Sick pay for employee - is this legal and fair?

[VoT]

I have one employee who has been with me a couple of months. I am just sorting out their contract.
HMRC tell me I am not entitled to claim SSP until the fourth day of any sick absence the employee has. But if my employee had, say, a three day bug and came back on the 4th day, if I paid them this would create significant cash flow problems for the business with no help from HMRC.
It was mentioned that some employers are now stating in contract that no sick pay will be paid until the 4th day. Is this legal?
To put in a clause like this would clearly be best from a business point of view, but it would cause me a huge ethical/moral headache. It goes against the ethos of the business - but on the other hand I didn't expand the business in order to become very poor.
Any views?

SSP kicks in on day 4 so for the 1st 3 days they are unpaid.
SSP isn't the full pay either this may help
This is the policy the firm I work for use.

Your firm's employees don't get paid by the firm for the first 3 days then? They don't receive SSP? What does this do for employee morale/relationships with management?
Prior to being self-employed, I had only ever worked in public sector organisations where you don't even think about not getting sick pay.
Adding this clause to a contract is going to give me a few sleepless nights, but every 3 day period of sickness is going to cost the business £300+ otherwise.

Asda employees don't get paid for the first three days they are off sick. My friend was a manager there when they introduced this policy and she said it really cut the time people take off sick.

Ypur not going to win any friends by implenting this policy though

No, I realise. And if I was on the receiving end of this policy, I'd be picketing the board room armed with over-ripe tomatoes.
Half of me is saying 'i don't believe employers are getting away with this' while the other half is saying 'business is business'. OK, not half and half probably 75/25.
Jeez, I gotta grow up and join the real world.

I would be careful. I used to love my job and then the sick pay policy was changed to something similar..I was genuinely sick and lost out, and am now looking for another job as I felt badly treated and could get better conditions elsewhere. And I do believe I am good at my job and would be missed if I left...just being honest from an employee point of view!!

The employees here know they aren't going to get sick pay and as latt says it does cut down the amount if sick leave people take!
You run a small business and you need to do financially what is best for you and ssp is the way most small businesses work

you can translate it to something you are more comfortable with perhaps, staying within the law of course.

i work for m&s, here we say if you go sick you are paid, but then if you are sick again within the next 12 weeks then the first shift of that absence is unpaid. helps cut down on frequent non genuine absence, but doesn't penalise one off sicknesses.

As Ruddynorah said, or even cut the time the employee is unpaid- gor example the first 1 or 2 dats are unpaid; striking a mid-way.

DH works for a massive international concern, currently the first 3 days are paid at 50% of usual pay.

My dh is a factory worker and has been in the job for 20 years or so. They don't get sick pay for the first 3 days, and it's never been a problem for us. He's seldom sick, and has only really had longer illness, not one or two days off.
He thinks if they were paid for any day off sick it would be abused by some workmates. Some of the younger staff are inclined to be out late the night before and occasionally phone in sick; if they were paid it'd be very hard on the company and put all the jobs in danger.
Ideally employers would pay, and employees would never abuse the situation. But it's the employers duty to protect the business too, so that there is a job there for the employee also.

Tesco also does the first three days unpaid, IKEA (where I work) does the first day only. It's pretty unfair imo, but I can understand why they do it and it wouldn't be something that made me leave - just grumble about I think it's becoming pretty common practise, at least I keep hearing of more places that have similar policies.

Bit of a side issue, but if you are going to agree to pay sick pay during absence at full contractual rates, also remember to cap it.

I know that the public sector has very long periods of paid sickness absence, but private companies are getting very hot on this. Too many people who are not genuinely ill going off with 'stress' (not to do down those who are genuinely depressed/stressed/suffering from anxiety. It's just that it's very easy to tell a doctor you're stressed and get a sick note, even if you're not really, or are just trying to avoid an awkward project/a night shift you don't want to do/a conversation about underperformance.).

It would be pretty common in a small company to say that sick pay entitlement is no more than a week or so a year, then go down to SSP. If an employee has a one-off longer illness, you can always consider whether you can afford to pay.

Like others have said, you can also have policies about two sets of absence close together.

Law states that you have 3 waiting days before paying SSP. Those 3 waiting days apply only once in any 8 week period - so if they are off again - they dont have the 3 days waiting - they go straight to ssp.

Unless you have given them a contract saying you will pay them, you dont have to pay them anything except the statutory. ie nothing for 3 days, then £15.08 a day or £75.40 a week.

If any firm offers sick pay it's usually considered a bonus or a 'perk'.

Worth bearing in mind that they'll only get it for 26 weeks before it stops, and, if you are a small company, you'll get it back from hmrc anyway so you havent lost anything apart from a pair of hands iyswim?

So many replies whilst I was off changing the beds!
Thank you all. I have decided that I am going to include the clause. I feel a bit Maggie Thatcher today - I am also going to include the one about the employees having to retain enough annual leave to cover the Xmas close-down period!
In a business as small as this, 3 days pay is fairly significant not taking into account the effects delays/cancellations would have on customer relations and retention.
Going to bite the bullet and do it.
Thanks again.

Can't give you much advice as I'd want you as a client! But just to add, however strict a policy you want to put in your contract, it doesn't mean you have to stick to it. It just covers you in case you want to stick to it.