What Happens When Sick Pay Runs Out

Employees can find themselves without income if their Statutory Sick Pay or contractual sick pay entitlement has been exhausted while they remain unfit for work. For employers and HR professionals, this point in the absence cycle is often sensitive and high risk. Decisions taken immediately after sick pay ends can affect capability procedures, discrimination risk, workplace relations and employee welfare. Clear guidance ensures that HR teams respond consistently, lawfully and with appropriate communication.

What this article is about:
This article explains the legal position when sick pay runs out, the employer’s duties, the options available to employees, and the steps HR should take to manage continued absence fairly. It sets out how SSP operates at the end of entitlement, how contractual sick pay interacts with SSP, and what employers must consider when deciding on further support or formal action. It is written for business owners and HR professionals handling queries or making decisions when an employee’s sick pay ends but they remain unable to return to work.

Section A: SSP Ending — Legal Position & Employer Duties

When an employee’s Statutory Sick Pay (SSP) reaches the 28-week limit, employers must understand exactly what changes, what remains the same and what duties continue. The end of SSP does not bring the employment relationship to an end, nor does it remove the employer’s wider duties under employment law or the Equality Act 2010. This section sets out the legal framework governing the end of SSP and the steps employers are expected to take to manage the situation lawfully and consistently.

Employers frequently encounter uncertainty once SSP entitlement expires, particularly where an employee remains unfit for work with no current return date. In these situations, HR teams must handle communication, medical evidence and ongoing absence management with care. Incorrect assumptions — such as believing that the end of SSP automatically triggers dismissal — can result in legal and practical risk. This section outlines the lawful position and the practical measures required.

1. When SSP ends under UK law

Statutory Sick Pay can be paid for up to 28 weeks in a single period of incapacity for work (PIW) or linked periods. Once the 28-week entitlement has been reached, the employer must stop paying SSP and notify the employee. The statutory entitlement cannot be extended, even if the employee remains unfit for work, is awaiting treatment or has not yet been assessed by occupational health.

Periods of sickness are treated as linked where each period of incapacity is separated by no more than eight weeks. Linked PIWs are effectively treated as one period for SSP purposes, so weeks paid in earlier linked absences count towards the 28-week maximum. Where the gap between sickness absences is more than eight weeks, the periods will usually not link and a new SSP entitlement may arise, subject to the statutory qualifying conditions.

Employers should therefore keep accurate records of sickness episodes and SSP payments to avoid overpaying or underpaying. Clear records are also important evidence if there is any dispute about whether the 28-week limit has been reached.

SSP ending does not change the employee’s status. They remain employed, continue to accrue holiday and retain statutory employment rights under the Employment Rights Act 1996 unless and until employment is lawfully terminated.

2. Required employer notifications

Employers must issue an SSP1 form when SSP is coming to an end or where SSP is not payable. The SSP1 must be provided either:

• within seven days of the employer becoming aware that the employee will not be entitled to SSP, or
• on or before the end of the 28-week SSP entitlement where SSP is stopping.

The employee uses the SSP1 to claim New-Style Employment and Support Allowance (ESA) or, depending on circumstances, Universal Credit. Failure to issue an SSP1 promptly can delay the employee’s access to financial support and may result in complaints or an internal grievance.

Notification should be clear, written and supported by an explanation of what the end of SSP means. Employers should avoid implying that employment will end or that absence reviews will always result in dismissal. The communication should instead confirm the position on SSP while directing the employee to discuss ongoing medical certification and next steps.

3. Fit notes and continuing sickness

Even though SSP has ended, the employer is entitled to ongoing medical evidence if the employee remains off sick. In line with the Social Security (Medical Evidence) Regulations, employees must self-certify for the first seven calendar days of absence and can be required to provide fit notes for periods beyond this. Fit notes should continue to be issued for the duration of the absence. This evidence is central to absence management, occupational health referrals and any future capability procedure.

