Managing sickness absence is part of everyday people management, and for many employers that also means understanding how company sick pay works alongside statutory sick pay. While statutory sick pay is the legal minimum for eligible employees, some businesses also offer an enhanced scheme as part of their wider employee package. This is usually referred to as occupational sick pay or contractual sick pay. Company sick pay must be set out in the employment contract if it is offered.
For SMEs, this can be an area where clarity really matters. Employees need to understand what they may be entitled to if they are off sick, while employers need a consistent way to record absence, check entitlement, and apply their policy fairly. Below, we look at what this type of sick pay is, how it differs from SSP, and how employers can manage both more effectively.
What Is Occupational Sick Pay?
Occupational sick pay is any sick pay an employer chooses to provide above the statutory minimum. It is often called company sick pay or contractual sick pay, and it should be explained in the employee’s contract or in a workplace policy. Unlike statutory sick pay, which follows set rules, this type of enhanced pay depends on the terms the employer has put in place.
There is no single format for a company sick pay scheme. One employer may offer full pay for a set period, another may offer a reduced amount after an initial period, and another may link entitlement to length of service. Some businesses offer it from day one, while others apply qualifying periods. Because of that, policies can vary widely from one employer to another.
What matters most is that the arrangement is clearly documented. If a business offers enhanced sick pay, employees need to know how much may be available, how long it may last, and what conditions apply.
Occupational Sick Pay and Statutory Sick Pay
Occupational sick pay and statutory sick pay are closely linked, but they are not the same thing. Statutory sick pay, or SSP, is the minimum sick pay employers must pay to eligible employees. Employers can offer more through a company scheme, but not less where SSP applies.
Occupational sick pay sits alongside that statutory framework. In some businesses it is inclusive of SSP, meaning the statutory amount forms part of the total sick pay rather than being paid separately on top. In others, the wording may be different. This is one reason why employers need to understand occupational sick pay and statutory sick pay together, particularly when reviewing absence records or checking what an employee may still be entitled to receive.
For employers, the key distinction is that SSP follows statutory rules on eligibility, notice, proof of sickness, and duration, while occupational sick pay depends on the wording of the company’s own contractual scheme. Keeping that distinction clear can help reduce confusion for both managers and employees.
What Should an Occupational Sick Pay Policy Include?
A clear occupational sick pay policy should explain how sick pay works in practice within the business. That usually includes who is eligible, how much sick pay may be available, how long it may be paid for, and what employees are expected to do when reporting sickness absence.
Many employers also include details on:
- when occupational sick pay begins
- whether it is inclusive of statutory sick pay
- whether entitlement depends on length of service
- what medical evidence may be needed
- how sickness absence should be reported
- what happens if absence continues beyond the enhanced sick pay period
Reporting expectations are an important part of this. Employees are expected to tell their employer they are off sick within the employer’s deadline, or within 7 days if no deadline has been set. Fit notes can usually be requested once an employee has been off for more than 7 days in a row.
A policy helps create consistency. It gives employees a clear point of reference and helps managers follow the same process across the business rather than making ad hoc decisions.
Managing Sick Pay Fairly Across Your Business
Managing occupational sick pay fairly usually comes down to consistency, visibility, and record keeping. Employers need to know when absence started, what has been reported, what evidence has been provided, and how much entitlement has already been used.
This becomes particularly important where the business offers enhanced sick pay in addition to SSP. Without clear records, it can be difficult to understand whether someone is receiving occupational sick pay, SSP, or a combination of both. It can also make it harder to apply the company policy consistently across different employees and teams.
Fair management also depends on managers understanding that occupational sick pay is a contractual benefit, while statutory sick pay is a statutory entitlement. One is based on the employer’s own policy and contract wording, while the other follows set rules. Keeping those two things clear can make absence management more transparent and easier to follow.
What Happens When Occupational Sick Pay Ends?
What happens when occupational sick pay ends will depend on the wording of the employer’s policy and whether the employee still qualifies for statutory sick pay. In some cases, an employee may move from enhanced contractual sick pay onto SSP only. In others, they may already have been using their SSP entitlement while receiving occupational sick pay if the company scheme is inclusive of SSP.
SSP is available for a limited period for eligible employees. Where SSP is ending, or where an employee is not entitled to it, employers may need to issue the relevant form so the employee can understand what happens next.
This is often the point where a clear policy becomes most important. If the wording is vague, it can be difficult for employees to understand what happens next. If the terms are clear, there is less room for confusion and a better chance of the process being applied consistently.
Common Mistakes Employers Should Avoid
One common issue is treating occupational sick pay and statutory sick pay as though they are the same thing. They are closely connected, but they are not interchangeable. SSP follows statutory rules, while occupational sick pay depends on the employer’s own scheme.
Another common problem is unclear documentation. If employees cannot easily find the sick pay policy, or if managers are unsure how the arrangement works, it becomes much harder to manage absence consistently.
Record keeping can also create problems. Where absence information is spread across emails, spreadsheets, payroll notes, and paper files, employers may struggle to keep track of sickness periods, fit notes, and when occupational sick pay ends and SSP continues.
How HR Software Can Help Manage Sick Pay and Absence
Sick pay and absence management often involve several moving parts at once. There may be reporting deadlines, fit notes, return dates, policy checks, and employee records to keep up to date. Managing all of that manually can be time consuming and can make it harder to maintain a consistent approach.
Our HRX software can help make this easier by keeping absence records, fit notes, and employee information together in one place. This gives employers better visibility over sickness absence, supports more consistent record keeping, and makes it easier to see how absence is being managed across the business. Rather than relying on separate spreadsheets and email chains, teams can work from a clearer central record.
Occupational sick pay can be a valuable part of the employee package, but it works best when the rules are clear and the process is easy to follow. If you would like to see how HRX can support absence management, employee records, and day to day processes, get in touch to book a demo today.
