Occupational Sick Pay UK: What it is, how it works & eligibility

Key takeaways

• Occupational sick pay is an enhanced benefit, not a legal requirement
   
• It usually tops up SSP to close the earnings gap for a set period
   
• Employers should have a clear occupational sick pay policy to ensure transparency and compliance

A healthy life and a working life shouldn’t be mutually exclusive.
Whether you’re designing a benefits package for your staff, or are an employee trying to balance good health and productive work, occupational sick pay (OSP) is a key topic. The law sets a minimum, but many UK businesses go further. But what is occupational sick pay, and how is it different from statutory requirements?

This is your guide to occupational sick pay in the UK, including eligibility rules, calculation methods, and the relationship with statutory sick pay (SSP).

How occupational sick pay works in the UK

The main thing to know is that these schemes depend entirely on the employment contract, as they’re not dictated by law. That means the exact rules vary by company, but should always cover eligibility, entitlements and duration, and be clearly set out in the employment contract.

OSP entitlements & duration

A standard OSP policy might offer full pay for a set number of days or weeks, followed by half pay. The total duration of OSP is also up to the employer, but must be written into the occupational sick pay policy.

While both are paid for by the employer, understanding the difference between SSP and OSP is essential for payroll accuracy and managing expectations. In a nutshell:

Statutory Sick Pay

A legal requirement, the bare minimum. Eligibility, rules, and amounts are all fixed and set by the government, not the business. As of April 2026, it’s set at £123.25 (or 80% of average earnings, whichever is lower) per week, for up to 28 weeks, to employees who meet the minimum earnings threshold (£123 per week). 

Occupational Sick Pay

An optional benefit offered by the employer, intended to replace an employee’s usual salary for a set period of time. Rules and eligibility at the company’s discretion and subject to contract, not law. 

Occupational sick pay (UK) calculator for employers

As OSP closes the gap between salary and SSP, it can be different for every employee. To calculate OSP, you need a clear formula to ensure consistency and accuracy. HR departments can use an occupational sick pay UK calculator or dedicated leave management software, like Leave Dates, to work out the “top-up” amount in each case.

Example:
If an employee earns £500 per week and the company offers a period of “full pay” as their OSP, the employer calculates it as follows:

1. Identify SSP: £123.25
2. Calculate top-up: £500 (full pay) - £123.25 (SSP) = £376.75 OSP
3. Total to pay: The employee receives £500, but the payroll reflects both the statutory and occupational elements.

Long-term sick pay considerations

OSP, like SSP, is not infinite. If an illness lasts for a long time (eg several months), an employee may exhaust their OSP. If the OSP duration is shorter than the 28-week SSP limit (4 weeks is common), they will usually then revert to just SSP.

What happens when OSP and SSP run out?

If someone is still unable to work after 28 weeks, OSP and SSP will have been exhausted, and income will take a big hit. But there are still options – employees may be eligible for government support (eg New Style ESA) if they have a condition that affects their ability to work. 

Some companies offer Group Income Protection (GIP), an insurance product that functions as a kind of long-term or “private sick pay”. This usually kicks in after a “deferred period” (eg after SSP expires) and can continue for years, a financial safety net and huge perk for those with access to it.

There is also the option to use accrued holiday to supplement income when an employee’s OSP runs out.

Company policies on long-term illness

If an employee has been on long-term sick leave, the employer is required under the Equality Act 2010 to discuss any reasonable adjustments upon their return, including disability accommodations. A phased return, eg part-time for a while, can support this, as can an occupational health (OH) assessment.

Long-term sickness absence that exceeds OSP/SSP durations will likely trigger a formal health review (aka a ‘welfare meeting’ or ‘capability hearing’). This is a structured process used to manage long-term sickness absence or health issues affecting an employee’s ability to work, and to determine they are physically or mentally fit to perform their role.

The sickness policy should set out the ‘trigger point’ for such a review; it might be after a set duration, eg 4 weeks continuous absence, or multiple short absences reaching a set threshold.

If you’re wondering how to claim occupational sick pay, and your employer offers it, you simply follow the reporting procedures outlined in the company sickness absence policy. Make sure you understand the rules and eligibility criteria so that you know what to expect, and when. 

While policies vary, if you think you’re entitled to OSP you should do the following:

📄 Check your contract

Confirm your eligibility for OSP

📱 Notify your manager

Make sure you follow all reporting requirements (e.g., a phone call by 9 am)

🩺 Submit a fit note 

Visit a doctor for absences over 7 days, or self-certify internally via an SSP1 form for a shorter absence

🔄 Return to work interview

This is a formal step in most occupational sick pay policies, to confirm that you’re fit to resume work, discuss any support needed and update records to close out the “sick pay” period and resume normal salary payments

Follow these steps, and your pay should be processed correctly, and your transition back to work will be smooth. 

For employers who want to move beyond basic compliance, an occupational sick pay policy is a great step towards a healthy and happy workplace. Best practices for managing occupational sick pay in the UK focus on clarity and support:

Create a clear written policy

Ambiguity is the enemy of fair payroll. Your OSP policy should clearly set out eligibility triggers, define how calendar periods and pay are calculated, and reporting requirements, to prevent confusion and manage expectations.
 

Standardise communication and support

Consistency is key to avoiding accusations of unfairness (or worse, discrimination claims). Managers should carry out welfare check-ins that are supportive but not intrusive, and ‘return to work’ interviews should be standard for all absences. This ensures that employees feel seen and that any underlying issues (eg workplace stress or physical barriers) are flagged early.
 

Use HR tech for accuracy

Manually calculating SSP vs OSP is prone to human error. Leave management software acts as your occupational sick pay UK calculator, automatically tracking usage and alerting payroll. This ensures employees are paid correctly and gives you a clear audit trail.

Proactive Occupational Health engagement

Don’t wait for an illness to become long-term before seeking expert advice. Engaging OH services early can provide helpful insights and easy adjustments, often preventing a short-term absence from spiralling into a permanent loss of talent.

By following this advice, you can protect the business from legal risk while also showing your team that their health is a priority. 

Remember, SSP is compulsory, but it’s not the end of the story if you don’t want it to be. By offering OSP, you can safeguard the health of your team’s body, mind and bank balance, all at once.