Phased return-to-work in the United Kingdom
Reviewed by Mellow Editorial Team, HR & payroll content team
A phased return to work is a temporary, agreed arrangement where an employee gradually increases their hours or duties after a period of absence — typically illness or injury. It is not a permanent contract change, and pay arrangements during the period require careful handling.
What a phased return actually means
A phased return is a short-term rehabilitation measure. The employee comes back incrementally — perhaps starting at two or three days a week, then building up to full hours over a number of weeks. The goal is to protect their recovery while keeping them connected to the workplace.
There is no statutory right to a phased return in UK law, but the duty to make reasonable adjustments under the Equality Act 2010 can require you to offer one where the employee is disabled within the meaning of that Act. Even where the Act does not apply, a phased return is widely regarded as good practice and can reduce the risk of a second, longer absence.
The Employment Rights Act 2025 has strengthened day-one rights across several areas, making it more important than ever to handle absence and return-to-work processes consistently and with documented reasoning.
Pay during a phased return
This is the area where most employers get unstuck. You have a few options, and the right choice depends on your own policies and what you have agreed with the employee.
Full pay for reduced hours. Some employers pay the employee their normal full salary throughout the phased return as a goodwill measure. This is generous and can aid recovery, but it sets a precedent and should be time-limited and documented.
Reduced pay proportional to hours worked. The employee is paid only for the hours they actually work. If Statutory Sick Pay (SSP) has been exhausted, this is the most common approach. Make sure the employee understands this clearly before they return.
Topping up with SSP. If the employee is still within their SSP entitlement period, they may be able to claim SSP on the days they are absent during the phased return, while receiving normal pay for the days they work. Get this confirmed with your payroll provider before assuming it applies, because SSP eligibility rules are specific.
Whatever you decide, put the arrangement in writing before the first day back. Ambiguity about pay is a common source of disputes.
Payroll and reporting obligations
A phased return does not change your fundamental payroll obligations. You still report earnings to HMRC through Real Time Information (RTI), submitting a Full Payment Submission (FPS) on or before each payday. If the employee's hours vary week to week during the phased return, their gross pay will fluctuate accordingly — make sure your payroll reflects the actual hours worked in each pay period.
Income tax and National Insurance continue to apply in the normal way. The employee's personal allowance remains £12,570. Employee NICs run at 8% up to the upper earnings limit, employer NICs at 13.8%. Auto-enrolment pension contributions also continue on qualifying earnings: employer minimum 3%, employee minimum 5%. Do not inadvertently pause pension contributions during a reduced-hours period without checking whether the employee remains enrolled and what qualifying earnings apply.
If the employee's pay drops significantly during the phased return, their tax code and NI liability will adjust through the normal payroll calculations. You do not need to issue a new contract, but you should keep clear payroll records showing the basis of calculation for each period.
Occupational health and fit notes
A GP fit note (formerly the sick note) can explicitly recommend a phased return. Since 2022, fit notes can be signed by a range of registered healthcare professionals, not only GPs. Where the fit note recommends a phased return, you are not legally obliged to follow it, but you should have a documented, reasonable justification if you do not.
An occupational health referral can be valuable here. An occupational health professional can assess the employee's fitness for specific tasks, recommend a structured timetable, and flag any workplace adjustments needed. This protects both the employee and the business, and provides a paper trail that would stand up to scrutiny if the matter were ever referred to an employment tribunal.
Setting the arrangement up properly
A brief written letter or agreement setting out the following will cover most situations:
- The start date and expected end date of the phased return
- The agreed hours and working pattern for each stage
- The pay arrangement (full pay, reduced pay, or SSP top-up) and how it will be calculated
- A review date — typically two to four weeks in — to assess progress
- Confirmation that the arrangement is temporary and does not alter the employee's permanent contract terms
Review the arrangement at the agreed date. If the employee needs longer, extend it in writing with a new end date. If they are ready to return fully, confirm that in writing too. Keeping a clear record throughout means that if questions arise later — from the employee, HMRC, or a tribunal — you have a straightforward account of what was agreed and why.
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