Recording Employee Sick Pay And Absences: A Guide for Small Business Employers

Someone calling in sick at the worst possible moment isn’t just inconvenient. For a small business, it’s chaos. Work slows down, stress ramps up, and suddenly everyone’s pretending they’re fine while secretly asking ChatGPT for tell-tale signs a cold is on its way.

But once the sniffles have passed, there’s a second job waiting for you: paying and recording that absence properly. Get it right and nobody thinks about it again. Get it wrong and your team will remember it for years (payroll mistakes have a long shelf life, like dried beans), and you’ll have some awkward explaining to do.

The rules also changed in April 2026, so if your sick pay knowledge dates from before then, this is your friendly nudge to refresh it.

What counts as a sickness absence?

A sickness absence is any time an employee can’t work because of illness or injury. That covers everything from a stomach bug to a broken wrist to a longer-term health condition.

For Statutory Sick Pay purposes, what matters is that they’re too ill to do their job on a day they’d normally be working. Those working days are called qualifying days (which we’ll come back to shortly).

Statutory Sick Pay (SSP): the basics

Statutory Sick Pay is the legal minimum you must pay an eligible employee who’s too ill to work. It’s paid through payroll in the same way as normal wages, on the usual payday, and it’s subject to tax and National Insurance like normal pay.

Think of it as the floor. You can always pay more, but you can’t pay less.

Who’s eligible for SSP (and who isn’t)?

Since the 6th of April 2026, SSP is a day-one right and the lower earnings limit has gone. That means employees no longer need to earn a minimum amount to qualify, so lower-paid staff who missed out before are now covered.

In general, an employee qualifies if they:

You generally don’t have to pay SSP to:

Not everyone who ‘works’ for you will be entitled to SSP, and employees and contractors ae not the same thing.

How much is SSP, and how long does it last?

For the 2026/27 tax year, SSP is payable from day one of sickness (the old three-day waiting period has been scrapped). The amount you pay is the lower of:

It’s paid for up to 28 weeks.

The 80% option exists because the government removed the minimum earnings threshold, allowing part-time and lower-paid staff to qualify for sick pay for the first time. It really only affects lower earners. Here’s how it plays out:

To work out average weekly earnings, you look at what the employee was paid over roughly the eight weeks before their sickness began.

Waiting days are gone: qualifying days explained

In the old days (well, we mean pre-April 2026), employees had to wait three unpaid days before SSP kicked in. Those waiting days, as we’ve mentioned, have been abolished. SSP is now payable from the first qualifying day of sickness.

Qualifying days are the days an employee normally works. You’ll usually agree these with them, and they’re often Monday to Friday, but not always. If someone works Tuesday to Saturday, those are their qualifying days.

Working out the daily rate

To work out the daily rate, divide the weekly SSP figure by the number of qualifying days in that week. For example, someone with five qualifying days on the full rate gets £24.65 per day (£123.25 ÷ 5).

What to do when an employee reports in sick

This is where a clear process saves you headaches. Set it out in your company handbook, and tell people about it (and get them to sign to confirm they’ve read it). Otherwise, if they don’t follow it, that’s on you. Soz.

A solid procedure might say:

That conversation isn’t an interrogation; you aren’t the FBI. It’s just a chance to understand why they were off and if you can help. Maybe an employee is struggling with childcare and a small change to their hours would sort it. Maybe something at work is making them ill. You can’t fix what you don’t know about.

What to record when someone calls in sick

Recording absences accurately in your bookkeeping

Whatever system you use, the goal is the same: a clear, accurate record of who was off, when, and what you paid them.

Record the absence

Log the start and end dates of every sickness absence, along with the employee’s qualifying days. A shared spreadsheet, an HR tool or your payroll software’s absence feature all do the job, so use whichever suits your team.

What matters is that it’s consistent, up to date and easy to find when someone asks ‘wait, how many days was Molly off in March?’

Real-time tracking beats a pile of sticky notes every time. Sticky notes are not a records system, however beautifully colour-coded.

Record the cost

SSP is a payroll cost, so it belongs alongside your other wages and salaries. If you pay anything above the statutory minimum, you might want to track that separately so you can see what sickness is actually costing the business (sobering, but useful).

Unlike some other statutory payments, SSP isn’t something you can reclaim from HMRC, so there’s no recoverable amount to account for. It’s a straightforward business cost.

Sick pay above the statutory minimum (occupational sick pay)

Some employers go further than SSP and offer occupational sick pay, which is also called contractual or company sick pay. This is whatever you’ve agreed in your employment contracts. For example, full pay for the first two weeks, or a sliding scale based on length of service.

A few things to remember:

Fit notes and when you need one

Here’s how it works:

A fit note may also say the employee may be fit for work with changes, such as phased hours or lighter duties. If that’s the case, talk to them about whether you can accommodate it.

Long-term sickness: what changes

When an absence drags on, a few things happen:

Long-term absence is where most employers feel out of their depth. Don’t wing it, it’s not a wedding speech. Get advice early.

Common mistakes employers make with sick pay

Keeping records HMRC will be happy with

Absence records contain sensitive personal data about someone’s health, so you absolutely must handle them carefully. Under UK GDPR, that means:

Nobody needs the whole office knowing Tom’s away because his dog bit his toe off.

If you don’t have dedicated HR software, secure options include password-protected folders, encrypted spreadsheets and restricted-access drives.

Make sure employees understand this information is confidential; trust matters more than most businesses realise.

For payroll purposes, keep a clear record of:

SSP records must be kept for at least 3 years after the end of the tax year which they relate to. Which is exactly why tidy bookkeeping pays off.

Wrapping up: staying on top of sick pay without the headache

Sick pay isn’t glamorous, but it’s one of those things that’s easy once you’ve got a process. Know who’s eligible, pay from day one, link absences properly, keep tidy records and treat your team like humans (not like suspects).

And once the sick pay is sorted, there’s still the rest of your books to keep on top of. Create a free Pandle account today and make the bookkeeping the easy bit.