SSP vs Company Sick Pay: Employer Obligations and Best Practice
Understand the difference between SSP and company sick pay. Learn your legal obligations and how to design a competitive sick pay policy.
Understanding Your Obligations
As a UK employer, you are legally required to pay Statutory Sick Pay (SSP) to eligible employees. However, there is no legal requirement to offer anything beyond SSP. Many employers choose to offer enhanced company sick pay as part of their benefits package to attract and retain staff.
This guide explains the differences between SSP and company sick pay, your obligations as an employer, and how to design a sick pay policy that works for your business.
SSP: The Legal Minimum
Statutory Sick Pay is the minimum amount employers must pay to qualifying employees. For 2026/27:
- Weekly rate: £123.25 (or 80% of normal earnings for low earners)
- Duration: up to 28 weeks
- Waiting days: none (SSP payable from day one since April 2026)
- Eligibility: all employees regardless of earnings
SSP is paid through your normal payroll and is subject to tax and National Insurance deductions. Use our SSP calculator to work out exact figures for specific scenarios.
Company Sick Pay: Going Beyond the Minimum
Company sick pay (also called occupational sick pay or contractual sick pay) is any sick pay you offer above and beyond SSP. Common arrangements include:
Typical Company Sick Pay Structures
| Structure | Example | Typical Employers |
|---|---|---|
| Basic enhanced | 1 week full pay, then SSP | Small businesses, retail |
| Standard | 4 weeks full pay, 4 weeks half pay, then SSP | SMEs, professional services |
| Generous | 13 weeks full pay, 13 weeks half pay | Large corporates, public sector |
| Very generous | 6 months full pay, 6 months half pay | NHS, civil service, universities |
SSP vs Company Sick Pay: Cost Comparison
The cost difference between SSP only and enhanced sick pay can be significant. Here is a comparison for an employee earning £30,000 (£576.92/week) off sick for different periods:
| Absence | SSP Only | 4 Weeks Full / 4 Weeks Half | Difference |
|---|---|---|---|
| 1 week | £47.50 | £576.92 | +£529.42 |
| 2 weeks | £166.25 | £1,153.84 | +£987.59 |
| 4 weeks | £403.75 | £2,307.68 | +£1,903.93 |
| 8 weeks | £878.75 | £3,461.52 | +£2,582.77 |
| 12 weeks | £1,353.75 | £3,937.27 | +£2,583.52 |
Company sick pay figures based on 4 weeks full pay followed by 4 weeks half pay, then SSP for the remainder.
Benefits of Offering Enhanced Sick Pay
Recruitment and Retention
In competitive job markets, enhanced sick pay is a valued benefit. Candidates increasingly expect more than the statutory minimum, particularly in professional roles. A good sick pay policy can be the difference between securing a candidate and losing them to a competitor.
Employee Wellbeing
Workers who know they will be paid during illness are less likely to come to work while unwell (presenteeism), which can reduce the spread of illness and improve overall team productivity. They are also more likely to take the time they need to recover fully, reducing the risk of relapse.
Reduced Absence Anxiety
Employees with only SSP may feel financial pressure to return to work before they are ready, leading to longer-term health problems. Enhanced sick pay gives them the security to focus on recovery.
Lower Turnover
Staff who feel supported during illness are more loyal and less likely to leave. Given that replacing an employee costs 1.5-3x their salary (see our hiring cost guide), the cost of enhanced sick pay is often far less than the cost of turnover.
Managing Absence Effectively
Whether you offer SSP only or enhanced sick pay, managing absence well is essential:
Clear Reporting Procedures
- Who should the employee contact and by when?
- How should they report (phone, text, app)?
- When do they need to provide a fit note? (After 7 calendar days of absence)
Return-to-Work Conversations
Hold a brief, supportive return-to-work meeting after every absence. This helps you:
- Understand the reason for absence
- Identify any workplace factors contributing to sickness
- Discuss any adjustments needed
- Show employees that absence is monitored
Trigger Points and Reviews
Many employers use trigger points to flag frequent or long-term absence for review. Common triggers include:
- 3 or more instances of absence in a rolling 12-month period
- 10+ total days absent in a rolling 12-month period
- Any single absence exceeding 4 weeks
Record-Keeping Requirements
Employers must keep SSP records for at least 3 years. Records should include:
- Dates of all periods of sickness
- Qualifying days in each period
- SSP paid (or reasons it was not paid)
- Fit notes and self-certification forms
When SSP Ends: The SSP1 Form
When an employee's SSP entitlement runs out (after 28 weeks) or they don't qualify for SSP, you must provide form SSP1. This enables the employee to apply for Employment and Support Allowance (ESA) from the government. You should issue the SSP1 at least 4 weeks before SSP is due to end.
Interaction with Other Statutory Payments
SSP cannot be paid at the same time as:
- Statutory Maternity Pay (SMP): SSP stops when SMP starts
- Statutory Paternity Pay (SPP): cannot overlap
- Statutory Adoption Pay (SAP): cannot overlap
- Maternity Allowance: SSP stops when MA starts
However, company sick pay policies can choose to top up these statutory payments if the employer wishes.
Designing Your Sick Pay Policy
When creating or reviewing your sick pay policy, consider:
- What can you afford? Start with what your business can sustainably offer
- What do competitors offer? Check industry benchmarks for your sector
- Service-based entitlement: many employers increase sick pay with length of service
- Probation exclusions: some employers offer only SSP during probation periods
- Clarity: your policy should clearly state what employees receive, when, and for how long
Current SSP Rules (from April 2026)
The SSP reforms that took effect from April 2026 affect both SSP-only and enhanced sick pay arrangements:
- SSP from day one: The 3 waiting days have been abolished. Employees receive SSP from their first qualifying day of sickness
- No earnings floor: The Lower Earnings Limit has been removed. All employees qualify for SSP
- Rate: SSP is £123.25/week. Lower earners receive 80% of their normal pay instead of the flat rate
Impact on employers offering SSP only: Costs are higher than under the old rules, particularly for short-term absences. Every sick day attracts SSP, and more workers are covered as there is no earnings threshold.
Impact on employers with enhanced sick pay: If your company sick pay already pays from day one and covers all staff, the operational impact is smaller. However, you should ensure your policy wording reflects the current rules.
Key Takeaways
- SSP at £123.25/week for up to 28 weeks is the legal minimum (payable from day one)
- There is no legal requirement to offer more, but many employers do
- Enhanced sick pay aids recruitment, retention, and employee wellbeing
- Effective absence management matters regardless of your sick pay level
- Keep SSP records for at least 3 years
- Issue SSP1 forms when entitlement ends
Calculate SSP for specific scenarios with our SSP calculator, or see how sick pay fits into your overall employment costs with our employee cost calculator.