Despite recent legislative changes to Statutory Sick Pay (SSP) under the Employment Rights Act 2025, which aimed to broaden eligibility and adjust payment rates, a significant majority of UK employers are maintaining and even enhancing their occupational sick pay (OSP) provisions. New research indicates that these enhanced schemes often far exceed the statutory minimums, reflecting a strategic commitment from businesses to employee welfare, retention, and overall workforce productivity.
The Enduring Generosity of Occupational Sick Pay
Findings from a comprehensive survey conducted by the employment research group Incomes Data Research (IDR) reveal a robust landscape of employer-provided sick pay. Across the economy, employees with five years of service typically receive a median entitlement of 19.5 weeks of full pay when absent due to illness. Even new starters, once their probationary period concludes, are entitled to a median of 6.5 weeks of full pay. These figures starkly contrast with the statutory minimums, underscoring a prevailing trend among UK businesses to offer more substantial financial support during periods of ill health.
Notably, the IDR study highlighted that three-quarters of employers operating OSP schemes apply these enhanced provisions uniformly across their entire workforce, rather than restricting them to managerial or head office staff. This widespread application signals a more egalitarian approach to employee benefits, aiming to foster a sense of fairness and support across all levels of an organisation. However, the research also identified significant variations between sectors, with the public and not-for-profit sectors generally offering the most generous arrangements. In these areas, long-serving employees frequently receive entitlements of up to 26 weeks of full pay, followed by an additional 26 weeks on half pay, demonstrating a deep-rooted commitment to long-term employee security.
Statutory Sick Pay: A Shifting Foundation (The Employment Rights Act 2025)
The context for these employer practices is the recent overhaul of Statutory Sick Pay. The Employment Rights Act 2025 marked a pivotal moment, extending SSP eligibility to all employees, a significant departure from previous rules that often excluded certain categories of workers or those earning below a specific threshold. Prior to these reforms, SSP was typically paid at a lower weekly rate (e.g., around £109.60 per week before the 2025 changes) and often required employees to meet specific earnings criteria, leaving some of the most vulnerable workers without this safety net.
Under the new legislation, SSP is payable at £123.85 per week, or 80% of average weekly earnings where this amount is lower. This adjustment, while providing a necessary floor, remains considerably below the actual earnings of most employees, particularly those in higher-paying roles. The government’s rationale behind these reforms was multi-faceted, aiming to provide a more inclusive safety net, reduce presenteeism (where sick employees feel compelled to work), and align the UK’s statutory provisions more closely with European standards. However, the IDR findings demonstrate that for many employers, SSP serves merely as a baseline, with their own occupational schemes providing the true financial backbone for employees facing illness.
The Business Case for Enhanced Sick Pay and Wellbeing Investment
The decision by employers to offer sick pay well above statutory minimums is not purely altruistic; it is increasingly seen as a strategic business imperative. Katherine Heffernan of IDR articulates this perspective: "Despite offering enhanced sick pay, in practice employers are likely to want to try to keep absence to a minimum through other aspects of their employment offering, such as effective occupational health support and incentives to help staff stay well like gym membership, vaccinations or private healthcare."
This statement highlights a broader shift in corporate philosophy, where employee wellbeing is recognised not just as a welfare issue but as a critical factor in business success. The direct costs associated with employee absence are substantial. Industry data, such as that often published by the Chartered Institute of Personnel and Development (CIPD), frequently estimates the average cost of absence per employee in the UK to be between £600 and £1,000 annually, encompassing lost productivity, temporary cover, and administrative overheads. By offering generous OSP, employers aim to:
- Attract and Retain Talent: In a competitive labour market, comprehensive benefits packages, including robust sick pay, are powerful differentiators.
- Boost Morale and Loyalty: Employees who feel valued and supported during times of illness are more likely to be engaged, loyal, and committed to their organisation.
- Reduce Presenteeism: Adequate sick pay encourages genuinely unwell employees to take time off to recover, preventing the spread of illness and ensuring they return to work fully productive.
- Enhance Productivity: A healthier workforce is a more productive workforce. Investment in wellbeing and sick pay can lead to fewer long-term absences and quicker recovery times.
