Occupational Sick Pay vs Statutory Sick Pay 2026/27: What's the Real Difference?
Statutory Sick Pay is £123.25/week, paid from day one for eligible employees in 2026/27. Occupational sick pay schemes usually pay far more — but only for a set period, after which many employees drop back down to the statutory floor. Here's how the two interact.
The Legal Floor vs the Contractual Extra
Every eligible employee in the UK has a right to Statutory Sick Pay: £123.25/week for 2026/27, payable for up to 28 weeks of sickness absence, as long as average weekly earnings are at least £129/week. From April 2026, the old rule requiring three unpaid "waiting days" before SSP kicked in was scrapped under Employment Rights Bill reforms — SSP is now payable from day one of eligible sickness.
That £123.25/week is the legal minimum, not the whole picture. Many employers — especially larger organisations, the public sector and unionised workplaces — offer occupational sick pay (OSP) on top of this floor, written into your contract or staff handbook. OSP schemes vary hugely: some pay full salary for weeks or months, others pay half pay after an initial full-pay period, and some very small employers offer nothing beyond SSP at all.
Worked Example 1: Full Pay, Then a Drop to SSP
Aisha earns £32,000 a year (£615.38/week gross) and has three years' service at a company offering 8 weeks full pay followed by 8 weeks half pay, then SSP only, for employees with her length of service.
During her first 8 weeks off sick, she continues to receive her normal gross pay of £615.38/week (her OSP entitlement is inclusive of SSP, so the £123.25/week statutory element is simply folded into that full-pay figure). Income tax and National Insurance are deducted as normal from this amount, exactly as from ordinary salary.
If her illness continues into weeks 9–16, her pay halves to roughly £307.69/week. From week 17 onwards, assuming she remains within her 28-week SSP window, her pay drops to the statutory rate of £123.25/week — a fall of nearly £500/week from her normal salary, and a moment that catches many employees off guard if they haven't checked their sick pay policy in advance.
Worked Example 2: SSP Only, No Occupational Scheme
Marcus works for a small retailer with no enhanced sick pay scheme — SSP is all he's entitled to. He earns £22,000 a year (£423/week gross), comfortably above the £129/week Lower Earnings Limit, so he qualifies for the full statutory rate.
From day one of a qualifying sickness absence, Marcus receives £123.25/week — a drop of around £300/week compared with his normal pay. Over a 4-week absence, he'd receive £493 in SSP compared with roughly £1,692 in normal gross pay, a difference of nearly £1,200. This gap is exactly why many employees take out income protection insurance or check whether their employer offers any discretionary top-up before relying on SSP alone.
Worked Example 3: Comparing Two Employers for the Same Salary
Consider two employees, both earning £35,000 a year (£673.08/week gross), both off sick for 12 weeks, but working for employers with very different sick pay policies.
| Week range | Employer A (full pay 12 wks) | Employer B (SSP only) |
|---|---|---|
| Weeks 1–12 | £673.08/week (full pay, gross) | £123.25/week |
| Total over 12 weeks | £8,076.96 | £1,479.00 |
| Difference | — | £6,597.96 less than Employer A |
The scale of that gap — nearly £6,600 over just 12 weeks for identical salaries — shows why checking your contract's sick pay clause matters as much as checking your salary when comparing job offers.
What Happens When OSP Runs Out
Once a contractual OSP entitlement is exhausted, most schemes drop the employee to SSP alone for the remainder of their 28-week statutory entitlement, provided they're still off sick and still meet the earnings threshold. After the full 28 weeks of SSP is used, statutory sick pay stops entirely, and employees who remain unable to work may need to claim Employment and Support Allowance (ESA) or Universal Credit, depending on circumstances.
It's worth modelling this drop-off in advance using
Statutory Sick Pay Calculator
Calculate Statutory Sick Pay (SSP) entitlement and how much you will receive when off sick.
Open Sick Pay (SSP) calculatorTax Treatment Is Identical
A common misconception is that SSP is somehow tax-free because it's a state-mandated minimum. It isn't — SSP and any employer OSP top-up are both taxed as ordinary employment income, with income tax at your marginal rate (20%, 40% or 45%) and employee National Insurance (8% up to £50,270, 2% above) deducted through PAYE exactly as with normal salary. There's no special exemption for either type of sick pay, and both count toward your annual taxable income for Personal Allowance and student loan repayment purposes.
Comparing the Two Systems at a Glance
| Feature | Statutory Sick Pay (SSP) | Occupational Sick Pay (OSP) |
|---|---|---|
| Legal requirement | Yes, minimum for eligible employees | No, entirely discretionary |
| 2026/27 rate | £123.25/week flat rate | Varies — often full or half salary |
| Duration | Up to 28 weeks | Set by employer policy, commonly weeks to months |
| Eligibility threshold | AWE of at least £129/week | Set by employer, often tied to length of service |
| Starts from | Day one of sickness (from April 2026) | Immediately, per contract terms |
| Tax treatment | Taxed as normal income | Taxed as normal income |
Bottom Line
SSP guarantees a floor of £123.25/week for up to 28 weeks — useful, but a significant drop from most people's normal salary. Occupational sick pay, where offered, can bridge that gap substantially, but it's a contractual perk, not a legal right, and it usually runs out well before the statutory 28-week ceiling. Check your contract's sick pay policy before you need it, and run your numbers through
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
Open Take-Home Pay calculatorFrequently asked questions
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