Occupational Sick Pay (OSP): A Practical Guide for Irish SMEs

Managing sick pay fairly and efficiently is a key part of running a responsible business. For small and medium-sized employers in Ireland, the challenge is often balancing the day-to-day needs of the company with the wellbeing of employees, especially when illness strikes unexpectedly.

Offering Occupational Sick Pay (OSP) can be a valuable part of your workplace culture, improving trust, retention, and morale. But it must be structured clearly and managed with care.

At PurpleTree, we provide hands-on support to Irish SMEs who want to stay compliant, create sensible policies, and look after their team without unnecessary complexity or risk. Here’s what you need to know about OSP.

What Is Occupational Sick Pay?

Occupational Sick Pay is an enhanced sick pay scheme offered by an employer, above and beyond Statutory Sick Pay (SSP). It’s not a legal requirement in Ireland, but many employers choose to offer it as part of their overall staff support package.

OSP allows you to pay your employees a higher level of sick pay than the statutory minimum during periods of absence due to illness. It’s one of the clearest signals you can send that you value employee wellbeing, but it must be handled transparently, fairly, and sustainably.

OSP vs Statutory Sick Pay (SSP)

Here’s a quick comparison:

• SSP is mandated by Irish employment law under the Sick Leave Act 2022 and currently entitles employees to 5 days of paid sick leave per year, at 70% of normal pay and capped at €110 per day. The planned increase to 7 and then 10 days has been paused, with entitlement remaining at 5 days for 2025 and 2026. For a full breakdown, see our guide to statutory sick pay in Ireland.
• OSP, by contrast, is employer-funded and voluntary. You can decide how much to pay, for how long, and who qualifies, so long as you meet or exceed the statutory minimum.

Our team, specialising in employment law and legislative compliance, regularly helps clients draft and refine OSP policies to ensure they support both business needs and staff expectations.

What Counts as Occupational Ill Health?

Occupational ill health refers to illnesses or conditions that are caused or made worse by work. This might include:

• Musculoskeletal injuries from repetitive tasks or manual handling
• Stress, anxiety, or depression linked to workload or workplace dynamics
• Respiratory issues from exposure to dust, fumes, or chemicals
• Skin conditions from repeated chemical exposure
• Hearing loss due to noisy environments

Providing OSP in these circumstances shows a duty of care and can help employees recover without unnecessary financial strain. It also strengthens your reputation as a responsible employer.

Who Is Entitled to Occupational Sick Pay?

OSP is entirely at the employer’s discretion. You decide:

• Whether to offer OSP at all
• Which employees qualify (e.g. after a certain length of service)
• Whether it applies to permanent, part-time, or contract staff
• What level of evidence or documentation is required

We strongly advise clearly setting these criteria out in contracts and absence policies, which we help many of our clients to develop and review during onboarding or policy audits.

How Much Should You Pay?

There’s no one-size-fits-all amount. Some employers offer full pay for a limited period; others provide a partial top-up to SSP. Either way, OSP is subject to normal payroll deductions and should be processed like regular earnings.

Key considerations:

• What can your business reasonably afford?
• Is it sustainable if you have multiple or long-term absences?
• Have you accounted for cover costs during absences?

Our team regularly helps clients map out sick pay schemes that are both competitive and financially sensible.

How Long Does OSP Last?

This is entirely up to you, but consistency matters. Some employers offer OSP for:

• A set number of days or weeks (e.g. 10 paid days per year)
• A rolling 12-month period
• Based on length of service

You must document your OSP scheme clearly in employment contracts and apply it fairly across all eligible employees.

What Happens When OSP Ends?

When an employee exhausts their OSP entitlement, one of three things generally happens:

1. They transition to Statutory Sick Pay (if still eligible).
2. You may offer other supports (e.g. allowing use of annual leave).
3. They may apply for state benefits (e.g. Illness Benefit or Disability Allowance).

At this point you confirm that company sick pay has ended. The employee then applies for Illness Benefit themselves through MyWelfare.ie, completing an IB1 claim form together with a medical certificate (a “Certificate of incapacity for work”) from their GP. If a return to work is planned, a Return to Work Interview is best practice and something our team can guide you through.

Why Offer OSP?

When well-managed, an occupational sick pay scheme offers several benefits:

• Better staff retention: Employees are more likely to stay with an employer that supports them during difficult times.
• Higher morale: A clear signal that your business cares.
• Easier recruitment: Especially in competitive sectors, offering OSP can give you an edge. It’s one of many employee benefits that help attract top talent.
• Reduced presenteeism: Employees don’t come to work sick just to avoid losing pay.
• Improved recovery: Sick staff can focus on getting well, not worrying about bills.

What Are the Drawbacks?

Of course, no policy is without trade-offs. Here are three potential issues:

1. Administrative Burden

Tracking absences, calculating OSP, and staying compliant can create headaches, especially for smaller businesses. This is where cloud-based systems like HR:Duo, integrated with our HR essentials support, can save hours each month.

2. Cost

OSP adds to payroll costs, especially during periods of high absence. That’s why we work closely with SME clients to ensure their OSP schemes are aligned with their business size and cashflow.

3. Potential for Misuse

Like any benefit, OSP can be exploited if policies aren’t clear. We help employers create firm but fair absence policies, backed by proper processes like medical certificates, follow-up meetings, and review periods.

Managing OSP Effectively with PurpleTree

Managing Occupational Sick Pay shouldn’t be a burden. At PurpleTree, we bring decades of practical HR and compliance experience to help you:

• Design or review your sick pay policy
• Ensure contracts and policies reflect Irish employment law
• Create a sick leave process that’s fair, clear, and manageable
• Reduce admin with integrated HR software (HR:Duo)
• Support return-to-work conversations and reasonable adjustments

Our advice is practical, not theoretical. Whether you’re reviewing your current setup or starting from scratch, we’ll help you get it right.

Get in touch with PurpleTree today to discuss your current policy or request support building an employee wellbeing framework that works for your business.