The rate is set by the government and changes each April. What often causes problems is working out whether absence really counts as a sick day. I have advised employers where an employee took two days off sick, returned for one day, then went off again. Because of the linking rules, that absence counted as one continuous period. The employer was caught out by not recognising this.
Some businesses offer enhanced sick pay through the contract of employment. This is often seen in larger organisations or in industries with strong union presence. Smaller businesses tend to rely on SSP alone, though some will offer discretionary top-ups. The important thing is that if you provide contractual sick pay, you must follow the terms set out in the contract. Any inconsistency can quickly lead to grievances or claims of unfair treatment.
Common Issues When Paying Sick Pay to Employees
In practice, I see several recurring problems around sick pay:
- Employers failing to keep accurate records of absence, which leads to disputes about entitlement.
- Managers misunderstanding when medical evidence is required, particularly with self-certification versus fit notes.
- Policies not aligning with the legal framework, causing confusion about whether sick pay is discretionary or guaranteed.
Another area that regularly crops up is misuse of sick leave. It is not unusual for employers to suspect that an employee is taking time off under the guise of illness when in reality there are other issues, such as workplace conflict or even moonlighting. In these cases, it is important to tread carefully. A knee-jerk refusal to pay sick pay could expose you to risk. Instead, you need to investigate properly and gather evidence before making any decision. ACAS guidance emphasises the need to balance employee welfare with business needs, which is sound advice in my view.
When Paying Sick Pay to Employees Becomes Complicated
One of the trickiest situations arises when employees are frequently absent for short spells. I have worked with employers who had staff off sick every couple of weeks for one or two days. Each occasion fell below the SSP threshold, yet the disruption was considerable. These patterns may suggest underlying health conditions, stress or sometimes an abuse of the system. A reasonable employer should consider whether the Equality Act 2010 comes into play, as certain conditions may count as disabilities. If they do, there is a duty to make reasonable adjustments. That can mean allowing more time off without triggering disciplinary action. On the other hand, if no protected characteristic is involved, you may have grounds to address the conduct through capability or disciplinary processes.
Another complication is where holiday and sickness overlap. Employees continue to accrue annual leave during sickness absence. They can also request to take holiday while off sick, which often surprises business owners. I once advised a client in retail whose employee went off long-term sick and then asked to use holiday entitlement while still absent. It felt counterintuitive, but the law was clear that the employee had that right. This is a good example of why clear written policies are essential.
Best Practice for Employers Paying Sick Pay to Employees
To avoid disputes and ensure compliance, I usually recommend employers take the following steps:
- Have a clear absence and sick pay policy, consistent with both legal requirements and any contractual promises.
- Train managers on when to request fit notes and how to apply the rules fairly.
- Keep accurate records of absence, including self-certification forms, return-to-work interviews and medical evidence.
It is also worth making sure staff understand the process. Many disputes arise simply because employees believe they are entitled to more than the law allows. A plain language policy that is explained at induction can save you a great deal of trouble later. If you operate enhanced sick pay, spell out the conditions. For instance, some businesses only pay full sick pay for the first two occasions in a year and thereafter revert to SSP. As long as this is written in the contract and applied consistently, it is lawful.
Seeking Advice
No matter how carefully you draft policies, situations will arise that do not fit neatly into the rules. For example, dealing with suspected malingering, overlapping medical conditions or staff returning from long-term absence. These cases often benefit from external advice. I have seen employers try to manage them informally, only to face claims later. A short call to a solicitor or HR specialist can help you decide whether to continue paying, challenge an absence or begin a capability process. The cost of advice is usually far less than the cost of defending a tribunal claim.
As with many areas of employment law, there is no one-size-fits-all answer. What works in a factory setting may not be right for a professional services firm. The key is to act reasonably, apply your policies consistently and seek guidance when the situation appears unclear. Even a small misstep around paying sick pay to employees can have a significant impact on your business, not only financially but also in terms of staff morale and reputation.