FAQ: Do You Get Paid for Unused Sick Days? What Every Boss Must Know

Ever wondered what happens to those unused sick days when an employee doesn’t call in sick all year? Do you get paid for unused sick days, or do they just disappear into thin air? It's a common question that many employers and managers face. In this blog, we’ll break down everything you need to know about sick leave policies, payout rules, and how to handle them like a pro — without all the legal mumbo jumbo. Let’s dive straight into it and make sure you’re ticking all the right boxes.

Are employees entitled to payment for unused sick days?

When it comes to unused sick leave, the rules aren't the same everywhere. In the UK, employees are generally not entitled to payment for unused sick days. If you don’t use your sick leave, it’s usually a case of “use it or lose it” — no extra cash in the payslip.

Over in the US, it’s a bit messier. Whether employees get paid for unused sick days depends heavily on state law, local ordinances, and the company’s paid sick leave policy. Some states have a paid sick leave law that requires employers to pay employees for unused time, while others leave it entirely up to the business.

In short: employees paid sick leave entitlement for unused days is mostly down to where the employee works and what’s written in the contract or collective bargaining agreement.

Understanding the legal framework for unused sick days

Sick days are more than sniffles and doctor notes — there’s a legal side that employers can't ignore.

Statutory Sick Pay (SSP) and employer obligations

In the UK, Statutory Sick Pay (SSP) is the standard support system. If an eligible employee is off work for at least four consecutive days due to a mental or physical illness, they’re entitled to SSP. Employers must provide paid sick leave at the set government rate, which is usually paid for up to 28 weeks.

Some quick facts👇:

• Employees must earn at least the lower earnings limit to qualify.

• SSP kicks in after three "waiting days" unless covered by a public health emergency.

• Government employees and private employers both must comply with SSP rules.

But — and it’s a big but — SSP doesn’t include any cash for unused sick days. If you stay healthy, there’s no lump sumwaiting for you at the end of the year.

Employers who fail to pay employees their due SSP could land themselves in hot water with the authorities (and nobody wants that kind of drama).

Contractual sick pay and its impact on unused sick days

Some companies offer paid sick leave that's more generous than SSP. This is often called contractual sick pay or enhanced sick pay. It might cover full wages for a longer period or even allow accrued sick leave.

If you’re dealing with accrued paid sick leave, the question becomes: what happens if employees don’t use it? Here's where it gets tricky. Unless the collective bargaining agreement or employment contract says otherwise, most UK employers aren’t on the hook to pay employees for unused sick leave.

If the contract mentions payouts or hours of paid sick leave carrying over, then you’ll need to stick to those terms — contracts matter!

Carryover and forfeiture of sick leave

Usually, unused sick leave doesn’t roll over to the next calendar year unless your policy, local laws, or employment contracts say it should.

Here’s how it generally works:

Most employees won’t be able to carry over unused sick days or cash them in — unless you’re feeling generous or bound by a specific collective bargaining agreement. Employers should clearly explain their sick leave law obligations and paid sick leave time policies to avoid confusion.

If you don't have a clear policy? Brace yourself for a lot of questions about why 40 hours of sick time mysteriously vanished.

Sick leave policies in the US

When it comes to sick leave in the US, there’s no one-size-fits-all rule — it’s more like a patchwork quilt of federal laws, state and local governments rules, and company policies all stitched together.

Federal guidelines and the role of the FMLA

At the federal level, the Family and Medical Leave Act (FMLA) steps in to help eligible workers. It gives eligible employees up to 12 weeks of job-protected unpaid leave for serious health issues, caring for a family member (like an immediate family member or domestic partner), or even responding to a family member's school emergency during a public health emergency.

But here’s the catch: FMLA doesn’t guarantee any paid sick leave. Yep, it’s all unpaid sick leave. If employers want to provide paid sick leave, that’s totally up to them. FMLA also doesn’t touch on accrued sick leave, paid sick leave time, or anything like unused sick leave payouts.

Bottom line? Federal law leaves a lot of the heavy lifting to states and employers.

State-specific sick leave laws and payout requirements

Some states decided not to wait around and created their own paid sick leave law. Here’s what’s interesting:

• States like California, Arizona, and Massachusetts offer paid sick leave where employees earn one hour of paid sick time for every 30 hours worked.

• In some states, if employees don’t use their accrued sick time by the end of the calendar year, they can roll it over — or sometimes they get a payout.

• State law might require payouts of unused paid sick leave if a worker leaves the job, depending on whether they have a collective bargaining agreement or a contract.

A quick look👇:

So, in a lot of cases, whether employees see a penny for unused sick days depends on local laws, company promises, and a good chunk of luck.

Employer discretion and company policies

In states without specific rules, it’s up to employers to set the tone. Private employers can choose whether to pay employees for unused sick leave, roll over sick leave hours, or let it vanish at year-end.

If you provide paid sick leave, it’s smart to have a clear paid sick leave policy. Decide things like:

• Will you allow rollover of accrued paid sick leave?

• Will unused sick days convert into holiday pay or a lump sum?

• Will you track paid sick leave accrual per pay period or per hour worked?

Without clear rules, you’re practically inviting arguments with staff about accrued sick days, paid sick leave hours, and why their sick leave disappeared.

Common practices among UK employers

Across the pond in the UK, things are a bit more... consistent (thankfully).

Rolling over unused sick days

While Statutory Sick Pay doesn’t usually allow rolling over unused sick days, some companies like to be flexible. They let covered employees carry over a portion of accrued sick leave into the next calendar year — often up to one year. It’s not super common, but it’s a nice perk for employees who work through sniffles and sprains without taking a day off.

