NHS Sick Pay Guide for Employers

NHS Sick Pay operates differently from the typical contractual sick pay arrangements found in the private sector. Employers working with NHS staff, recruiting from the NHS or engaging workers with previous NHS service must understand how the scheme functions. The rules are set out primarily in the NHS Terms and Conditions of Service Handbook, known as Agenda for Change. These rules determine how much sick pay a worker may receive, how long it lasts and how service is counted.

What this article is about: This guide explains NHS Sick Pay in a way that supports HR directors and employers dealing with staff who are either currently NHS employees or have moved between NHS and non-NHS roles. It outlines the statutory and contractual framework, how service is calculated, how full and half-pay entitlements work and the HR risks when applying or interpreting NHS Sick Pay. The article also highlights practical points for managing sickness absence, handling evidence requirements, mitigating Equality Act risks and understanding complex issues such as continuous service, capability processes and TUPE transfers.

NHS Sick Pay is not the same as Statutory Sick Pay. It is a contractual entitlement with clear rules on eligibility, calculation and duration. Employers who fail to understand these rules risk miscalculating sick pay, mishandling absences or making incorrect decisions about staff with NHS backgrounds. This guide provides a clear, legally-grounded explanation to help you apply consistent HR practice and remain compliant with UK employment law.

Section A: Understanding NHS Sick Pay

NHS Sick Pay is a contractual scheme set out in the NHS Terms and Conditions of Service Handbook (Agenda for Change). It provides employees with periods of full and half pay during sickness absence, depending on their length of continuous service. For employers outside the NHS, understanding this framework matters when recruiting from the NHS, managing ex-NHS employees who may assume they retain certain rights or interpreting continuous service where TUPE applies. For NHS employers, the rules underpin day-to-day decision making on absence, capability processes, record-keeping and pay calculations, including how much contractual sick pay is available in any rolling 12-month period.

1. What NHS Sick Pay is

NHS Sick Pay is a contractual entitlement that operates in addition to Statutory Sick Pay. It provides enhanced pay during sickness absence based on length of service. It is not discretionary, although misuse of sick leave or conduct issues can affect entitlement. It is governed by national terms rather than local policy variation, which means the rules apply uniformly across Agenda for Change posts unless a local agreement expressly modifies them. The entitlements are applied by reference to a rolling 12-month period, so HR teams must understand both the service thresholds and how absence is recorded over time.

2. Who is eligible under Agenda for Change

Eligibility is tied directly to Agenda for Change employment. Most NHS employees fall under these terms except for very senior managers, medical and dental staff and some locally employed roles. For Agenda for Change employees, entitlement starts from the first day of employment, although the duration of sick pay increases with service. Bank staff and agency workers are generally excluded unless they have separate contracts that state otherwise. Where bank workers do hold substantive or hybrid contracts recognised under Agenda for Change, they may gain access to NHS Sick Pay and employers must check the specific contractual position before confirming eligibility.

3. Continuous service rules

Continuous service is central to determining the amount of NHS Sick Pay available. The NHS Handbook recognises reckonable service with any NHS employer where there has been no break longer than the permitted period—typically one week, although some breaks up to 12 months may still count in limited circumstances such as childcare, study or reserved armed forces duties. Employers taking on former NHS staff must check whether service continuity is preserved by contract, by agreement or by TUPE transfer. Misunderstanding service continuity can lead to incorrect sick pay calculations within the rolling 12-month entitlement window or disputes about whether an employee has moved into a higher entitlement band.

4. Sick pay during probation

Probation does not remove a worker’s right to NHS Sick Pay. Even new starters can access sick pay according to the standard service-based schedule. However, excessive absence during probation can activate capability procedures. HR teams must handle these cases carefully to avoid allegations that sickness has been treated as misconduct or that disability-related absences have been penalised unlawfully. Some local policies allow incremental pay progression or pay step reviews to be delayed where there has been significant absence during probation, but these arrangements do not reduce the employee’s contractual NHS Sick Pay entitlement and should be clearly separated from sick pay decisions.