Employers cannot insist on a return to work merely because SSP has finished. The assessment of fitness to work is a medical matter. However, employers may ask occupational health to explore whether a return-to-work plan, adjusted duties or phased hours could be accommodated, taking into account both clinical opinion and operational requirements.

Where employees fail to provide medical evidence without good reason, normal absence procedures can apply, including warnings where appropriate and, in serious cases, escalation through the disciplinary or capability route.

4. Impact on employment status

Ending SSP does not change the contractual relationship. The employee continues to be employed unless a formal process — such as a capability dismissal — is followed in line with the Employment Rights Act 1996 and relevant case law. Employment rights including protection from unfair dismissal, protection from discrimination, paid annual leave accrual and, where applicable, pension contributions remain intact while the contract of employment continues.

If the employee remains off sick for a prolonged period, the employer may consider a capability review, but this must follow a fair, staged process. Medical dismissal should only be considered after obtaining up-to-date medical evidence, consulting the employee, reviewing reasonable adjustments, and assessing whether a return to work is likely within a reasonable timeframe. In assessing what is reasonable, employers should consider whether it is realistic to wait longer for a potential return, in light of medical prognosis and the operational impact on the organisation.

Throughout this stage, employers must avoid assumptions about disability or prognosis and must base decisions on evidence. Where there is any indication that the condition may amount to a disability, the Equality Act duty to consider reasonable adjustments will be relevant, even though SSP has ended.

Section A Summary
The end of SSP marks a change in entitlement to statutory sick pay, not a change in employment rights or status. Employers must issue an SSP1 promptly, manage communication carefully, require continuing fit notes in line with medical evidence regulations, and ensure sickness absence procedures remain fair and evidence based. The employer’s legal duties continue despite SSP having ended, and the focus should remain on managing absence lawfully while supporting the employee through medical assessment and consistent communication.

Section B: Contractual Sick Pay Ending — Policies & Risk

Where an employer offers contractual sick pay on top of Statutory Sick Pay (SSP), the point at which that enhanced entitlement ends often raises additional legal and employee-relations considerations. Contractual sick pay schemes differ widely across workplaces. Some mirror SSP rules, while others provide more generous periods of full or part pay. Whatever the structure, employers must ensure the rules are clearly set out and applied consistently to avoid allegations of unfair treatment, unlawful deductions or breach of contract.

This section explains how contractual sick pay interacts with SSP, the legal position when enhanced sick pay ends and the risks associated with handling these provisions incorrectly. It also outlines good practice for HR teams when managing employees whose contractual sick pay has been exhausted but who remain unfit for work.

1. Interaction between company sick pay and SSP

Contractual sick pay typically sits on top of SSP, meaning employers pay at the enhanced rate while SSP continues to accrue in the background. Once contractual sick pay ends, the employee may still have SSP entitlement available unless both run concurrently as part of the scheme’s design.

Because schemes vary, employers should consult the employment contract, staff handbook or collective agreement to determine how sick pay interacts. If the contract states that contractual sick pay runs concurrently with SSP, this must be observed. If it sits above SSP, HR must calculate any remaining statutory entitlement accurately.

Accurate payroll records and absence logs are essential to ensure payment periods are properly tracked. Miscalculations may result in overpayments or underpayments, giving rise to unlawful deduction from wages claims under Part II of the Employment Rights Act 1996.

2. Contractual entitlements and policy requirements

Employees must receive the contractual sick pay entitlement promised under the contract. If the contract specifies a set number of weeks at full or half pay, the employer must honour that entitlement provided the employee meets any stated conditions, such as timely provision of fit notes or engagement with occupational health.

Where discretionary sick pay schemes apply, discretion must be exercised consistently, rationally and without discrimination. Poorly explained or inconsistently applied discretion can result in grievances, allegations of unfairness or breach of the implied term of mutual trust and confidence.

Where enhanced pay has conditions attached — such as attendance standards, communication requirements or participation in occupational health assessments — these criteria must be applied strictly and fairly. Employers should document the basis for any decision not to extend or continue contractual sick pay, particularly where discretion is being exercised.

