Understanding statutory sick pay

Whether you pay only statutory sick pay (SSP) or operate an occupational sick pay scheme, you must detail your rules on sick pay in each employee's written statement of employment particulars or refer them to an accessible and separate document, eg ,company handbook, which gives these details.

You must give a written statement to all employees who work for you for one month or more. Read more on the written statement.

See Labour Relations Agency (LRA) guidance on preparing a written statement of main terms and conditions of employment.

Precedent in overpayment of SSP

If you (mistakenly) pay more than the SSP rate over a period of time, employees could regard the payments as contractual through 'custom and practice'.

If you then try to reduce payments to the SSP rate, the employee could claim:

• unlawful deduction of wages
• breach of contract
• constructive dismissal - although they would have to resign first

Contact HMRC for further advice on SSP - see Statutory Sick Pay and leave.

Long-term sickness and dismissal

An employee's inability to do their job because of long-term sick leave can be a potentially fair reason for dismissal.

However, in the event of an unfair dismissal complaint, an industrial tribunal will expect you to have acted reasonably by:

• consulting the employee and finding out as much as possible about their condition and the likely timescale for their recovery
• seeking medical advice from an Occupational Health Physician or GP
• considering all the alternatives to dismissal, such as changing the employee's role or hours of work
• following the statutory three-stage dismissal and disciplinary process

The tribunal will consider your business's size when deciding whether a dismissal was reasonable.

See how to manage absence and sickness and find out more about dismissing employees.

You should also consider whether or not the employee is disabled under the Disability Discrimination Act 1995 when considering dismissal on the grounds of long-term sickness. See how to prevent discrimination and value diversity.

Sickness and holiday entitlement

If an employee is on sick leave, they can normally build up four weeks of statutory paid holiday time, like any other employee. Statutory holiday entitlement is built up while an employee is off work sick. This is the case no matter how long the employee is off.

Any statutory holiday entitlement that isn't used because of illness can be carried over into the next leave year. Holiday leave carried over in this way must be taken by the end of the period of 18 months from the end of the holiday leave year in which entitlement originally arose.

Taking holiday while off sick

An employee can use their paid holiday (annual leave) while off sick. For example, if they:

• are not physically able to work, but are physically able to take a holiday
• have a mental health condition that might be helped by a holiday
• are off sick long term, and a holiday might help with their recovery

It's up to an employee to request holiday while off sick. An employer cannot force an employee to take holiday while off sick.

If an employee is sick on holiday

An employee must report their sickness to their employer if they want to take holiday as sick leave. In this case, the employee can:

• get statutory sick pay for the time they were sick - as long as they are entitled to it
• keep the time they were sick to use as holiday another time