What Is Occupational Sick Pay

When your employees are off sick, they may be able to get some form of sick pay. Sickness doesn't necessarily have to be physical, it applies to mental illness.

Depending on the employee's contractual terms, they may be eligible for either (or both) of the two types of pay available:

• Statutory sick pay (SSP).
• Occupational sick pay (OSP).

This article will focus on occupational sick pay and how this is reflected on a payslip.

OSP payment (or company sick pay) is for sickness absences paid for by the organisation. It’s a contractual payment you may choose to provide your employees.

If you do, payment should be equal to or greater than the SSP they’d receive.

What is occupational ill health?

It’s the term used to describe various forms of health issues relating to work. This can be as a result of exposure to work hazards or as a result of prolonged work activities.

Occupational ill health can also relate to injuries or illnesses not caused, but made worse by, work. For example, asthma triggers brought on by exposure to dust.

According to the HSE, the leading cause of occupational ill health includes:

• Back injuries.
• Mental health issues.
• Upper limb disorders.
• Occupational asthma or asthma attacks.
• Occupational dermatitis.
• Hearing loss.

What happens when sick pay runs out?

In situations where an employee isn’t eligible for SSP but require continued absence from work, they may be able to apply for Universal Credit or Employment and Support Allowance (ESA).

These options provide employees with financial support while they’re off work due to ill health or disability. Ultimately, an employer is responsible for your staff health and wellbeing.

If an employee’s SSP is ending, you must fill in and send the SSP1 form to them. You're required to do this either within seven days of the SSP ending or on or before the beginning of the 23rd week.

It’s important to remember, if an employee doesn’t qualify for SSP, you’re required to send the SSP1 form within seven working days of the employee going on sick leave.

Returning to work after Occupational Sick Pay

Employers must ensure that employees’ return to work after either a short or long-term absence is managed correctly.

It is good practise to have a workplace absence policy to make this clear.

Long-term absence

If the employee has been in receipt of OSP due to an ongoing health condition it is important that employers meet with them before they return to work.

The meeting should consider reasonable adjustments; company updates’; occupational health referrals and EAP if it’s available.

Is sick pay taxable?

Yes. It’s (statutory and occupational) a ‘work-related earned income’ so it forms part of an employee’s taxable income. In some instances, occupational sick pay can be equivalent to full pay for a set period.

Your company determines the rules for claiming OSP. Although a common practice is to allow employees to claim for occupational sick pay upon successful completion of their probation period (usually three to six months).

Other rules to consider include:

• Requirements to qualify for OSP (manual labourers, white-collar employees etc).
• Process for reporting and documenting sickness.
• Duration of sickness absence.
• Submission of doctor’s notes/fit notes.
• Occupational health assessments.

To avoid claims of discrimination, it’s essential to treat all employees fairly when creating the rules relating to sick pay.

Occupational sick pay policy

It’s important to have a policy in place that clarifies your employees’ entitlements in relation to sick pay.

The policy should highlight the conditions under which entitles your staff to occupational sick pay and SSP. It should also include the process for requesting it.

For employers that choose to provide their staff with occupational sick pay, it’s strongly advised to have a company sick pay policy in place. A consistent sick pay policy reduces the potential for discrimination claims and puts everyone on an equal footing.

Expert Support

Contact us today for advice on absence and sickness policies that work for your organisation. Speak to a Croner expert on 01455 858 132.