Company Sick Pay vs SSP: Understanding Contractual Sick Pay in the UK

Sickness absence is an inevitable aspect of employment, and understanding how you will be compensated when unfit for work is crucial for financial stability. In the United Kingdom, sickness payments generally fall into two main categories: Statutory Sick Pay (SSP) and Company Sick Pay, which is also referred to as occupational or contractual sick pay. While SSP represents the minimum legal requirement that all employers must pay to eligible workers, company sick pay is a discretionary or contractual benefit offered by employers to provide enhanced financial support. Understanding the differences between these two systems is essential for managing your finances and protecting your workplace rights.

This comprehensive guide provides a detailed comparison of company sick pay and Statutory Sick Pay in the UK. It covers the legal frameworks governing both systems, the eligibility criteria you must meet, the rules surrounding medical evidence, and what steps you can take if your sickness payments run out. If you require formal medical evidence to support your sickness claim and secure your pay, you can explore our private medical certificate service or submit an online consultation request directly through our portal for a swift clinical assessment.

The UK Sickness Payment Landscape: Statutory vs. Contractual

The UK sickness payment system is designed to provide a safety net for employees who are unable to work due to physical or mental illness. Sickness compensation is structured in two distinct tiers: the statutory minimum, which is legally mandated, and the contractual level, which is determined by individual employment agreements. Every employee in the UK is covered by the statutory minimum, provided they meet the legal eligibility criteria, but only a portion of the workforce receives contractual enhancements.

Statutory Sick Pay (SSP) is the legal minimum that employers must pay by law. It is paid at a flat rate of £116.75 per week (for the tax year 2026/27) and can be paid for a maximum of 28 weeks. The statutory scheme is highly regulated, with strict rules governing waiting days, qualifying days, and notification procedures. Employers are legally prohibited from paying less than the statutory rate to eligible employees, and any attempt to contract out of SSP is void under UK law.

Company Sick Pay, on the other hand, is an occupational scheme set up by an employer to pay employees more than the statutory minimum. These schemes are voluntary, meaning employers are not legally required to offer them. However, when an employer does offer a company sick pay scheme, and it is documented in the employment contract, the terms become legally binding. Contractual sick pay schemes vary widely between industries and employers, ranging from a few days of full pay to several months of full salary followed by half pay.

The historical development of sickness pay in the UK reflects a gradual shift towards protecting workers' financial security. Sickness payments are not merely an administrative detail; they are a critical component of public health and economic stability. When workers are forced to choose between attending work while ill or losing their income, many will choose to work, risking the spread of infectious illnesses or worsening their own health. The dual system of SSP and Company Sick Pay aims to balance the financial burden, with the state setting a basic floor of protection and employers having the flexibility to offer enhanced benefits to attract and retain talent in a competitive labor market.

What Is Company Sick Pay (Contractual Sick Pay)?

Company sick pay is a contractual benefit that replaces or enhances Statutory Sick Pay. If your employer operates an occupational sick pay scheme, the details will be outlined in your employment contract, your employee handbook, or your company's HR policy documents. Because these schemes are designed by the employer, they can establish their own rules regarding eligibility, payment rates, and administrative requirements, provided they do not fall below the statutory minimum.

A typical company sick pay scheme will specify: first, the length of service required to qualify for the scheme (e.g., passing a probation period or completing one year of service); second, the rate of pay during sickness (e.g., 100% of normal salary); and third, the maximum duration of the payments (e.g., 8 weeks of full pay in any 12-month period). Some schemes also include a sliding scale, where the entitlement increases with the employee's length of service.

It is important to note that company sick pay schemes can be discretionary. A discretionary scheme means that the employer reserves the right to evaluate each sickness absence individually and decide whether to pay the enhanced rate. However, employers must exercise this discretion fairly and consistently. If an employer behaves in a discriminatory or arbitrary manner when withholding discretionary sick pay, they may face claims of breach of contract or discrimination under the Equality Act 2010.

The inclusion of company sick pay in an employment contract serves as a powerful recruitment and retention tool for businesses. Companies that offer full pay during sickness are often viewed as more supportive and employee-centric, which can enhance staff morale and reduce overall turnover. However, because occupational schemes are contractual, they are subject to the terms agreed upon during hiring or updated through collective bargaining. Any changes to a contractual sick pay scheme must be agreed upon by both the employer and the employees or their representatives, and unilateral changes by the employer can lead to constructive dismissal claims.

Key Differences Between Company Sick Pay and SSP

To help you understand your rights, it is useful to compare the key features of Company Sick Pay and Statutory Sick Pay side-by-side. The most significant differences relate to the payment amounts, waiting days, and the duration of the benefits, which directly impact your financial security during a sickness absence.

The primary differences include:

• Payment Rate: SSP is a fixed flat rate (£116.75 per week), which is often a fraction of an employee's normal earnings. Company sick pay typically pays 100% of the normal salary, or a combination of full pay and half pay.
• Waiting Days: SSP has a mandatory three-day unpaid waiting period. Company sick pay schemes frequently pay from the very first day of absence, ensuring no loss of income for short-term illnesses.
• Maximum Duration: SSP is payable for up to 28 weeks. Company sick pay schemes are usually shorter (e.g., 4 to 12 weeks), after which the employee transitions down to the statutory rate.
• Eligibility Rules: SSP has strict legal criteria, such as earning above the Lower Earnings Limit (£123 per week). Company sick pay schemes set their own criteria, which can include or exclude specific staff grades.

When an employee receives company sick pay, the statutory sick pay is usually included within that amount rather than paid on top of it. The employer calculates the SSP entitlement, pays the employee their full salary, and offset the statutory amount internally. This means you do not receive "double pay" during your sickness absence.

