Long Term Sick Pay Rules

As an employer, it’s essential you understand how to manage absence so as to support your workforce, whilst also minimising the impact on your business.

In this guide, we explain the rules on long term sickness pay, and consider how to deal with long term sick leave.

 

Types of sick pay

 

The two main types of sick pay are:

 

• Statutory Sick Pay (SSP): The legal minimum amount you must pay eligible workers who are off sick
• Occupational sick pay: A discretionary scheme you might want to offer employees that’s more generous than the legal minimum.

 

Statutory Sick Pay

 

Statutory Sick Pay is the legal minimum you must pay eligible workers who are off sick. The government sets the amount each year.

Statutory Sick Pay (SSP) is paid to eligible employees, regardless of the length of service (but subject to certain exclusions), for up to 28 weeks of sickness in any period of incapacity for work (PIW). This payment is made as part of the employer’s sick pay scheme, from the first qualifying day.

As per HMRC rules, in order to qualify for SSP, an employee must meet the criteria below:

 

• the employee must have commenced employment with the employer
• sickness days must make up part of a ‘period of incapacity for work’ (4 or more days)
• SSP can only be paid for an employee’s normal working days
• normal earnings must be above the Lower Earnings Limit (LEL) for National Insurance contributions (NICs)
• the employee cannot have already exhausted their entitlement to SSP for the PIW (28 weeks) – or for a series of linked PIWs (3 years)
  notification of sickness absence must be given within the set time-period (a maximum seven days from the first day of absence). Under the employer’s procedures the individual must notify the department on the first day of sickness, and exceptions to this may only be made in exceptional circumstances
• if asked, the employee must provide proof of their incapacity

 

If the employee does not meet the conditions above, they must be notified and sent the SSP1 form by Payroll to enable them to claim any state benefit to which they may be entitled to.

SSP payments will be made as part of salary and will therefore be liable to tax and national insurance deductions. Employees in receipt of the employer sick pay or sickness state benefit should not carry out any work duties during this period.

During a period of a phased return to work of an employee, payment of SSP will continue to be made for days not worked (if the entitlement remains to do so).

 

Who pays SSP?

Employers are legally obliged to pay Statutory Sick Pay to all eligible workers.

You start paying SSP from the fourth day an employee is off sick following a 3-day waiting period.

 

Qualifying days for SSP

SSP is only payable if there is a period of incapacity for work (four or more days). An employee’s qualifying days for SSP will normally be Monday to Friday, or the actual days worked if less than five days. Employees’ working patterns should be recorded correctly in PeopleXD to ensure an accurate payment of SSP.

 

Visa holders

Where the staff member is a Tier 2 or Tier 5 visa holder and their sickness absence involves a period of reduced pay, or unpaid, leave it will need to be reported to the Home Office.

 

When do you stop paying SSP?

You are legally obliged to pay Statutory Sick Pay for 28 weeks, or until the employee:

• Returns to work
• No longer qualifies for it
• Starts receiving Statutory Maternity Pay or Maternity Allowance

 

How do I pay Statutory Sick Pay?

You should pay SSP the same way you pay wages: On your normal payday and deducting tax and National Insurance.

 

Withholding sick pay

Employers may withhold sick pay if they have good reason to believe that an employee’s illness is not genuine, or if an employee fails to comply with the policy’s procedure on notification of sickness absence. Professional advice should be sought. In such cases, the employee will be informed of this in writing and a SSP1 form should be issued to them, entitling them to make a claim for state benefit. If an employee disagrees with this decision, they can raise the matter informally with the departmental administrator, Head of Administration and Finance or equivalent. The employee may progress the matter through the grievance procedure if necessary.

 

Occupational sick pay

 

Occupational sick pay is any sick pay you choose to offer as a company above and beyond the legal minimum set out by SSP. Some employers offer sick employees full pay for a set period, e.g. up to 6 months, followed by a percentage of their salary (such as 50-75%) for another period thereafter.

