In a recent Acas survey, employers and employees were asked which three changes in the Employment Rights Act 2025 would have the biggest impact in their workplace.
Surprisingly, the new rights on Statutory Sick Pay (SSP) topped the list for both groups, named by 43% of employers and 36% of employees. The reduction in the unfair dismissal qualifying period from two years to six months was the second most significant change (31% of employers and 30% of employees). Employers ranked the new paternity leave day-one rights as the third-largest reform, whereas employees said it was easier access to flexible working arrangements.
The SSP reforms take effect from 6 April 2026, aiming to improve financial security, particularly for part-time employees and those in low-paid jobs. While more employees will qualify for SSP, employers will face increased costs and compliance requirements, particularly for small and medium-sized enterprises.
Before looking at the reforms and what employers can do to prepare for them, let’s consider the current arrangements.
What is the current SSP framework?
An employee must be an “eligible employee” and earn at least the Lower Earnings Limit (LEL), which is currently £125 per week. Even if employees are eligible, SSP is payable only from the fourth consecutive day of sickness, as the first three days are unpaid waiting days.
It is estimated that around 1.3 million employees receive no SSP at all, and many lose pay for only short periods when unwell. Some face the choice of working while ill or losing income. This can spread illness in the workplace and reduce productivity.
What is changing from 6 April 2026?
Approximately 25% of employees only receive SSP (rather than contractual sick pay), and the SSP changes below will have a significant impact.
- Removal of the Lower Earnings Limit, and employees will no longer need to meet the LEL to qualify for SSP.
- A new earnings‑linked calculation and SSP will be paid at 80% of normal weekly earnings (NWE) unless the SSP flat rate is lower.
- SSP will be payable from day one of sickness absence, as the Employment Rights Act 2025 abolishes the three unpaid waiting days.
- SSP will increase from £118.75 to £123.25 a week on 6 April 2026.
It is important to mention atypical workers, such as zero-hours and agency workers, as well as seasonal and irregular-hours staff. Establishing NWE is not always straightforward because of their fluctuating pay and variable working patterns. Employers can determine NWE, for example, by averaging pay over the previous 8-12 weeks or by following the relevant contractual arrangements to ensure SSP reflects actual earning patterns.
What do the SSP changes mean for employers?
The scope of SSP entitlements is significantly widened. As well as administrative adjustments to update policies and payroll processes, the reforms carry a cost implication for organisations of all sizes.
The Government estimates that removing waiting days and abolishing the LEL, combined with introducing the 80% earnings‑linked calculation, will increase employer SSP costs by around £450 million a year. Although a significant sum, it equates to roughly £15 more per employee according to the Government’s impact assessment. Crucially, earlier access to SSP may boost productivity by allowing employees to stay home when unwell without feeling compelled to attend work.
Employer concerns about increased sickness absence could be mitigated through strengthened sickness management. This includes conducting return‑to‑work interviews promptly, even after short periods of illness, which can help to identify underlying issues early and reduce avoidable absences. It can also include structured return-to-work planning, phased returns, and temporary adjustments.
How can employers prepare for the changes?
- Update payroll systems for earnings‑linked SSP and day‑one entitlement.
- Review and update sickness absence policies, contracts and employee handbooks and communicate these changes to employees.
- Budget for increased SSP.
- Identify roles or departments most affected by the wider eligibility rules.
- Train managers and HR on the new regime.
- Strengthen sickness absence management processes.
- Establish the number of atypical workers and how their normal weekly earnings are calculated.
Conclusion
The April 2026 SSP reforms represent a major shift in the UK’s approach to sick pay, expanding access and enhancing financial protection for employees. While these changes introduce additional costs and compliance requirements for employers, early preparation will support a compliant and well‑managed transition.
By reviewing systems and policies now, organisations can ensure they are ready for the new SSP regime and are equipped to support staff and manage sickness absence effectively.