Another key difference lies in the treatment of tax and national insurance contributions. Both Statutory Sick Pay and company sick pay are subject to Class 1 National Insurance and income tax deductions through the Pay As You Earn (PAYE) system. However, because company sick pay is often paid at the employee's normal salary rate, the tax deductions will be higher than those applied to the flat statutory rate. It is also important to note that if an employee is receiving company sick pay, they cannot also receive SSP as a separate, additional payment; the SSP is always topped up by the company pay to reach the agreed contractual amount.

Sickness Evidence and Notification Rules

Both Statutory Sick Pay and company sick pay schemes require employees to provide evidence of their illness and follow specific notification procedures. However, because company schemes are contractual, the rules for claiming occupational sick pay can be stricter than the statutory minimums set by the government.

Under the statutory scheme, you can self-certify your illness for the first seven calendar days, and you must provide a doctor's fit note from the eighth day onwards. For company sick pay, however, employers can request medical evidence earlier. Some company policies state that contractual sick pay will only be paid if the employee provides a doctor's certificate for absences of three days or more. If an employer demands medical evidence during the self-certification window, they must accept a private medical certificate, and in some cases, they may be required to fund the cost of the certificate if the employee cannot access NHS services.

Notification rules are also critical. Your employer's policy will specify how and when you must report your illness (e.g., calling your manager before 9:00 AM on the first day of absence). Failing to follow these notification rules can result in the employer withholding company sick pay, even if you are genuinely ill. For SSP, the statutory notification limit is seven days, but employers can enforce their own internal reporting timelines for company pay. Always check your employee handbook to ensure you remain compliant.

Moreover, the notification requirements under company schemes are often designed to minimize disruption to business operations. For instance, a retail business may require a sick employee to call their direct supervisor by phone at least two hours before their shift starts so that cover can be arranged. A text message or email may not be accepted under the company policy. If the employee fails to follow these specific steps, the employer may be contractually entitled to withhold the enhanced company sick pay for that day, even if the employee later provides a valid GP fit note. This highlights the importance of familiarizing yourself with the exact reporting lines of your company.

What Happens When Your Sickness Payments Run Out?

A major concern for employees facing long-term illnesses is what happens when their sickness pay entitlement is exhausted. Sickness payments do not continue indefinitely, and understanding the transition to other support systems is vital for long-term financial planning.

If your company sick pay runs out, but you have not yet reached the 28-week limit for Statutory Sick Pay, you will transition down to the statutory rate of £116.75 per week. Your employer must continue to pay you SSP until the 28-week threshold is reached. If you reach the 28-week limit, or if you do not qualify for SSP in the first place, your employer must issue you with form SSP1 (Support for Statutory Sick Pay).

Form SSP1 is a critical legal document. It explains why SSP has stopped or why you do not qualify, and it allows you to claim other state benefits. With form SSP1, you can apply for Employment and Support Allowance (ESA) or Universal Credit through the Department for Work and Pensions (DWP). Additionally, you should check whether your employer offers a Group Income Protection scheme or if you have private income protection insurance, which can provide long-term financial support during extended sickness absences.

For employees facing the exhaustion of their sick pay, the financial transition can be daunting. The reduction from full pay to SSP or state benefits represents a significant income drop. To mitigate this risk, many large UK employers offer group income protection insurance as an employee benefit. These policies typically kick in after a specified deferral period (often 13 or 26 weeks, matching the expiry of company sick pay) and pay a percentage of the employee's salary (e.g., 60% or 75%) for several years or until retirement if they remain unfit for work due to long-term illness or disability.

How DoctorCert Can Help with Your Sickness Documentation

Whether you are claiming Statutory Sick Pay or company sick pay, providing your employer with clear, professional medical evidence is essential. At DoctorCert UK, we provide a secure online clinical review service designed to help you secure the compliant documentation you need to protect your rights and maintain your income.

Our service is built to support your sick pay claims with these key benefits:

• UK GMC-Registered Doctors: All our medical certificates are reviewed and signed by registered doctors, making them legally valid for SSP and company sick pay schemes.
• Convenient Digital Process: Complete our online questionnaire and upload any supporting medical records from your phone, avoiding the need for an urgent GP visit.
• Instant Verification: Our certificates feature secure reference codes, allowing your employer to verify their validity instantly on our portal, reducing administrative delays.

To request a private fit note or check our fees, visit our online booking page or view our pricing details on our pricing overview. We are here to provide the professional clinical evidence you need, helping you manage your sickness absence and secure your pay with confidence.

Frequently Asked Questions

Can my employer pay me less than Statutory Sick Pay (SSP)?

No. Under UK law, employers are legally required to pay the statutory minimum of £116.75 per week to eligible employees. Paying less than the statutory minimum is a violation of employment rights.

Do I have a legal right to company sick pay?

No. There is no automatic legal right to company sick pay in the UK. Enhanced sick pay is a contractual benefit. You only have a right to it if it is included in your employment contract or company policy.

Can my employer stop my company sick pay if I don't provide a fit note?

Yes. Company sick pay schemes have their own rules. If your contract states that you must provide a fit note by a certain date or for a short absence, and you fail to do so, your employer can withhold the contractual pay.

What is form SSP1 and when do I need it?

Form SSP1 is a DWP document provided by your employer when your Statutory Sick Pay is ending (after 28 weeks) or if you do not qualify. You need this form to claim Employment and Support Allowance (ESA) or Universal Credit.

Can I receive company sick pay and SSP at the same time?

When you receive company sick pay, the SSP amount is usually included within it, rather than paid as an extra sum. Your total payment will match your contractual rate, which must be equal to or higher than the SSP minimum.