Sick Leave Policies For Small Businesses And Startups
Small businesses and startups are subject to the same statutory sick leave obligations as large employers. UK law protects workers regardless of the size of the business they work for. Understanding these obligations — and building a clear, proportionate sick leave policy — is essential for compliance and for maintaining good working relationships.
- Statutory and company sick pay must be paid to eligible employees — the size of the business does not affect this obligation.
- After seven calendar days of absence, a sick note for work from a registered healthcare professional is legally required.
- Guidance on SSP eligibility and calculation is available from GOV.UK for employers who process payroll manually.
- The Sick Leave Report and GOV.UK guidance provide authoritative information on employee rights during sickness absence.
- The Equality Act 2010 applies to all employers with one or more employees — reasonable adjustments for disability must be considered regardless of business size.
Write a simple, written absence policy
Even for small teams, a written policy prevents misunderstandings and provides a consistent framework. It should cover notification procedures, documentation requirements, SSP entitlement, and return-to-work expectations. It does not need to be complex — clarity matters more than length.
Include the policy in employment contracts
Key sick leave provisions — including SSP, notification requirements, and any enhanced pay arrangements — must be included or referenced in the written statement of particulars given to employees on or before their first day. Omitting this is a compliance failure.
Apply policy consistently as you grow
Inconsistent application of sick leave rules — common in fast-growing startups where informal arrangements develop — creates significant legal risk. Review and formalise arrangements as headcount increases, and ensure all line managers apply the policy in the same way.
What small businesses should know
There is no lower threshold below which statutory sick leave obligations do not apply. Even a business with a single employee must pay SSP to eligible workers. The Equality Act and unfair dismissal protections also apply, and the smaller the business, the greater the proportional risk of getting a dismissal or absence decision wrong.
This guidance is informational only and does not constitute legal advice. Employers in complex or disputed situations should seek guidance from a qualified employment law adviser or ACAS.
This guidance applies within the United Kingdom. Devolved employment law in Northern Ireland may differ in some respects.
Does a startup with only one employee still have to pay SSP?
Yes — all employers, regardless of size, must pay SSP to eligible employees. There is no minimum headcount for this obligation. Eligibility is determined by the employee’s earnings and qualifying conditions, not the size of the business.
Can a small business afford to offer enhanced sick pay?
Enhanced contractual sick pay (above SSP) is optional for most employers. Small businesses are not required to offer it, though doing so can support employee retention and wellbeing. If you do offer enhanced pay, it must be documented clearly in the employment contract and applied consistently.
What if a key employee is off sick for weeks and the business suffers?
The operational impact of absence does not override employment law obligations. Small businesses are advised to consider key-person insurance and cross-training to reduce dependency on individuals. Where absence is prolonged, occupational health referral, phased return planning, or — as a last resort — a formal capability process may be appropriate, with legal advice.
Need Fit Notes for Your Team?
GMC-registered UK doctors can issue fit notes and medical letters for employees of businesses of all sizes, subject to clinical review.
You may also need a fit to work certificate before resuming duties.
Request a Fit Note
