When employees are off sick, they may be eligible for some form of sick pay.

They may be eligible for either (or both) of the two types of pay available:

  • statutory sick pay (SSP)

  • occupational sick pay (OSP).

OSP payment (or company sick pay) is for sickness absences paid for by the organisation. It is a contractual payment which employers may choose to provide their employees.

If you do, payment should be equal to or greater than the SSP they’d receive.

What is occupational ill health?

It is the term used to describe various forms of health issues relating to work. This can be as a result of exposure to work hazards or as a result of prolonged work activities.

Occupational ill health can also relate to injuries or illnesses not caused, but made worse by, work.

According to the HSE, the leading cause of occupational ill health includes:

  • back injuries

  • mental health issues

  • upper limb disorders

  • occupational asthma

  • occupational dermatitis

  • hearing loss.

What happens when sick pay runs out?

In situations where an employee is not eligible for SSP or SSP is about to run out, they may be able to apply for Universal Credit or Employment and Support Allowance (ESA).

These options provide employees with financial support while they are off work due to ill health or disability.

If an employee’s SSP is ending, employers must complete and send the SSP1 form to the employee. Employers are required to do this either within seven days of the SSP ending or on or before the beginning of the 23rd week.

It’s important to remember that if an employee doesn’t qualify for SSP, you’re required to send the SSP1 form within seven days of the employee going on sick leave.

Is sick pay taxable?

Yes. It is (statutory and occupational) a “work-related earned income” so it forms part of an employee’s taxable income.

Occupational sick pay rules

The employer determines the rules for claiming OSP. Common practice is to allow employees to claim for occupational sick pay upon successful completion of their probation period (usually three to six months).

Other rules to consider include:

  • requirements to qualify for OSP (manual labourers, white-collar employees, etc)

  • process for reporting and documenting sickness

  • duration of sickness absence

  • submission of doctor’s notes

  • occupational health assessments.

To avoid claims of discrimination, it’s essential to treat all employees fairly when creating the rules relating to sick pay.

Occupational sick pay policy

It’s important to have a policy in place that clarifies your employees’ entitlements in relation to sick pay.

The policy should highlight the conditions under which your staff are entitled to occupational sick pay and SSP. It should also include the process for requesting it.

For employers that choose to provide their staff with occupational sick pay, it’s strongly advised to have a company sick pay policy in place. A consistent sick pay policy reduces the potential for discrimination claims and puts everyone on an equal footing.

Further advice

To speak with an HR advisor for professional advice, or for any other employment law guidance, call our advice line on 0844 561 8149.

Last reviewed 23 April 2019