- Improve Employer Brand: Companies known for strong employee support tend to have better reputations, which can aid recruitment and foster positive public relations.
A Holistic Approach: Health Benefits and Proactive Wellbeing
Beyond financial provisions, many employers are actively investing in a wider array of health benefits designed to proactively reduce absence and improve overall workforce wellbeing. The IDR research found that 23% of organisations provide private medical insurance for their entire workforce, while a further 47% make it available to selected groups, typically salaried or managerial employees. This widespread provision of PMI underscores a recognition that timely access to healthcare can significantly shorten recovery periods and prevent minor ailments from escalating into more serious, long-term conditions.
However, the adoption of newer, more specialised benefits is still in its nascent stages. The survey indicated that offerings such as funding for weight-loss injections, fertility treatment, or standalone neurodiversity assessments have yet to gain widespread traction. This suggests a cautious approach to emerging health trends, with employers likely weighing the cost-effectiveness and demand for such niche benefits against more established provisions.
The proactive approach extends to preventive measures. Many organisations are funding initiatives like flu vaccinations, health screenings, and even gym memberships or discounts, aligning with the idea that investing in employee health upfront can yield significant returns in terms of reduced absence and increased productivity. This strategic shift reflects a growing understanding that a healthy workforce is a resilient workforce, better equipped to navigate challenges and contribute effectively.
The Unwavering Importance of Absence Management
Despite the generosity of OSP and the investment in wellbeing, the findings also underscore the continued critical importance of robust absence management for HR teams. The vast majority of organisations surveyed (92%) operate formal absence management procedures. These typically involve triggering reviews after a certain number of discrete absences (e.g., three separate instances) or a cumulative period of sickness (e.g., 10 days) over a rolling 12-month period.
These procedures are not merely disciplinary; they are designed to provide a structured framework for supporting employees, identifying underlying health issues, and, where necessary, addressing patterns of absence that may indicate misuse or require intervention. The report noted that employers also actively monitor patterns of absence, including those around major sporting events – a light-hearted but real-world example of how employers keep an eye on attendance trends. Heffernan playfully added, "With any future England matches scheduled for relatively sensible weekend hours, hopefully line managers won’t find too many staff falling foul of this aspect of their absence policy."
Blanche Brett, an associate in the employment team at Birketts, provided crucial advice for employers, emphasising the need for fairness and clear communication within these schemes. "Most employees use sick leave appropriately, but employers will want to ensure that occupational sick pay schemes are not open to abuse. The key is striking the right balance between supporting genuinely unwell employees and addressing attendance concerns in a fair and proportionate way. Clear communication and well-drafted absence management policies remain essential." Her insights reinforce the dual challenge for HR: being supportive while maintaining accountability and ensuring equitable treatment across the workforce.
Sectoral Dynamics and Future Outlook
The marked differences in OSP generosity across sectors, particularly the leading role of the public and not-for-profit sectors, can be attributed to several factors. These sectors often operate under different funding models, have a strong public service ethos, and are frequently influenced by collective bargaining agreements that prioritise employee benefits. In contrast, the private sector, particularly smaller enterprises, may face greater financial constraints, though many still strive to offer competitive packages to attract talent.
Looking ahead, the landscape of sick pay and employee wellbeing is likely to continue evolving. The growing emphasis on mental health, the increasing recognition of neurodiversity, and the ongoing push for greater work-life balance will undoubtedly shape future benefit offerings. Employers will likely explore more personalised and flexible benefits packages to cater to a diverse workforce, moving beyond a one-size-fits-all approach. The role of technology in absence management, from predictive analytics to streamlined reporting, is also set to expand, offering HR teams more sophisticated tools to monitor, support, and manage employee health.
The IDR findings, coupled with expert commentary, paint a clear picture: UK employers are not just complying with statutory minimums but are strategically investing in their employees’ health and wellbeing. This commitment, reinforced by comprehensive OSP schemes and proactive health benefits, reflects a mature understanding that a supported, healthy workforce is fundamental to business resilience, productivity, and long-term success. The Employment Rights Act 2025 may have updated the statutory floor, but it is the actions of employers that continue to set the high bar for employee support during times of illness.