 

How much is occupational sick pay?

As occupational sick pay is entirely up to you, it can be as much as you want or can afford to provide. The only rule is that you can’t offer less than SSP.

Options include:

 

• Paying Statutory Sick Pay to workers for the first 3 days before SSP kicks in
• Adding a little bit extra to SSP to top it up by a set amount each week for a set number of weeks
• Paying a sick employee a proportion of their salary (e.g. 75%) for a set period (e.g. 2, 3 or 5 years)
• Going the whole hog and pay workers full pay for a set period (e.g. for up to a year).

 

Who pays occupational sick pay?

As the employer, you pay occupational sick pay entirely out of your pocket. While it’s a great benefit to provide, consider affordability. Could you run into financial problems if you offer a period of full sick pay and two or three members of staff go off sick all at once, meaning you have to provide not just full sick pay but also pay for replacement cover?

 

Who gets occupational sick pay?

Again, as it’s your scheme, you can set the rules. You might offer it to every employee from their first day on the job. Or you might extend it only to employees who’ve been at the company for a certain period. Of course, you must still pay SSP to any eligible employees who don’t fall within the scope of your occupational sick pay rules. This said, one thing to bear in mind is that it’s important to treat all employees broadly the same where you can. Otherwise, there may be potential discrimination claims if there’s a significant difference in your approach from employee to employee.

 

Why should I offer occupational sick pay?

You might ask why you’d pay more than the legal minimum, especially given that sick pay can be expensive. Yet, as with all benefits, occupational sick pay is a great way to show your people you appreciate them. Moreover, the reality is that many businesses have sick pay as a cornerstone of their benefits offering. For many employees, it’s often the bare minimum they expect, making it a strong attraction when you’re looking to hire. Yet, as mentioned, paying decent sick pay — especially to multiple people for a prolonged period if this is necessary — would likely be costly. As a result, some businesses choose a benefit such as Unum’s Income Protection Insurance. This pays a benefit after an employee has been off sick for a set period, allowing them to receive a longer period of sick pay than you may otherwise be able to afford.

 

Third party claims for absence caused by an accident

 

If a member of staff is absent from work as the result of an accident or injury that happens whilst they are not at work, and that is caused by another person (for example, a car accident), damages for loss of earnings may be recoverable from the person who caused the accident, who is referred to as the ‘third party’.

In this case, for the employer to reclaim any sick pay which can be recovered from the third party, the following special arrangements would usually apply:

 

• The employer will not pay sick pay as of right, but will advance to the member of staff a sum not exceeding their normal entitlement to sick pay, on the understanding that, if they are awarded compensation for loss of earnings, they must refund to the employer any such compensation received, subject to a maximum of the total sum advanced during the period of absence.
• If such a refund is made, the period covered by the refund will be disregarded for the purpose of calculating entitlement to sick leave payments for any period of sickness. However, where no damages for loss of earnings are actually recovered, the employer will waive its right to seek a refund and the period concerned will be regarded as normal sick leave.
• The requirement to refund advances from damages received does not extend to any non-salary related compensatory awards, nor to payments made directly by an insurance company without reference to third party recovery.

 

How much sickness absence is my employee allowed?

 

How long an employee can be on sick absent from work before they can be dismissed depends upon the employer establishing that there is no reasonably foreseeable return to work, this will usually require some form of medical evidence (such as a GP report or Occupational Health report) in order for the employer to establish a genuine held belief that there was no reasonably foreseeable return to work. Employers are not expected to keep a sick employee’s job open indefinitely.

Extended period of absences can be costly for employers and potentially disruptive to your business. There is a balancing act between being supportive and considerate for the employee who is sick, whilst also considering how a long-term illness might affect the rest of your employees and customers/sales.

Employees who are off sick for more than six weeks are considered to have a “long-term sickness absence”.