5. Interaction with employer contractual sick pay

Non-NHS employers sometimes assume that an ex-NHS employee’s service automatically transfers to their new organisation. This is incorrect unless the new contract explicitly recognises the previous service or a TUPE transfer is involved. NHS Sick Pay entitlements do not carry over into private, charity or local authority roles unless agreed contractually. Some public sector organisations and local government schemes have reciprocal policies for recognising NHS service for certain benefits, but this is never automatic and must be clearly set out in the contract or relevant policy. Employers should therefore be clear during recruitment about whether any prior NHS service will be recognised for contractual sick pay purposes and, if so, to what extent.

6. Section Summary

NHS Sick Pay is a structured entitlement grounded in Agenda for Change rules. Eligibility depends on employment under these terms, and entitlements are determined by continuous and reckonable service, applied within a rolling 12-month period. Employers must understand how service continuity works, how probation interacts with entitlement and when past NHS service may or may not be recognised, including the limits of any reciprocal arrangements outside the NHS. A clear grasp of these rules provides a foundation for lawful, consistent and fair management of absence and sick pay decisions.

Section B: NHS Sick Pay Entitlements & Calculations

NHS Sick Pay follows a structured entitlement system tied to the employee’s length of continuous service. The scheme sets out specific periods of full pay and half pay, alongside rules on how service is counted, how absences link together for statutory purposes and how NHS Sick Pay interacts with Statutory Sick Pay. These entitlements are applied within a rolling 12-month period rather than a calendar year, so employers working within or alongside the NHS must apply these rules precisely to avoid pay errors, employee disputes or incorrect triggers during long-term absence management.

1. Entitlement structure based on length of service

Under Agenda for Change, NHS Sick Pay entitlement is defined as follows:

During the first year of service: one month full pay and two months half pay.

During the second year of service: two months full pay and two months half pay.

During the third year of service: four months full pay and four months half pay.

During the fourth and fifth years of service: five months full pay and five months half pay.

After five years of service: six months full pay and six months half pay.

These entitlements represent the maximum available within a rolling 12-month period. HR must recalculate the entitlement window each time a sickness episode occurs to ensure the correct balance of full and half pay is applied, taking into account all previous absences in that 12-month look-back period. Misapplication often arises where an employee has had multiple short absences within the year and earlier episodes have not been fully factored into the entitlement calculation.

2. Full pay and half pay periods

Full pay means the employee continues to receive their normal contractual earnings, including basic salary and regularly paid allowances. Half pay represents 50% of those contractual earnings. Both full and half pay are subject to adjustments where the combined sum of NHS Sick Pay and Statutory Sick Pay must not exceed normal pay. Employers must also consider the impact of salary sacrifice arrangements, overtime patterns and unsocial hours premia when calculating entitlements. In cases involving work-related injury or disease, separate provisions such as NHS Injury Allowance may apply in addition to NHS Sick Pay, potentially topping up overall income to a defined percentage of pay subject to eligibility criteria.

3. How reckonable service is calculated

Reckonable service includes all NHS employment with no break longer than the permitted limit. Periods of authorised leave, such as parental leave or certain protected absences, count towards reckonable service. Breaks for study, childcare or reserved forces duties may also be included if they meet the criteria in the NHS Handbook. Service with non-NHS organisations does not normally count unless preserved through TUPE or contractual agreement. Errors in calculating reckonable service are a common cause of pay disputes, particularly when employees move between NHS organisations or return after a period of authorised absence and expect to retain their previous sick pay banding.

4. Linking periods of sickness

Periods of sickness separated by 28 days or fewer count as a single period for the purposes of Statutory Sick Pay and may also affect how HR teams view absence patterns for management purposes. The 28-day rule is a statutory SSP concept rather than a separate NHS Sick Pay mechanism. For NHS Sick Pay, employers must instead focus on the total amount of sick pay used in the rolling 12-month period and how earlier absences reduce the remaining full or half-pay entitlement. Employers managing frequent short-term absences must review absence histories carefully to ensure correct SSP linkage and accurate NHS Sick Pay administration.

