How to build a paid sick leave policy for UK SMEs?

When it comes to creating a paid sick leave policy in the UK, compassion and consistency are the key ingredients for employers.

Whether they’re battling a challenging illness or are buried under a pile of tissues bunged up with a cold, employees want to know they’ll be treated fairly while having a clear set of rules they can follow as they recover.

In this guide to UK paid sick leave, we’ll cover the essentials of statutory sick leave and pay while also discussing what should be included in your sick pay policy. So, read on!

How does paid sick leave work in the UK?

But first, let’s get back to some basics - when it comes to paid sick leave, what’s the law in the UK?

What does the law say about paid sick leave?

If an employee is ill in the UK, they can take time off work.

Employees can take up to 7 days off (including non-working days and bank holidays) without a sick note. But once they hit the 7-day mark, they must prove their illness to their employer with a sick note, also often called a ‘fit note’. If your employee is late providing this document, then you don’t have to pay them SSP for any of the days it was late.

Fit notes are acceptable if they come from a GP, doctor, or registered nurse. However, occupational therapists, pharmacists and physiotherapists can now also give these out.

A fit note usually says someone ‘isn’t fit for work’, but in some situations, they can say the employee ‘may be fit for work’. If this is the case, then you, as the employer, will need to figure out with your employee what ‘reasonable adjustments’ might be made to support them coming back to work. If you can’t agree on this, then the default is the employee is ‘not fit for work’.

While a fit note isn’t required for sick time of 7 days or less, the employee must confirm they’ve been ill to you when they’re back at work. Otherwise known as self-certification, this might consist of filling out a form, such as an SC2 form, or writing a more detailed explanation describing the illness.

How does sick leave work with annual leave?

Sometimes, sick leave might overlap with paid holiday an employee was planning to take. In this case, the employee should take sick leave instead. If an employee doesn’t meet sick pay requirements, they should use their paid holiday instead to take time off. Remember, though, you can never force someone to take annual leave.

It’s also worth noting that employees can still accrue statutory holiday entitlement while they’re off sick. In other words, they can carry over any unused annual leave into the next holiday period. This accrual principle is similar to other statutory rights, such as those applied during maternity leave.

Can you dismiss an employee on sick leave?

When long-term sick leave extends beyond normal time frames, you might have to dismiss an employee based on illness.

Of course, it’s always best to avoid this scenario if you can. In other words, it’s important to at least try to make some adjustments so you can help them return to work. An occupational health assessment can help with this.

But this doesn’t always work out, and you might have to consider dismissing an employee because of their illness. While there are no ‘hard and fast’ rules here on when you should dismiss an employee, there are some helpful guidelines on Gov.UK.

How many paid sick days in the UK are employees entitled to each year?

When it comes to paid sick days in the UK, employees are entitled to 28 weeks of Statutory Sick Pay at a time. This can be taken straight through or as what we call ‘linked sickness’, meaning each sickness period is four or more days, and there is less than eight weeks between leaves. This can only last for up to 3 years before the employee loses their entitlement to SSP.

As for how many paid sick days an employee is allowed per year? Well, there’s no legal limit to this amount. It’s up to your organisation what is and isn’t reasonable when limiting the amount of sick leave an employee can take.

What makes an employee eligible for paid sick leave?

To be eligible for Statutory Sick Pay (SSP), an employee must earn an average of at least £125 per week (from April 2025). They must also have been ill for at least four qualifying days in a row (days they usually work).

It generally does not matter if they’re part-time or full-time, or how many hours they work, provided they meet the earnings threshold. Through SSP, they will receive the full amount of pay.

How much should you pay out for Statutory Sick Pay?

The rate of pay for standard sick leave is £118.75 a week (for the 2025/26 tax year) for up to 28 weeks after the employee has been off for four days.

Learn more about how to calculate Statutory Sick Pay for your employees.

What are the upcoming changes on paid sick leave in the coming Employment Rights Bill?

It is important for employers to be aware of the Employment Rights Bill, which proposes significant changes to sick pay. Expected to take full effect around April 2026, the bill plans to:

• Make SSP a ‘day one’ right: This will abolish the current three-day waiting period, meaning employees will be entitled to sick pay from the first day of their illness.

• Remove the Lower Earnings Limit: The requirement to earn at least £125 per week will be removed, extending SSP eligibility to all employees regardless of their earnings.

Calculating annual leave for your staff

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What should be included in a UK paid sickness policy?

Your company’s paid sick leave policy is a vital part of your people strategy. Not only does it lay out the deal for workers when requesting time off from managers, but it also has an impact from a cultural perspective.

If your policy isn’t yet fair and consistent, then this should be a top priority for your HR team. It should align with the terms in the employment contract, and clearly set out how to report an absence, what’s allowed, and how to keep everyone in the loop.

At a minimum, a compliant sickness policy should lay out the following principles:

✅ = Legal requirement

⚠️ = Not required but strongly recommended

*Note: reasonable adjustments ARE legally required if the absence relates to a disability or protected characteristic under the Equality Act 2010.

Reporting sick leave

Your company’s sickness policy, otherwise known as an Occupational Sick Pay scheme, should be crystal clear on who to tell when someone can’t make it to work due to illness. Usually, it’s the manager’s call, but this doesn’t necessarily have to be the case. Employees should also have a clear understanding of how to self-certify sickness and when they will need a fit note. You’ll also want to outline which channels should be used for reporting.

Providing evidence

As we covered a few sections before, if someone is off for up to 7 days, a self-certifying note is usually enough. You only need a fit note if the absence is over a week. You might, however, choose to include some extra paperwork, such as an SC2 form. This is entirely up to you. Juggling sick leaves for a big team can get tricky, but it’s crucial for measuring productivity and growth.

Returning to work

Finally, there’s the return to work. As an employer, you should have a game plan for getting people back to work within your policy once they are able to do so. Research says key factors for a smooth return are:

• Personal competence

• Workplace support

• Social support from family and friends

• Having some control over the job

In addition to this, holding a return-to-work interview can help suss out individual needs and figure out if any tweaks are needed.

What are the benefits of a well-thought-out UK paid sick leave policy?

Last but certainly not least, having a solid sick leave and pay policy results in its fair share of benefits. It creates a structured environment where employees feel cared for and the business runs smoothly.

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