Employees have a statutory right to sick pay for up to 28 weeks. After those 28 weeks are up, employees can apply for employment and support allowance (ESA).

 

Can an employer contact an employee while off sick?

 

Yes, employers are allowed to have reasonable contact with employees while they are absent due to illness. Many employers are genuinely concerned with their employee’s health and would like to check in every now and then to see how they are doing. It is also wise to be kept up to date on the likely period of absence so employers can plan accordingly.

It is important that the contact is a good balance between the support and concern for the employee, the desire to secure a return to work as quickly and as safely as possible, while also giving enough space to allow the employee to recuperate without any unnecessary stress.

Getting in touch too often could seem overbearing and intrusive, and even result in allegations of harassment. Getting in touch too infrequently could leave the employee feeling out of touch and undervalued, while also leaving you in the dark in relation to plans for return to work.

The amount you contact the employee will depend on the expected length of their sickness absence, the employee’s role, seniority, and the size and culture of your business. It might be that a regular telephone conversation once a fortnight may suffice if the illness is long-term.

 

Can I dismiss an employee while off sick?

 

Yes, employers can dismiss an employee whilst on long-term sick, but only after following a reasonable process. The potentially fair grounds for the dismissal would be on the basis of ‘capability’.

A fair dismissal process is required before any dismissal can take place, however. An employment tribunal will consider if an employer has followed the appropriate procedure, and will consider whether:

 

• The medical evidence being relied upon was up to date
• The employee was warned before they were dismissed, and therefore understood the seriousness of the situation
• The employer was shown any medical evidence of the long-term sickness and, where there is medical evidence, if the employee was asked for their input on that evidence
• The employee and employer disagreed on the medical evidence and, if so, if the employer could provide their own medical evidence
• A partial return to work has been considered
• Consider whether the employee could take up alternative employment or whether there are any other options that would avoid the need for dismissal
• Where there is a PHI policy or Ill Health retirement policy in place, if there is, whether employer claimed under terms of the scheme
• All the necessary steps have been taken by the employer to accommodate any disability
• The employee was due to have any further treatment that might have improved their chances of returning to work

 

We would advise getting expert employment law advice before considering dismissing someone who has been absent due to long-term sickness.

An employer can also potentially dismiss on the grounds of persistent short time sickness absence from work, normally this process would require stepping through warnings before a dismissal could be fairly achieved. It is essential that a consistent approach is taken in this regard following any absence policies the employer has in place. This absence management process is similar to a disciplinary in that it will need:

 

• Investigation in the first instance to establish the facts,
• Formal notice of an absence review meeting informing the employee of the right to be accompanied, giving the employee clear and detailed information on the number of absences and/or any patterns in absence and provide the employee with a copy all evidence being relied upon in advance of the absence review meeting.

 

In some cases, especially where the employee is ‘disabled’ in law this process/your absence policy may require reasonable adjustments.

 

Annual leave entitlement & sick leave

 

Workers continue to accrue annual leave entitlement during sickness absence, and workers can choose to take annual leave at the same time as being absent due to sickness and be paid for it. But notice to take annual leave must be given to the employer to be entitled to payment for holiday pay whilst on sick leave. If notice is not given in the leave year then the holiday entitlement will be deemed as unused and will be lost. It cannot be carried over unless the employer agrees to this.

 

Need Assistance?

 

DavidsonMorris works employers to support with all aspects of workforce management, including absence management. Our employment lawyers and HR consultants provide holistic guidance on developing and implementing effective policies and procedures to help reduce absenteeism and promote positive workplace behaviours in relation to absence. For expert advice, contact us.

 

Long Term Sick Pay FAQs

 

What is the difference between Statutory Sick Pay (SSP) and contractual sick pay?

Statutory Sick Pay (SSP) is the minimum amount an employer is legally required to pay eligible employees who are off sick for more than four days. Contractual sick pay is an enhanced payment agreed upon in the employment contract, often providing more than the SSP amount.