Partial payouts to discourage unnecessary sick leave

Some clever companies find a middle ground: offering a partial payout (say 50%) of unused sick leave. It’s a way to reward employees who don’t abuse the system while still protecting the budget. For example:

• Work all year and bank 40 hours of sick time? Get a payout for 20 hours!

• Encourages employees to take sick days only when there’s a genuine serious health condition like a mental or physical illness.

It also helps companies foster healthy workplaces and avoid unnecessary unpaid leave claims.

No payout policy due to budget constraints

Not every company can afford to pay employees for unused sick days. Especially smaller businesses and some government workers, where every penny counts towards net income. Many employers simply have a clear "no payout" policy written into contracts, meaning unused sick days just quietly disappear at the end of the year.

Having no payout policy is perfectly legal — as long as it’s made crystal clear in your leave laws documents or employee handbook.

Best practices for employers

A solid sick leave policy is essential if you want to avoid headaches, angry emails, and the classic “but I thought I could cash out my sick days” conversations.

Developing clear sick leave policies

First things first: if you want to avoid confusion, make your paid sick leave policy crystal clear.

Here’s what every good policy should spell out:

• How accrued sick leave works — whether it's one hour of paid sick leave for every 30 hours worked, or some other formula.

• What happens to unused sick leave — is there a lump sum payout, or does it just disappear after the calendar year?

• Whether employees can carry over unused sick days or whether unused time is forfeited.

• How accrued paid sick leave is tracked — per hour worked, pay period, or annually.

Also, explain how sick leave applies during public health emergencies, serious health conditions, and caring for an immediate family member or domestic partner.

Including these details helps covered employers (including private employers and state and local governments) stay compliant with state law, local ordinances, and any leave laws floating about.

Communicating policies to employees

Having a policy is great, but you need to communicate it clearly and loudly.

Some easy ways to spread the word:

• Include the paid sick leave rules in the employee handbook.

• Go over sick leave entitlements during onboarding (new hires are confused enough — help them out).

• Post information about employees covered under your offer paid sick leave policy where everyone can see it (like a bulletin board or internal HR system).

• Send yearly reminders to all staff about their sick leave hours, especially for employees who work irregular schedules.

Good communication = fewer disputes over holiday pay, overtime hours, or why someone’s accrued sick time suddenly reset.

Reviewing and updating policies regularly

Sick leave rules don’t stay the same forever. Thanks to new paid leave laws, changes in the healthy workplaces act, and random updates from state and local governments, you need to stay on your toes.

Set a reminder to:

• Review your paid sick leave accrual methods every year.

• Check if any new local laws require changes to your offer paid sick leave policies.

• Update how you pay employees for unused paid sick leave (if you offer it) to match any state law tweaks.

Keeping your policies fresh and in line with the latest requirements protects your business and keeps your team happy — no nasty surprises for anyone!

Strategic considerations

Managing sick leave is simply a smart move if you want to build a loyal, motivated team without blowing your budget.

Balancing employee well-being and business needs

Supporting employee health is more than being the “nice boss.” It’s good for business too. Offering fair paid sick leave helps reduce burnout, supports recovery from mental or physical illness, and builds trust. Employees are less likely to drag themselves to work with the flu (and spread it around) if they know they have enough paid sick leave hours to cover it.

At the same time, you have to keep operations running smoothly. This is where having a clear paid sick leave policy, a plan for covering shifts, and clear rules around accrued sick leave come into play.

Some tips for balancing both sides:

• Allow eligible employees to accrue one hour of paid sick leave for every set amount of hours worked (e.g., one hour for every 30 hours).

• Cap the maximum accrued paid sick leave to prevent huge balances that cause problems later.

• Allow reasonable rollover of unused sick leave to the next calendar year, within limits.

By planning ahead, you protect both your people and your bottom line — including your net income.

Competitive advantage through generous sick leave policies

Want to stand out to top talent? A generous paid sick time policy can give you a major edge. While many companies still offer only the bare minimum, those who provide paid sick leave above legal requirements often attract better candidates and keep them longer.

Think about it:

• Offering more hours of paid sick leave than required shows you actually care about employee well-being.

• Allowing unused sick days to roll over, or offering a lump sum payout at termination, builds serious goodwill.

• Having a flexible policy that covers care for an immediate family member, a domestic partner, or even a family member's school emergency can be a huge selling point.

Plus, companies that show they value employee health are more likely to foster healthy workplaces and reduce turnover— saving you from scrambling to replace staff every few months.

With state and local governments pushing more regulations, and employees getting pickier about benefits, being ahead of the game on paid sick leave time isn’t just smart — it’s essential.

Manage leave and absence with ease!

• Automatic accrual of vacation hours
• Request leave easily
• Leave registrations visible in the planning

Try for free Request a demo

How Shiftbase can help you manage sick leave with ease

Managing paid sick leave, unused sick days, and absence management doesn’t have to be a paperwork nightmare. With Shiftbase, you can streamline everything in one simple platform — from employee scheduling and time tracking to keeping track of absence management.

Shiftbase makes it easy to:

• Monitor accrued sick leave and paid sick leave hours automatically.

• Set up clear rules for sick time rollover or forfeiture.

• See all employee leave balances at a glance, so you’re always compliant with state law, local laws, and your own company policy.

• Avoid confusion about paid sick leave accrual and unused sick days at the end of the year.

No more messy spreadsheets, forgotten sick days, or payroll mistakes.

👉 Ready to simplify sick leave management and keep your team happy? Try Shiftbase free for 14 days — no strings attached!