Occupational Sick Pay (OSP)

Occupational sick pay (OSP) is not a statutory entitlement for employees. If you are taking time off work and are wondering what your entitlements are, your employer may offer OSP to top up Statutory Sick Pay (SSP).

Our guide looks at how OSP is usually implemented within companies, and how this type of sick pay is generally administered. We’ll also look at how occupational sick pay fits into employment law.

What is Occupational Sick Pay?

Occupational sick pay is also known as company sick pay or contractual sick pay. It’s paid as an additional benefit by employers to top up employee wages when they are off work sick.

All workers are entitled to statutory sick pay (SSP) provided they meet earnings criteria. This mandatory payment is set at a current rate of £109.40 a week, and is payable after 4 days off work. The first 3 days are unpaid, these are referred to as “SSP waiting days“.

This is a lot less than many worker’s salaries. The amount of contractual sick pay workers are eligible for will be stated within contracts of employment. If you are in any doubt about your employer’s own policies, you should contact HR or your manager for clarification.

OSP Policies

The rules on qualifying for occupational sick pay will be largely determined by company policy on sick pay.

The rules on OSP which are at your employer’s discretion are:-

  • Eligibility for enhanced sick pay.
  • Sickness reporting and documentation procedures.
  • Sick pay rates.
  • How long sick pay will be paid. This is often an annual allowance.
  • Requirements for doctors notes or occupational health reports to qualify.

Any pay over the rate of SSP is entirely at the discretion of your employer. However, that doesn’t mean employment law can’t be applied to company sick pay policies.

OSP & Employment Law

Despite the discretionary nature of occupational sick pay, employers must administer their OSP policies in line with employment law.

This means employers must treat employees fairly when creating their sick pay policies. If they fail to do this, they could be subject to discrimination claims. This means OSP must be available on equal terms to all staff.

For example, part time workers should be offered comparable rates of sick pay on a pro rata basis. Their eligibility should also be determined in a comparable way to full time staff members.

How Much is Occupational Sick Pay?

The rate at which sick pay is paid will depend upon the rates set by individual employers.

However, a typical company sick pay scheme will usually provide:-

  • Full pay for a set number of weeks.
  • Half pay for a set number of weeks.

The amount of sick pay, and how long it is payable will be set by your employers own sickness policies.

The amount of occupational sick pay you are entitled to will include SSP. That means you will not get statutory sick pay as an extra payment on top of OSP.

OSP on Your Payslip – How Occupational Sick Pay is Paid

If your employer is paying occupational sick pay, it is paid through the PAYE system the same way as your other salary entitlements.

If you see OSP indicated on your payslip this will be your company sick pay for the days you took off work while unwell.

This will be accounted for separately so your employer can keep a record of how much OSP has been paid at an individual and company level.

What Happens when Occupational Sick Pay Ends?

Once occupational sick pay ends, you will shift onto statutory sick pay (SSP) if you qualify. SSP is payable for up to 28 weeks, and you must have earned an average of £123 per week.

How Much is SSP?

Statutory sick pay is set at a flat rate of £109.40 per week. You will be entitled to this for up to 28 weeks if your absence is continuous.

Your entitlement to SSP will kick back in if you return to work for 8 weeks or more. If you then go back off sick, you will be entitled to a further 28 weeks statutory sick pay.

The reset date of your OSP will  depend upon your employers own sick pay policies.

What If Sick Pay Entitlement Has Run Out?

If you are no longer entitled to sick pay, and don’t have any income insurance, you may be eligible for government help.

People on long term sick leave can apply for Universal Credit or Employment support allowance. Our guide on what happens after the 28 weeks sick pay runs out explores options for further financial support.


Do a company have to pay occupational sick pay?

There’s no obligation for a company to pay occupational sick pay, offering it is at their discretion. However, if it is offered as a contractual benefit and you meet your employer’s sick policy criteria, they will be in breach of contract if they refuse to pay.

Is occupational sick pay taxed?

Occupational sick pay (OSP) is paid in the same manner as wages, and is therefore subject to tax. This is also the case for statutory sick pay (SSP) which will form part of your OSP.

One thought on “Occupational Sick Pay (OSP)

  1. Betina Jackson says:

    My employer has put SSP on my payslip £334, then deducted osp from that
    -£1309. Leaving me with no money. Is this right?

Leave a Reply

Your email address will not be published. Required fields are marked *