3. Managing long-term sickness after pay ends

When contractual sick pay has ended, and SSP has also expired, the employee may remain unfit for work. This stage can be challenging because the loss of income may affect the employee’s wellbeing, engagement and communication.

Employers should continue to follow their sickness absence procedures. Key steps typically include:

• maintaining regular, structured contact
• requesting up-to-date fit notes
• referring the employee to occupational health
• assessing whether reasonable adjustments could support a return
• reviewing the feasibility of a phased return, alternative duties or redeployment
• scheduling formal absence review meetings where appropriate

Any perception that the employer has disengaged once paid sick leave ends can undermine the fairness of later decisions. Consistency in process is essential to maintaining trust and demonstrating procedural fairness.

4. Risk of breach of contract or unfair treatment

Ending contractual sick pay prematurely or applying rules inconsistently can expose employers to legal claims. Risks include:

• Unlawful deduction from wages, where contractual sick pay is withheld contrary to the employment contract
• Breach of contract, including breach of the implied term of mutual trust and confidence
• Discrimination, particularly if the underlying health condition meets the disability definition under the Equality Act 2010
• Constructive dismissal, if poor treatment causes a fundamental breach of contract
• Grievances or industrial relations disputes, where contractual provisions are applied inconsistently

HR teams should audit contractual sick pay practices periodically to ensure they remain legally compliant and consistent with policy, contracts and case law on discretion and fairness. Transparent decision making and proper record keeping underpin defensible practice in disputes.

Section B Summary
Contractual sick pay schemes must be administered strictly in line with employment contracts and policies. When they end, employers must ensure employees understand their position and continue to follow a consistent sickness absence management process. Errors in administering contractual sick pay can lead to legal risk, including breach of contract, trust and confidence issues and discrimination. A structured, fair and evidence-driven approach protects both the organisation and the employee.

Section C: Employee Options After Sick Pay Ends

When an employee’s statutory or contractual sick pay entitlement has run out, the immediate concern is often financial. Employers and HR professionals should understand the alternative income routes available, how these interact with employment status and what support an employer can lawfully offer. This section sets out the key benefit options, workplace adjustments and medical interventions that may be available once sick pay stops, together with the considerations HR teams should keep in mind when supporting affected employees.

Employees who reach the end of sick pay are typically still unfit for work, undergoing treatment or awaiting medical assessment. The combination of ill health and loss of income often affects engagement, wellbeing and communication. Employers should handle this stage with clarity and consistency while remaining firm on evidential requirements and procedural obligations.

1. Universal Credit, ESA and other benefits

Once SSP ends, some employees may be eligible for:

• New-Style Employment and Support Allowance (ESA), which is contribution-based and requires sufficient National Insurance contributions in the relevant tax years, supported by an SSP1 form
• Universal Credit (UC), which is means-tested and may include a health element following a Work Capability Assessment
• Other support, such as Council Tax Reduction or Personal Independence Payment (PIP), which assesses daily living and mobility needs rather than employment capability

Employers should not advise on eligibility but must ensure the SSP1 form is issued on time and may signpost GOV.UK resources. HR teams should avoid suggesting whether an employee will qualify for specific benefits, as entitlement depends on individual financial and medical circumstances.

For some employees, ESA or UC claims may result in a Work Capability Assessment. This does not determine the employer’s capability process but may inform discussions about prognosis or likely timescales for recovery.

2. Permitted work and phased return options

If the employee wishes to attempt a return to work, even in a limited capacity, employers can explore suitable arrangements provided the employee is medically fit to try. These options may include:

• a phased return plan with reduced hours
• adjusted duties that avoid aggravating symptoms
• temporary workplace modifications
• remote or hybrid arrangements where compatible with the role

An occupational health assessment should guide any decision, since employers cannot rely solely on the employee’s declaration of capability. If the role presents safety risks, a workplace risk assessment may also be required.

Phased returns should be documented, time-limited and regularly reviewed. Employees claiming ESA must ensure that any work undertaken complies with the permitted work rules on earnings and hours.

