Sick pay

Produced by Tolley in association with Sarah Bradford
Sick pay

The following Employment Tax guidance note Produced 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 General Practitioners (GPs)
  • Fit for Work service

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

  1. contractual sick pay

  2. statutory sick pay (SSP)

This guidance note covers both types of sick pay.

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 tobe paid during any periods of sick absence. An employer does not have toagree toany contractual terms entitling his employees tosick pay. However, if he does agree tosuch terms, then they must be included in any written statement of particulars provided tothe employee. See the Written statement of particulars (terms and conditions) guidance note.

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

Typically, the contract of employment will specify the duration of any entitlement tosick pay. However, where there is a contractual entitlement tosick 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 towhat constitutes ‘reasonable duration’, the question may be referred tothe Tribunal.

Again, the contract will usually specify the rate at which sick pay will be paid. There is no presumption that sick pay will be at full rate, although this is often the case. It is common for an employer toagree topay sick pay at full rate for a certain period, perhaps the first three or six months of sick absence, at

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