5. How NHS Sick Pay sits alongside SSP

NHS Sick Pay operates on top of Statutory Sick Pay. During full-pay periods, SSP is effectively included within the employee’s normal pay. During half-pay periods, SSP is usually added on top unless the combined total would exceed normal pay. Employers must monitor SSP entitlement to ensure it is paid correctly and that appropriate notifications are provided to employees when SSP entitlement ends. SSP is subject to its own statutory rules on qualifying days and has a maximum duration of 28 weeks; when SSP comes to an end, employers must issue the required SSP1 form so that employees can consider claiming benefits such as Employment and Support Allowance or Universal Credit as appropriate.

6. Treatment for injury at work

Where an injury, illness or disease is attributable to work, the NHS scheme provides additional protections. NHS Sick Pay will still apply in line with service-based entitlements, but the separate NHS Injury Allowance may be payable where the criteria are met. Injury Allowance is a distinct contractual benefit designed to top up an employee’s income (for example to a defined percentage of pay) where their earnings are reduced because of a work-related injury or disease. The rules are strict: the injury must be directly connected to the employee’s duties and supported by occupational health or management investigation. Handling these cases incorrectly can expose the employer to liability under health and safety law and undermine trust in the absence management process, particularly if employees feel that work-related injuries have not been properly recognised.

7. Section Summary

NHS Sick Pay calculations depend heavily on length of service, the rolling 12-month entitlement window, linkage of absences for SSP purposes and correct integration with statutory rules. Entitlements are generous compared with many private sector schemes, but they must be administered strictly in line with the Handbook and with SSP legislation. Employers must understand how full pay, half pay, reckonable service, SSP linkage and additional protections such as Injury Allowance interact to maintain compliance and ensure employees receive the correct payments throughout sickness absence.

Section C: Employer Responsibilities & Compliance

Employers with NHS staff, or organisations managing employees who previously worked within the NHS, must apply NHS Sick Pay rules consistently and lawfully. Compliance involves statutory requirements, contractual obligations, equality considerations and accurate record-keeping. Mistakes in these areas often lead to grievances, unlawful deduction claims or capability disputes. This section outlines the core responsibilities for HR teams and line managers when administering NHS Sick Pay and managing sickness absence.

1. Managing absence lawfully

Absence management must follow both the NHS Terms and Conditions of Service Handbook and wider employment law. Employers must ensure that sickness absence triggers are applied consistently, capability processes are fair and absence reviews reflect the individual’s circumstances. Policies must align with ACAS guidance and avoid approaches that could be considered discriminatory. Long-term sickness must be handled through a structured process, incorporating medical evidence and regular review meetings. For any consideration of dismissal on the grounds of ill-health capability, employers must ensure that up-to-date medical evidence is obtained and all reasonable adjustments have been properly explored.

2. Record-keeping and evidence requirements

Accurate absence records are essential for applying NHS Sick Pay correctly. HR must monitor the rolling 12-month entitlement period, track SSP linkage between absences and record any half-pay or full-pay balances used. Employees must self-certify during the initial phase of an absence and provide fit notes for longer periods. Since the expansion of the fit note rules in 2022, fit notes may be issued by doctors, nurses, occupational therapists, physiotherapists or pharmacists. Failure to manage evidence properly can lead to overpayments, underpayments or disputes about whether an absence was genuine.

3. Fit notes and OH referrals

Fit notes guide employers in assessing an employee’s ability to work, including whether they are “not fit” or “may be fit” with adjustments. For longer absences or complex health conditions, employers should refer the employee to Occupational Health. OH assessments help inform reasonable adjustments, phased return plans and capability decisions. Employers who ignore or delay OH input risk unfair dismissal claims or failure to accommodate an employee’s health needs properly.

4. Equality Act risks and reasonable adjustments

Many sickness absence cases intersect with disability under the Equality Act 2010. Employers must identify potential disability-related sickness and consider reasonable adjustments, such as modified duties, altered hours, equipment or phased returns. They must avoid treating disability-related absence as misconduct. Absence triggers may need modification where they disproportionately impact a disabled employee, and disability-related absence may need to be recorded separately for management purposes. Failure to accommodate these obligations exposes employers to discrimination, failure to make reasonable adjustments and unfavourable treatment claims.