3. Occupational health assessments

Occupational health (OH) plays a central role once sick pay ends. The OH clinician can provide:

• prognosis and expected timeframe for return
• recommendations for reasonable adjustments
• advice on suitability for phased return or alternative duties
• an assessment of whether the condition may meet the Equality Act definition of disability
• guidance on whether the employee may be permanently unfit for the role

OH reports can only be shared with the employee’s informed consent in line with data protection requirements. Employers should discuss reports openly with the employee and consider their recommendations carefully. Where medical evidence is conflicting, a specialist medical opinion or further OH review may be needed.

If an employee refuses to attend OH assessments without reasonable grounds, the employer may proceed based on the available evidence, provided the employee has been warned of the implications of refusing participation.

4. Reasonable adjustments and ongoing support

Where the condition could amount to a disability, the Equality Act 2010 imposes a duty to consider reasonable adjustments. This duty applies regardless of sick pay status. Reasonable adjustments can include:

• changes to working hours
• equipment or assistive technology
• temporary or permanent job modifications
• altered procedures or methods of working
• phased return arrangements
• flexible working patterns where appropriate

Whether an adjustment is “reasonable” depends on the effectiveness of the change, the cost, the size of the organisation, the resources available and the impact on operations. Employers must document their consideration of adjustments and communicate decisions clearly. The duty applies only where the employer knows or could reasonably be expected to know of the disability.

In cases involving long-term or fluctuating conditions, HR teams should continue structured communication, review medical evidence regularly and ensure the employee understands the next steps in the absence management process.

Section C Summary
When sick pay ends, employees may rely on benefits, workplace adjustments or phased return arrangements to manage their ongoing health condition. Employers must handle discussions lawfully, support occupational health referrals and ensure that the Equality Act duty to consider reasonable adjustments is properly observed. A structured, evidence-led approach helps the employee understand their options and allows the employer to continue managing absence fairly.

Section D: Employer Actions & HR Decision-Making

When sick pay ends, employers must continue managing the absence in a structured, legally compliant and evidence-based manner. The end of pay does not create any new power to dismiss, nor does it lessen the employer’s duties under the Employment Rights Act 1996 or the Equality Act 2010. This stage is often where HR mistakes occur, typically through assumptions that the situation has become unsustainable simply because pay has stopped. Proper handling requires clear communication, continued assessment and consistent application of the organisation’s capability and absence procedures.

This section sets out the key actions employers should take once sick pay has run out and provides guidance on how capability, medical evidence and consultation should be managed when an employee has no definitive return-to-work date.

1. Maintaining contact with the employee

Regular, structured communication remains essential. Employers should avoid leaving long periods without contact, as this can undermine the fairness of later decisions and damage trust. Good practice includes:

• scheduled welfare meetings
• written confirmation of discussions
• reminders to provide fit notes
• clear communication about the next steps in the absence process

Communication should remain respectful and supportive. HR should explain that the end of sick pay does not affect job security but that absence reviews will continue in line with policy. Employers must avoid implying that dismissal is inevitable or predetermined.

Consistent contact helps employers gather up-to-date information and demonstrates procedural fairness should capability processes be required later.

2. Managing absence reviews and capability processes

Ongoing review meetings allow the employer to evaluate medical evidence, consider reasonable adjustments and assess whether the employee may be able to return to work in the foreseeable future. Where long-term absence continues, the employer may begin or continue a formal capability process.

A fair capability process typically involves:

• obtaining recent medical evidence
• referring to occupational health
• consulting with the employee
• considering adjustments or redeployment
• assessing whether the employee can return within a reasonable timeframe

The “reasonable timeframe” test is informed by case law, including BS v Dundee City Council, which requires employers to assess whether it is reasonable for the employer to wait any longer for the employee’s return, taking into account medical prognosis, operational impact and fairness.

Failure to follow a fair process can render any dismissal unfair, even where the employee has been absent for many months. All decisions should be evidence based and documented.

