UK Sick Leave Policy: What Small Business Owners Need to Know About Statutory and Private Sick Pay

Managing employee absences is a critical task for small business owners. The number of sick days UK employees take has increased 41% in the last three years, according to a report by jobs platform Totaljobs. This highlights the growing complexity and importance of tracking and managing sick leave effectively. Sick leave policies can be particularly complex, with legal obligations, employee entitlements, and company-specific rules to consider. In the UK, understanding Statutory Sick Pay (SSP) and private sick pay arrangements is essential to supporting employees while keeping your business running smoothly.

This comprehensive guide breaks down the essentials of sick leave in the UK, so you can stay compliant, support your team, and maintain productivity.

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What is Sick Leave?

Sick leave refers to the time an employee takes off work due to illness or injury. It covers both physical and mental health issues, which are legally treated equally in the UK. During sick leave, employees may be entitled to statutory or company-specific sick pay.

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Key Points to Remember:

• Employees can self-certify their sickness for up to 7 calendar days.
• Beyond 7 days, a fit note (sick note) from a healthcare professional is required.
• Employees cannot be forced to take annual leave while they are eligible for sick leave.

Did You Know? According to the Office for National Statistics (ONS), 2.6% of working hours were lost to sickness absence in recent years, the highest rate in nearly two decades. Furthermore, over 1.35 million individuals reported depression, bad nerves, or anxiety as part of their long-term sickness in 2023 (ONS).

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Understanding Statutory Sick Pay (SSP)

Statutory Sick Pay is the minimum legal requirement for employers to pay eligible employees during sick leave. Recent trends indicate that SSP plays a crucial role in supporting the UK workforce, with long-term sickness reaching a peak of 2.82 million economically inactive individuals in the first quarter of 2024. This ongoing rise highlights the increasing importance of structured sick leave policies (ONS). As of 2023, SSP is set at £109.40 per week and can be paid for up to 28 weeks.

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Eligibility for SSP:

1. The employee must:
   • Earn at least £123 per week (on average).
   • Have been sick for at least 4 consecutive days (including non-working days).
   • Notify their employer within 7 days (or earlier, as per company policy).
2. SSP is not available to:
   • Self-employed workers.
   • Employees already receiving other statutory payments, such as maternity pay.

SSP Waiting Period:SSP payments begin on the fourth day of sickness. The first three days, known as “waiting days,” are unpaid unless the employee qualifies for an exception.

How to Calculate SSP:Employers can use the government’s SSP calculator to ensure accurate payments. Keep detailed records of payments for compliance.

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Private (Occupational) Sick Pay

Some employers offer private or occupational sick pay schemes, which provide more generous terms than SSP. These schemes are often outlined in employment contracts and may:

• Cover a percentage of the employee’s salary.
• Extend beyond the SSP’s 28-week limit.
• Include a shorter waiting period.

Benefits of Offering Private Sick Pay:

• Enhances employee satisfaction and retention.
• Attracts top talent in competitive industries.
• Reduces the financial stress on employees during illness.

If you offer private sick pay, clearly outline the terms in your employment contracts and ensure employees understand their entitlements.

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Fit Notes and Proof of Sickness

Employees need to provide proof of sickness if they’re off for more than 7 days. This usually takes the form of a fit note from a healthcare professional, which can state:

• The employee is “not fit for work.”
• The employee “may be fit for work” with adjustments.

Who Can Issue a Fit Note?

• GPs or hospital doctors.
• Registered nurses, occupational therapists, pharmacists, and physiotherapists.

If adjustments suggested in the fit note cannot be agreed upon, the employee should be treated as “not fit for work.”

Self-Certification:For sickness lasting 7 days or less, employees can self-certify by providing a written or verbal statement. Employers may require a specific form or email confirmation.

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Sick Leave and Holiday Entitlements

Sick leave does not affect an employee’s statutory holiday entitlement. Key points include:

• Employees continue to accrue holiday entitlement while on sick leave.
• Unused statutory holiday due to sickness can be carried over into the next leave year.
• Employees who fall ill during a pre-booked holiday can request to convert the leave into sick leave.

Employers should handle these situations carefully to ensure compliance and maintain fairness.

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Long-Term Sickness

Employees who are off work for more than 4 weeks are considered long-term sick. There was a peak of 2.82 million individuals economically inactive due to long-term sickness in the UK during the first quarter of 2024, marking a significant increase from just over two million in 2019. While this figure fell slightly in subsequent quarters, it reflects a concerning and consistent rise over recent years. This figure has been rising considerably since 2019, when there were just over two million people economically inactive for this reason.

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Employers must:

• Consider reasonable adjustments to help the employee return to work (e.g., reduced hours, adapted tasks).
• Conduct regular check-ins to discuss progress and potential return dates.
• Obtain occupational health advice if necessary.

Dismissal Due to Long-Term Sickness:Dismissing an employee on long-term sick leave should only be a last resort. Employers must:

1. Explore all options for adjustments and flexible working.
2. Hold consultations with the employee about their situation.
3. Ensure the process is fair and documented to avoid claims of unfair dismissal.

Employees can appeal their dismissal through an employment tribunal if they believe it was unjustified.

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Creating an Effective Sickness Absence Policy

A well-defined sickness absence policy ensures clarity for both employers and employees. Key elements to include:

1. Reporting Procedure: How and when employees should notify their manager.
2. Evidence Requirements: When fit notes or other documentation are needed.
3. Pay Details: Clarify SSP and any additional company sick pay entitlements.
4. Return-to-Work Process: Outline return-to-work interviews and any phased reintegration plans.
5. Support for Mental Health: Highlight resources for mental health-related absences.
6. Long-Term Sickness Management: Procedures for handling extended absences.

Benefits of a Robust Sick Leave Policy

• Employee Wellbeing: Reduces stress by providing clear guidelines and financial support.
• Fairness and Transparency: Ensures consistency in handling absences across the business.
• Legal Compliance: Helps employers meet statutory obligations and avoid disputes.
• Improved Productivity: Minimises disruption by setting clear expectations and managing workloads effectively.

Technology for Managing Sick Leave

Managing sick leave manually can be time-consuming and prone to errors. Consider using a digital absence management system like TimeOff.Management to:

• Track absences in real-time.
• Provide a clear view of team availability.
• Streamline communication between employees and managers.

Final Thoughts

Navigating sick leave policies in the UK doesn’t have to be a headache. By understanding SSP requirements, offering private sick pay where possible, and implementing a robust sickness absence policy, you can support your employees while keeping your business compliant and productive.

For more guidance, check out gov.uk’s official sick leave resources or consult an HR professional.

Disclaimer: This blog provides general information and is not intended as legal or tax advice. Always consult your attorney or tax advisor to ensure compliance with your specific situation.

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