5. Conduct vs capability for sickness cases

Sickness absence should be managed as a capability issue rather than a conduct issue unless there is evidence of abuse or dishonesty. Employers must distinguish between genuine health-related absences and misconduct such as falsifying medical evidence. Incorrect classification can result in procedurally flawed dismissals or breach of contract. Employers should document decision-making carefully and ensure senior HR oversight in complex cases.

6. When NHS Sick Pay runs out

When an employee exhausts their NHS Sick Pay entitlement, SSP may continue until its statutory limit of 28 weeks is reached. Employers must inform employees when sick pay is ending, issue the required SSP1 form when SSP ends and discuss alternatives such as unpaid leave, phased return or redeployment. Where dismissal is considered, employers must follow a fair capability process, supported by up-to-date medical evidence and reasonable adjustments considerations.

7. Section Summary

Compliance with NHS Sick Pay rules requires accurate record-keeping, lawful management of absence, appropriate use of OH advice and careful handling of equality issues. Employers must distinguish between capability and conduct, ensure evidence is properly collected and maintain fair processes when entitlement ends. Robust compliance protects both employee rights and organisational risk exposure.

Section D: Workforce Management Issues for Employers

Employers frequently encounter complex workforce management questions when dealing with NHS employees or individuals transitioning between NHS and non-NHS roles. These issues arise in recruitment, recognition of service, administration of contractual benefits and the handling of long-term sickness. Understanding how NHS Sick Pay interacts with broader employment frameworks helps employers avoid disputes and ensure fair, transparent HR practice.

1. Hiring staff with previous NHS service

Many ex-NHS employees assume their NHS Sick Pay entitlement will transfer to a new organisation. This is incorrect unless the employer agrees contractually to recognise previous NHS service. Employers must set expectations clearly during recruitment, particularly where the organisation offers its own contractual sick pay scheme. Offers of employment should confirm whether prior NHS service will count towards any contractual benefits and should avoid ambiguous statements that could later be construed as contractual promises. Where any recognition of previous NHS employment is intended, HR should define the scope and limits in writing so that line managers can apply it consistently in future absence decisions.

2. Recognising prior service for contractual benefits

Even outside the NHS, employers may choose to recognise previous NHS service for certain benefits such as annual leave or sick pay. If they do so, the contract must define which parts of prior service count, how breaks will be treated and whether all NHS employment is included. Without clear drafting, employees may argue that full NHS service should apply to all benefits. Some public sector and local government employers operate reciprocal arrangements under which NHS service can be counted towards particular entitlements, but these schemes depend on express policy or contractual wording and do not apply automatically. Clear clauses prevent misunderstandings and ensure HR teams apply benefits consistently.

3. NHS fixed-term and bank workers

Bank staff and fixed-term NHS workers do not usually accrue NHS Sick Pay in the same way as permanent Agenda for Change employees. Bank workers are typically paid only for hours worked and may not have sufficient contractual continuity to qualify for enhanced sick pay. However, where individuals hold substantive or hybrid contracts that fall within Agenda for Change, they may have NHS Sick Pay entitlements that need to be respected. Employers recruiting from these groups must check the specific contractual arrangements, as some NHS Trusts issue contracts that confer partial or full entitlements. Failing to verify employment status can lead to incorrect assumptions about eligibility.

4. Managing long-term sickness and return-to-work plans

Long-term absence requires careful coordination between HR, managers, Occupational Health and the employee. For NHS employees, the duration of full and half pay may influence return-to-work discussions, as employees may seek to time recovery phases around the end of full-pay periods. Employers must maintain a structured approach, using regular review meetings, updated medical advice, reasonable adjustments and phased returns where appropriate. A clear return-to-work plan supports employee wellbeing and reduces litigation risk, particularly where there is a disability or long-term health condition that requires ongoing workplace adjustments.

5. Redundancy, TUPE and NHS service continuity

TUPE transfers involving NHS services can preserve continuous service for contractual rights, including sick pay. Employers inheriting staff under TUPE must honour existing sick pay entitlements unless renegotiated lawfully. Redundancy situations also require careful attention: continuous service may impact redundancy pay calculations and consultation arrangements. Employers must verify continuous service at the start of any restructuring to avoid miscalculating payments or undermining the fairness of the process. Post-transfer changes to sick pay or related contractual terms are tightly constrained; they should not be made for a reason connected with the transfer unless there is a genuine economic, technical or organisational (ETO) reason entailing changes in the workforce and appropriate consultation has taken place.

