Statutory Sick Pay Reform – What You Need To Know

From April 2026, the Government is introducing significant changes to Statutory Sick Pay (SSP) as part of wider employment law reforms. These proposed updates are designed to improve financial security for workers who are unable to work due to illness, while also creating new considerations for employers across the UK.

So, how will these reforms affect workplace policies and payroll processes?

What Is Statutory Sick Pay?

Statutory Sick Pay is the minimum amount employers must pay eligible employees who are absent from work due to illness. Under the current system, SSP is paid by employers for up to 28 weeks, provided the employee meets qualifying conditions.

At present, employees must:

1. Earn at least the Lower Earnings Limit (LEL)
2. Be off sick for at least four consecutive days
3. Wait three “waiting days” before SSP payments begin

These rules have long been criticised for leaving lower-paid and vulnerable workers without adequate financial support during short-term illness.

What Changes Are Being Proposed?

The Government’s proposed SSP reforms aim to make sick pay more accessible and fairer for employees. The key proposed changes include:

Removal of Waiting Days

One of the biggest reforms is the removal of the current three-day waiting period. This means eligible employees would receive SSP from the first day of sickness absence rather than the fourth day.

For employees living paycheck to paycheck, this could make a substantial difference during periods of illness. It also aligns the UK more closely with other countries that provide immediate sick pay support.

Removal of the Lower Earnings Limit

Currently, employees earning below the Lower Earnings Limit are not entitled to SSP. The proposed reforms would remove this threshold, extending eligibility to lower-paid workers who were previously excluded.

This change is particularly significant for:

1. Part-time workers
2. Employees on variable hours
3. Workers in hospitality and retail sectors
4. Individuals with multiple low-paid jobs

The reform is intended to create a more inclusive system and reduce financial hardship caused by illness.

New Sick Pay Structure for Lower Earners

The Government has also discussed introducing a percentage-based SSP calculation for lower earners. Rather than receiving the standard flat SSP rate, some workers may receive a percentage of their normal earnings if this is lower than the standard amount.

This is aimed at balancing affordability for employers while ensuring workers still receive meaningful financial support.

What These Reforms Mean

The proposed SSP reforms represent one of the most significant changes to workplace sickness rights in recent years. They reflect a broader shift towards improving worker protections and addressing concerns raised during and after covid.

Many employees currently delay taking time off when unwell because they cannot afford the loss of income during the waiting period. This can lead to:

1. Increased workplace illness
2. Reduced productivity
3. Poorer employee wellbeing
4. Higher long-term absence rates

By making SSP available earlier and to a wider group of workers, the reforms could encourage healthier workplace practices and reduce presenteeism, where employees work while unwell.

What Employers Should Be Thinking About

Although the reforms are not yet fully implemented, employers should begin preparing now. Changes to SSP could have operational, financial, and policy implications for businesses of all sizes.

Review Absence Policies

Employers should review existing sickness absence procedures and contracts to ensure they align with the proposed changes once legislation is finalised.

This includes checking:

1. SSP eligibility wording
2. Reporting procedures
3. Company sick pay schemes
4. Payroll processes

Assess Financial Impact

The removal of waiting days and wider eligibility may increase SSP costs for some employers, particularly those with large workforces or high levels of casual employment.

Businesses may benefit from forecasting potential increased absence costs and considering how these reforms could affect budgeting and workforce planning.

Train Managers and HR Teams

Managers will need clear guidance on handling sickness absence consistently and lawfully under the new rules. HR teams should stay informed about legislative developments and ensure policies are updated promptly.

Good communication will also be important in helping employees understand their rights and responsibilities.

Preparing For The Future Of Sick Pay

For employers, early preparation will be key. Reviewing policies, updating payroll systems, and staying informed about legal developments can help businesses adapt smoothly while continuing to support employee wellbeing effectively.

Businesses that take a proactive approach will be in the strongest position to remain compliant and maintain positive workplace relationships.

If you would like some help or advice with preparing your business for these changes, get in touch with HR Inspire today:

Phone: 01296 325720

or send us a message via our contact form