Company sick pay
Statutory sick pay is the floor every employer has to meet. Everything above it is a scheme you design, have to write down, and will be held to.
There is no legal duty to pay company sick pay, but there is a legal duty to tell people whether you do. Statutory sick pay is £123.25 a week or 80% of average weekly earnings, whichever is lower, for up to 28 weeks. Anything above that is contractual, has to appear in the written statement on day one, and is far easier to design well than to withdraw later.
Do employers have to offer company sick pay?
No. The obligation is statutory sick pay, and gov.uk states the boundary in a single sentence: "You can offer more if you have a company sick pay scheme but you cannot offer less. Company schemes are also called 'contractual' or 'occupational' sick pay and must be included in an employment contract."
So the question is not whether you are allowed to pay more. It is whether paying more buys you something. For most employers the honest answers are recruitment in a competitive market, and absence that gets reported early rather than hidden: an employee who loses most of a week's pay by saying they are unwell has an incentive to come in and infect the rest of the team, or to book annual leave instead, which makes your absence data fiction.
What you are required to write down
Sick pay is one of the particulars the written statement must contain. Section 1(4)(d)(ii) of the Employment Rights Act 1996 requires terms relating to "incapacity for work due to sickness or injury, including any provision for sick pay". The statement is a day-one right, it must be given "not later than the beginning of the employment", and it applies to workers as well as employees.
"We pay statutory sick pay only" is a complete and lawful answer to that requirement. Silence is not, and silence is the common failure: a handbook that describes the reporting procedure in detail and never says what anyone gets paid. Our written statement template has the clause in the order the section lists it.
The four decisions a scheme has to make
Every company sick pay scheme answers these four questions, whether deliberately or by accident. Deciding them on purpose takes an afternoon; discovering your answer during a long-term absence takes months.
| Decision | Common approaches | What it commits you to |
|---|---|---|
| Who qualifies | Everyone from day one, or after probation, or after a set period of service | A service condition is lawful, but it has to be applied to everyone. Excluding a group needs a reason that is not a protected characteristic. |
| How much, for how long | Full pay for a set number of weeks, often followed by half pay; frequently rising with service | The most expensive clause in the handbook. Model it against your actual absence figures before publishing it, not after. |
| Whether SSP is included | Inclusive (the company payment absorbs SSP) or additional (paid on top) | Silence tends to be read against the employer. Inclusive is the norm and needs one sentence to be unambiguous. |
| Contractual or discretionary | A contractual entitlement, or a discretion the employer exercises case by case | Discretion applied identically every time can harden into a contractual term. See below. |
A note on benchmarks. There is no official figure for what a typical UK company sick pay scheme pays. The government publishes none, and articles that quote a "standard" of so many weeks at full pay are describing the schemes their author has seen. Design yours from your own absence data and what you can afford indefinitely. Our absence cost calculator prices the current position first.
Does company sick pay include SSP?
In almost every scheme, yes: the employer pays full or half pay including the statutory element, rather than the statutory payment plus an enhancement on top. That is the arrangement most employers intend and most contracts fail to state clearly. Because SSP is a floor rather than a separate stream, an inclusive scheme still satisfies it, provided the employee never receives less in a week than statutory sick pay would have given them.
Write it as a sentence, not an implication. Something in the shape of: company sick pay is inclusive of any statutory sick pay payable for the same period, and the two are not paid concurrently.
The discretion trap
Plenty of employers want the flexibility to be generous without promising it forever, so the handbook says payment is "at the company's discretion". That works only while the discretion is real. Where an enhancement has been paid consistently, over a long period, in a way employees know about and expect, it can become a contractual term through custom and practice, and removing it then means varying contracts rather than updating a policy.
If you genuinely want discretion, three things keep it: say in writing that each case is decided on its own facts and creates no precedent, record the reasoning each time you pay it, and be prepared for the decisions to differ. If in practice everybody with the same absence gets the same money, you have a scheme. You may as well write it down and get the recruitment value from it.
Sickness, disability and adjustments
A sick pay scheme applied identically to everyone can still discriminate. Where an employee is disabled within the meaning of the Equality Act 2010, extending paid sick leave beyond the scheme's normal limit is one of the adjustments that may be reasonable, and unfavourable treatment because of something arising from a disability needs objective justification. Absence trigger points raise the same question: the exclusions matter as much as the thresholds.
None of this makes a scheme unlawful. It means the scheme needs a stated route for deciding the exceptions, so that a decision to extend pay in one case is a recorded judgement rather than a favour that the next person did not get.
Putting it into practice
- Write the four decisions into one clause. Our sickness absence policy template covers reporting, certification, sick pay, return to work and triggers in one document.
- Record absence from day one. Statutory sick pay is now payable from the first qualifying day, so a scheme that counts from day four is out of step with the statutory position underneath it.
- Keep the certification rule simple. Employees self-certify for the first seven calendar days and a fit note follows: the seven-day rule in full.
- Hold the return-to-work conversation every time. It is the intervention with the clearest effect on repeat short absence, and it is free. The question set takes ten minutes.
Frequently asked questions
Do employers have to pay company sick pay?
No. Statutory sick pay is the only sick pay an employer must provide, and gov.uk puts the position in one line: you can offer more if you have a company sick pay scheme but you cannot offer less. A scheme is a choice about recruitment, retention and how you want absence to be handled, not a legal duty. What is a duty is telling people which one applies to them.
Is company sick pay paid on top of SSP?
Almost never, and the contract has to say so. Most schemes are inclusive: the employer tops the statutory payment up to full or half pay, so SSP forms part of the company payment rather than sitting underneath it. A scheme that is silent on this can be read as paying both, which is an expensive drafting error to discover during a long absence.
Can company sick pay be discretionary?
It can be written as discretionary, but discretion that is always exercised the same way stops being discretion. Where an employer has consistently paid the same enhancement over a long period, and employees know it, the term can become contractual through custom and practice. If you intend it to stay discretionary, say so in writing, apply it unevenly enough to be genuinely case by case, and record the reason each time.
Do sick pay terms have to be in the employment contract?
Yes. Section 1(4)(d)(ii) of the Employment Rights Act 1996 requires the written statement to cover terms relating to incapacity for work due to sickness or injury, including any provision for sick pay. Since April 2020 that statement is a day-one right and it covers workers as well as employees, so it has to be issued not later than the beginning of the employment. Saying there is no company scheme is a valid answer; saying nothing is not.
Sources
Checked against the primary source on 14 September 2026. Where a figure or rule on this page comes from statute or official guidance, this is where it comes from:
- gov.uk: statutory sick pay for employers - the £123.25 or 80% rate, the 28-week limit, and the position on company schemes
- Employment Rights Act 1996, s.1 - sick pay as a required particular of the written statement, due by the beginning of employment
- Equality Act 2010, s.20 - the duty to make reasonable adjustments, which can reach the sick pay scheme itself
- Acas: absence from work - the practice guidance on handling sickness absence fairly
Worth reading alongside
This guide explains the statutory position and common scheme designs for a general UK employer. It is not legal advice, and sick pay interacts with contracts, pension rules and disability law in ways that are specific to your organisation. Take advice before changing an existing scheme.
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Absence you can see before it becomes a cost
CoDash records every absence from the first day, works out Bradford Factor scores, prompts the return-to-work conversation and keeps sickness reasons away from line managers - so the scheme you designed is the one that actually runs.