6. Section Summary

Effective management of NHS-related workforce issues depends on accurate recognition of prior service, proper assessment of employment status and clear communication with new hires. Employers must handle long-term sickness through structured processes and understand when TUPE preserves NHS service continuity and constrains contractual change. Addressing these issues proactively reduces disputes and ensures that contractual entitlements, including NHS Sick Pay, are applied lawfully and consistently.

Frequently Asked Questions

How does NHS Sick Pay differ from Statutory Sick Pay?

NHS Sick Pay is a contractual entitlement under the NHS Terms and Conditions of Service (Agenda for Change). It provides full-pay and half-pay allowances based on length of service within a rolling 12-month period. Statutory Sick Pay is a statutory minimum payable by all employers subject to eligibility rules and qualifying days. NHS Sick Pay sits on top of SSP and must not exceed normal pay when combined, so employers must manage both regimes together.

Is NHS Sick Pay contractual or discretionary?

NHS Sick Pay is a contractual entitlement. Employers must apply it consistently and in accordance with the NHS Handbook and any local policies that supplement it. However, entitlement may be restricted or withheld where there is evidence of abuse, fraud or conduct concerns related to sickness absence, provided decisions are evidence-based and procedurally fair.

Does NHS Sick Pay continue during maternity?

NHS Sick Pay is separate from maternity pay. A period of sickness prior to maternity leave may attract NHS Sick Pay, but once maternity leave begins, maternity pay arrangements take precedence. Sickness during maternity leave is treated differently and does not usually attract NHS Sick Pay; instead, the statutory and contractual maternity pay framework applies.

Do employers have to recognise previous NHS service?

Outside of TUPE transfers or explicit contractual agreements, private or non-NHS employers do not have to recognise previous NHS service for sick pay or other benefits. Any recognition of service must be clearly stated in the employment contract or a relevant policy. Some public sector or local government employers may operate reciprocal schemes that recognise NHS service for certain benefits, but these are not automatic and depend on express terms.

Can NHS Sick Pay be stopped for conduct issues?

Yes. Entitlement may be withheld or reduced if the employer has evidence of abuse of the scheme, falsified medical evidence or misconduct related to the sickness absence. Decisions of this kind must be supported by clear evidence, documented HR decision-making and fair procedure to minimise the risk of challenge.

How is injury-at-work sickness treated?

Where an injury is directly caused by work, NHS Sick Pay will apply in the usual way according to length of service, but the separate NHS Injury Allowance may also be payable if the criteria are met. Injury Allowance is designed to top up an employee’s income where their earnings are reduced as a result of a work-related injury or disease, subject to investigation and occupational health input. Misattribution or poor investigation can expose employers to health and safety risk and undermine confidence in the absence management process.

Conclusion

NHS Sick Pay provides a structured, service-based system of full and half pay that operates alongside Statutory Sick Pay. For employers, especially those recruiting from the NHS or managing staff on Agenda for Change terms, understanding how entitlement is built, how service is counted and how absence interacts with SSP is critical. Errors in these areas can result in overpayments, underpayments, employee grievances or capability disputes.

Compliance depends on accurate records, lawful absence management, early engagement with Occupational Health and careful handling of Equality Act considerations. Employers must distinguish between sickness capability and misconduct, ensure fair processes when entitlement ends and communicate clearly when taking on staff with prior NHS service. Where TUPE applies, employers must also preserve existing contractual entitlements, including sick pay, unless varied lawfully in line with the restrictions on transfer-related changes.

By applying consistent HR governance and understanding the contractual and statutory framework behind NHS Sick Pay, employers can reduce legal exposure, support effective workforce planning and ensure staff are treated fairly throughout periods of sickness absence. A clear grasp of the rolling 12-month entitlement model, the interaction with SSP and the additional protections such as Injury Allowance enables HR teams to manage absence in a way that is both legally robust and aligned with organisational values.

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