What the new statutory sick pay reforms mean for UK employers
The Employment Rights Act 2025 has ushered in some of the most significant changes to UK employment law in years. Among the most imminent is a major overhaul of Statutory Sick Pay (SSP) entitlements, reforms that take effect from 6 April 2026. The result will be broader eligibility, increased costs, and new compliance obligations for employers.
For employers across the UK, the reforms will matter financially, administratively and legally. In this blog, Liam Kenealy, Director in our Employment team, breaks down the changes and sets out what you as an employer need to know to prepare effectively.
How will the new statutory sick pay reforms change the current landscape?
Currently, SSP is only payable from the fourth qualifying day of sickness absence (i.e. employers don’t have to pay for the first three days) and is only open to employees earning above the Lower Earnings Limit (LEL) which currently is £125 per week from 6 April 2025.
The new statutory sick pay reforms will overturn both of these conditions:
- Day-one SSP
Under the new rules, SSP will be paid from the first qualifying day of absence, removing the unpaid waiting period altogether.
- No earnings threshold
The current earnings threshold (LEL) will be removed. This means all employees and workers (regardless of how much they earn) will qualify for SSP.
- Change to SSP amount
The statutory rate remains the higher of the flat weekly SSP rate or 80% of average weekly earnings (whichever is lower). This is designed to ensure lower-paid workers can still receive a meaningful sick pay amount.
Collectively, these changes mean a larger number of absences will qualify for SSP and that more workers - in particular part-time, low-paid, and atypical employees - will be eligible.
What do the new statutory sick pay reforms means for UK businesses?
For SMEs, the reforms present both practical challenges and opportunities for improving workforce wellbeing. However, they will also require early planning.
The most immediate impact for many employers will be increased payroll costs. Businesses that did not previously have to pay SSP for short-term absences of 1 to 3 days will now incur additional costs. In addition, part-time and low-paid employees who were previously not eligible will now attract SSP from day one.
Even for small absences this could add up, particularly in industries with seasonal pressures, high turnover or higher rates of short-term sickness. We’d suggest that employers should review wage projections and cash-flow forecasts to cushion the potential impact in 2026.
However, the reforms are not all about costs.
SMEs will also need to make sure their payroll systems, absence records and time-tracking processes are ready to handle the changes. For example, businesses should consider:
- Updating payroll software or systems to calculate SSP from day one and remove the earnings threshold test.
- Amending internal absence reporting processes to ensure accurate recording of sickness start dates, durations and SSP eligibility.
- Ensuring fit-for-purpose time-and-attendance logs so that payroll and HR teams can substantiate SSP payments if ever challenged (particularly important as payroll errors with SSP can be costly both in terms of back-pay and administrative penalties and reputational damage).
It could also be time to review your employment contacts. Many SMEs operate with contractual sick pay schemes that top up SSP or offer enhanced terms. Under the new SSP rules:
- Employers should review existing contractual sick pay terms to align them with expanded SSP entitlements.
- Any contractual sick pay that currently sits “below” the statutory minimum will need to be amended so that contractual and statutory entitlements dovetail cleanly.
- HR policies on sickness absence reporting, return-to-work interviews, and absence management should be updated to reflect the expanded SSP rules.
It is important to note that failing to align policies and contracts could lead to disputes or even tribunal claims, especially where ambiguity arises between contractual and statutory entitlements.
What are your legal and compliance risks as an employer?
From a legal perspective, SSP reforms are part of a broader employment law tightening trend, including changes to unfair dismissal qualifying periods and expanded worker rights under the Employment Rights Act.
The key legal risks include:
- Compliance with SSP calculations and record-keeping to avoid enforcement action or employment tribunal claims.
- Aligning sick pay policies with statutory rights to minimise contractual disputes.
- Ensuring managers and HR personnel understand SSP entitlement changes and apply them consistently.
- Documenting absence-related decisions in case of disputes later on.
To mitigate these risks, employers should take a proactive and structured approach to SSP compliance in the areas listed in the next section of this blog.
Preparing now: A checklist for your business
To get ahead of the changes before April 2026 we’d suggest you:
- Audit your current SSP practices and payroll systems.
- Update your payroll software and test scenarios for day-one SSP and no earnings threshold.
- Revise your employment contracts and sick pay policies to match the new statutory entitlements.
- Ask your employment lawyers if they can provide training for your HR and payroll teams on the implementation and compliance obligations.
- Plan financially for increased SSP costs in 2026 budgets.
Consistent application of policies supported by clear documentation of absence-related decisions will not only reduce the likelihood of enforcement action or tribunal claims but also demonstrate good governance in our increasingly regulated employment landscape.
The 2026 SSP reforms represent a shift toward a fairer sick pay system for workers, especially low-paid and part-time employees. However, they also place new obligations on UK employers, particularly SMEs.