Sick pay

By Tolley in association with Sarah Bradford
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The following Employment Tax guidance note by Tolley in association with Sarah Bradford provides comprehensive and up to date tax information covering:

  • Sick pay
  • Contractual sick pay
  • Statutory sick pay
  • SSP ― definition of employee
  • SSP ― excluded categories
  • SSP ― limit of entitlement
  • SSP ― rate and recovery
  • SSP records
  • Certificates provided by GPs
  • Fit for Work service

An employee who is unable to work because of sickness may still be entitled to pay during any period of sick absence. Such entitlement may be due to:

  • contractual sick pay
  • statutory sick pay (SSP)

This guidance note covers both types of sick pay. Please note that all case references in this note are subscription sensitive.

See also the Statutory sick pay (SSP) guidance note in the ‘Mechanics of payroll’ sub-topic for more on the administration of SSP as part of payroll operation.

Contractual sick pay

An employee’s contract of employment may contain provisions entitling him to be paid during any periods of sick absence. An employer does not have to agree to any contractual terms entitling his employees to sick pay. However, if he does agree to such terms, then they must be included in any written statement of particulars provided to the employee. See the Written statement of particulars (terms and conditions) guidance note.

ERA 1996, s 1(4)(d)(ii)

There is no general presumption of a contractual right to sick pay, but a term may be implied in some circumstances even where there has been no express agreement. See the Contractual terms guidance note.

Mears v Safecar [1982] IRLR 183

Typically, the contract of employment will specify the duration of any entitlement to sick pay. However, where there is a contractual entitlement to sick pay but no duration is specified, a reasonable duration will be implied into the contract. In determining what is reasonable, this would usually be determined by normal practice in the relevant sector. In the absence of any such normal practice or in any other instance of dispute as to what constitutes ‘reasonable duration’, the question may be referred to the Tribunal.

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