As part of employer and employee relations, certain arrangements are legally put in place, one of which is sick leave and related pay. If an employee is ill and unable to make it into work, they, by law, will be entitled to a minimum amount of compensation rather than receiving no payment during their time off. Employment contracts will usually set out the agreed procedure between employers and employees when it comes to sick pay and the agreed terms. There are two possible types of sick pay available for employees who are absent from work due to ill health.

The first type is Statutory Sick Pay, enforced by government law in order to provide employees, who are under a contract of service, a minimum sum of compensation whilst off work. Legally, employers will be liable to pay statutory sick pay if an employee is if work sick for a minimum of four working days in a row and earns at least £107 each week. For employers to receive statutory sick pay they must inform their employer of their illness and, if the sickness remains for 8 days, if asked, employers must provide a note from doctors or hospital confirming they are unfit for work. Without this note, employee's sickness may not be deemed accurate and employers are able to ask if the sickness is indeed correct. The sick pay is a nominal amount that will be paid through the usual procedure and remains subject to tax and national insurance.

However, in some cases, a company will offer Company Sick Pay, which is the second type of sick pay available for employees. Company sick pay is also known as occupational or contractual sick pay. Company sick pay is an employer's own scheme for payment whilst employees are off work due to illness. How much a company will commit to paying will vary, and again the employment contract will stipulate these details, but whatever the amount, it must be above the rate of Statutory Sick Pay. A common scenario is that sick pay eligibility would begin after a set period of service such as 3 or 6 months. After this time, a company may pay their employee their usual salary for a set period, then perhaps half their salary if the time off extends. However, companies will vary their schemes considerably and only have to meet the statutory sick pay rate to offer their own scheme. For employees off sick, a company would usually state how they should be informed of the leave. It is quite normal for employees to take a week of sick leave without the need of a doctor's note. However, for a time period longer than a week, an employee will need to provide their employers with a 'fit note' that is obtained from a doctor.

It is worth noting that employers do have the option of paying sick pay even if it is not stipulated within the employment contract. Furthermore, employers will usually offer company sick pay at their discretion, meaning that the employer can refuse sick pay if the employee's absence is considered to be unjustified. Any decision on refusing pay needs to be consistent so that the employer shows no evidence of discrimination towards employees.