Entitlement to sick pay

The contract of employment should set out the payment to be made if a worker is absent due to sickness or injury and the rules that must be followed. The minimum amount is Statutory Sick Pay (SSP, see page 48) but the contract may include additional pay or benefits (Occupational Sick Pay). Other aspects of absence management policy may or may not be deemed to be contractual (see page 44).

Employers must provide their employees with details of their sick pay entitlement as part of their written statement of particulars, in accordance with sections 1 and 2 of the Employment Rights Act 1996 (ERA), within two months of the start of employment.

The sick pay provisions do not have to be set out in the contract of employment itself, they can be set out in a separate document but the employee must have the opportunity to read it at work, and the employer must have referred them to it.

If there is no written employment contract and the contractual entitlement to sick pay is disputed, a tribunal would have to work out the contract term by examining all the circumstances, including the parties’ past conduct (for example, if the employee had always received full sick pay in the past) and any documents or discussions.

Sometimes sick pay is discretionary but if so, the employer must not exercise that discretion arbitrarily or inconsistently, or be “irrational or perverse” (Commerzbank v Keen [2007] IRLR 132 CA). An employee on long-term sick leave for several months will still have continuous service (and a contract of employment) even if all sick pay rights have been exhausted.