3. Disability discrimination risks and the Equality Act

Employees whose health condition has lasted, or is likely to last, at least 12 months may fall within the Equality Act definition of disability. Where disability is a possibility, employers must:

• consider reasonable adjustments
• avoid unfavourable treatment arising from disability unless objectively justified (Equality Act s.15)
• ensure capability decisions are justified and evidence based
• avoid assumptions about prognosis or capability
• ensure the employer has actual or constructive knowledge of the disability before making decisions

Ending sick pay itself is not discriminatory, but capability decisions taken without considering adjustments or ignoring medical evidence can amount to discrimination arising from disability. Employers should rely on clinical evidence when determining whether the employee can continue in the role and must document their assessment of adjustments carefully.

4. When medical dismissal may be considered

Medical capability dismissal is a last resort. Employers can only consider dismissal after:

• obtaining comprehensive, up-to-date medical evidence (ideally including occupational health)
• providing the employee with the opportunity to comment on the evidence
• considering and, where reasonable, trialling adjustments
• assessing redeployment possibilities
• determining that a return within a reasonable period is unlikely

If dismissal is ultimately the outcome, employers must give the appropriate notice. Where the employee is incapable of working during notice due to illness, they may still be entitled to statutory notice pay under sections 88–89 of the Employment Rights Act 1996. If contractual notice exceeds statutory notice, the additional period may be paid as pay in lieu of notice (PILON), depending on contractual terms.

Dismissal must include a right of appeal. Employers should also calculate any outstanding holiday entitlement. In line with case law, including Stringer v HMRC, statutory holiday continues to accrue during sickness absence and must be paid upon termination.

Medical dismissal carries legal risk. Comprehensive documentation of decision making, consistent application of policy and reliance on medical evidence are essential in defending any subsequent claim.

Section D Summary
Once sick pay ends, HR must continue managing absence in a structured and lawful manner. Contact, consultation, medical evidence and consideration of adjustments all remain central. Capability processes must be fair, consistent and based on evidence. Medical dismissal must only be considered once alternatives have been assessed. Employers who take a careful, well-documented approach protect both the organisation and the employee.

FAQs

Does employment end when sick pay ends?
No. The end of Statutory Sick Pay or contractual sick pay has no impact on employment status. Employment continues until it is formally ended through resignation or a fair dismissal process. The employer must continue to follow sickness absence and capability procedures.

Do employers have to extend sick pay?
There is no legal obligation to extend SSP or contractual sick pay. SSP ends after 28 weeks and cannot be extended. Contractual schemes must be followed as written. Where discretion exists, it must be used consistently, rationally and without discrimination.

Can an employee take holiday after sick pay ends?
Yes. Statutory holiday continues to accrue during sickness absence in line with case law, including Stringer v HMRC. Employees may take annual leave while off sick, subject to normal authorisation rules. If approved, they receive normal holiday pay, not SSP.

Can an employer dismiss someone after SSP ends?
Yes, but only through a fair capability process. Dismissal cannot be based solely on SSP ending. Employers must obtain medical evidence, consult with the employee, consider reasonable adjustments and assess whether a return within a reasonable timeframe is likely.

What benefits can employees claim after sick pay stops?
Options may include New-Style ESA, Universal Credit and, for some conditions, Personal Independence Payment. Employers should issue an SSP1 form promptly to support benefit claims but should not give eligibility advice.

Conclusion

When an employee’s sick pay runs out, the employer’s legal responsibilities continue. SSP or contractual sick pay ending does not alter employment status and does not provide grounds for automatic dismissal. HR teams must maintain communication, request up-to-date fit notes, consider reasonable adjustments and follow a structured absence management process. Decisions must be based on medical evidence rather than assumptions, particularly where disability may be a factor.

A fair and consistent approach protects the organisation from legal risk while giving the employee clarity about the process and their options. Proper documentation, transparent communication and consideration of alternative duties or phased return arrangements form the basis of lawful decision making. Only when medical evidence confirms that a return is unlikely within a reasonable timeframe should capability dismissal be considered. Employers who follow a clear, well-documented and supportive process will manage the end of sick pay legally and effectively.

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