 

How long can an employee receive Statutory Sick Pay (SSP)?

Employees can receive SSP for up to 28 weeks. After this period, they may be eligible for other benefits, such as Employment and Support Allowance (ESA).

 

What should I do if an employee’s sick leave exceeds 28 weeks?

If an employee’s sick leave exceeds 28 weeks, you should inform them that SSP has ended. They may need to claim other benefits such as Employment and Support Allowance (ESA). It’s also advisable to review their contract to check if they are eligible for additional support or payments.

 

Can I dismiss an employee who is on long-term sick leave?

While it is possible to dismiss an employee on long-term sick leave, this should be done with caution and only after all reasonable adjustments have been considered. Dismissal must be fair, and employers must follow proper procedures to avoid claims of unfair dismissal.

 

What are ‘reasonable adjustments’ for employees on long-term sick leave?

Reasonable adjustments are changes or adaptations made to the workplace or job role to help an employee with a disability or long-term health condition return to work. This could include altering working hours, providing specialised equipment, or offering a phased return.

 

How do I manage a phased return to work?

A phased return to work involves allowing the employee to gradually increase their working hours or responsibilities as they recover. It’s important to agree on a plan with the employee and regularly review their progress to ensure they are supported.

 

What should I do if an employee refuses to return to work after a long-term sickness absence?

If an employee refuses to return to work, you should first try to understand their reasons and explore any possible solutions. If the issue cannot be resolved, you may need to consider other options, such as a capability dismissal, ensuring that all steps taken are fair and in line with employment law.

 

Are part-time and temporary workers eligible for long-term sick pay?

Part-time and temporary workers may be eligible for Statutory Sick Pay, provided they meet the eligibility criteria, such as earning at least the Lower Earnings Limit and having been off sick for more than four days in a row.

 

What records do I need to keep regarding sick pay?

Employers must keep records of all sick days taken, SSP payments made, and any correspondence or documentation related to the employee’s sick leave. These records should be kept for at least three years.

 

Can employees take holiday during long-term sick leave?

Employees can request to take holiday during their sick leave. This could be beneficial as they would receive their full holiday pay instead of sick pay during this time. However, they cannot be forced to take holiday while on sick leave.

 

Glossary

 

 

Term	Definition
Statutory Sick Pay (SSP)	The minimum amount an employer is legally required to pay eligible employees who are off sick for more than four days.
Contractual Sick Pay	Sick pay that is provided by the employer as part of the employment contract, often offering more than SSP.
Eligibility Criteria	The conditions an employee must meet to qualify for Statutory Sick Pay or contractual sick pay.
Long-Term Sick Leave	A period of extended absence from work due to illness or injury, typically lasting more than four weeks.
Reasonable Adjustments	Changes or adaptations made to the workplace or job role to accommodate employees with disabilities or long-term health conditions.
Phased Return to Work	A gradual return to work where the employee increases their working hours or responsibilities over time as they recover.
Occupational Health	A field of healthcare that focuses on the physical and mental well-being of employees in the workplace.
Lower Earnings Limit	The minimum amount an employee must earn to qualify for certain benefits, including SSP.
Capability Dismissal	The process of terminating an employee’s contract due to their inability to perform their job role, often due to long-term sickness.
Employment Rights Act 1996	A key piece of UK legislation that outlines the rights of employees, including provisions for sick pay and dismissal.
Employment and Support Allowance (ESA)	A benefit for people who cannot work due to illness or disability, available after SSP entitlement has ended.
Holiday Pay	Payment made to employees during their annual leave, usually equivalent to their regular salary.
Sick Pay Record	Documentation kept by employers detailing employee sick days, SSP payments, and related correspondence.
ACAS	Advisory, Conciliation and Arbitration Service – an independent body that provides advice on workplace relations and employment law.
CIPD	Chartered Institute of Personnel and Development – a professional body for HR and people development, offering guidelines and resources.