What is third party sick pay?

Third party sick pay is a type of insurance that provides income replacement for employees who are unable to work due to illness or injury. This coverage is offered by a third-party insurance provider, rather than being provided directly by the employer.

In most cases, third party sick pay benefits are paid directly to the employee, rather than being paid through the employer's payroll system. This ensures that the employee receives the benefits in a timely manner, without having to wait for the employer to process the payments.

Employers may choose to offer third party sick pay as a voluntary benefit to their employees, or as part of a group benefits package. Some employers may also be required to provide third party sick pay under state or local laws, or as part of a collective bargaining agreement with a labor union.

Overall, third party sick pay can provide valuable financial protection for employees who are unable to work due to illness or injury, helping them to meet their financial obligations while they focus on recovering their health.