As part of the Employment Rights Act 2025, the government has announced the first major overhaul of Statutory Sick Pay (SSP) in years. The upcoming changes, effective from 6 April 2026, will have cost and compliance implications for employers, particularly around eligibility, waiting days and payment calculations.
SSP is paid by an employer when an employee is off sick. It is currently subject to certain conditions and eligibility requirements, notably an individual must:
- be classed as an eligible employee for tax purposes (PAYE) (this can sometimes include casual workers, even though they are not typically classed as employees); and
- earn at least the lower earnings limit; and
- have been ill for more than three calendar days in a row to create a period of incapacity for work (PIW).
SSP is treated as taxable earnings, with Income Tax and National Insurance deducted through payroll in the same way as ordinary wages.
As part of the Employment Rights Act 2025, changes to Statutory Sick Pay (SSP), will come into effect from 6th April 2026.
The government has estimated that the average increased costs to employers, as a result of these changes, will be around £15 per employee per year.
The changes are as follows:
The Lower Earnings Limit Will be Removed
Currently, only employees who earn over the lower earnings limit qualify for SSP. The lower earnings limit for the 2025/2026 tax ear is £125.00, increasing to £129.00 per week for the 2026/2027 tax year.
From 6th April 2026, the lower earnings limit for SSP purposes will be removed. This means that more employees will qualify for SSP, and that lower-paid, part-time and zero-hours workers will qualify when they may not currently do so.
The Rate of SSP
SSP is currently £118.75 per week for those who qualify. Under the reforms, it will be the lower of two amounts:
- 80% of the person’s Average Weekly Earnings (AWE), based on the previous 8 weeks’ earnings, and;
- the flat rate of £123.25 per week (which is expected to increase each April)
The Waiting Days will be Removed
Currently, the first three days of sickness are unpaid. This means that employees currently must wait for three unpaid waiting days before they are entitled to any SSP. However, if they have already fulfilled the three waiting days within the previous eight weeks, they do not have to repeat them.
SSP will also be payable from day one of sickness, not day four, meaning that the period of incapacity to work is reduced to one day and employees don’t have to meet the three unpaid days criteria.
The waiting days may currently motivate employees to come into work, even if they are not feeling fully well, knowing that they will not be paid anything if they phone in sick. However, it can be argued that this can lead to lower productivity and spreading infectious diseases to colleagues.
This change may result in a larger number of one-day absences and more short-term sickness, as employees will know that they will at least receive some income right from the start of their absence.
The Transitional Period
When the SSP changes happen, on 6th April, some employees will be part-way through a period of sickness absence.
Some employees who were already receiving SSP prior to 6th April and whose sickness continues from 6th April 2026 onwards would have, in theory, seen a reduction in their rate of SSP as a result of the new ‘80%’ rule. However, this will not happen in practice, because those already receiving SSP before 6th April 2026 will be transitionally protected to prevent any reduction in their payments. They will keep getting the up-rated flat rate of £123.25 until they either return to work, exhaust their 28-week entitlement, their contract ends, or they reach the start of the exclusion period due to pregnancy (when the Statutory Maternity Pay or Maternity Allowance period begins).
Employees earning under the lower earnings limit who are off sick on or after 6th April will be eligible for SSP.
Employees who are serving waiting days on 6th April will become entitled to SSP from that date onwards. Those earning below the current lower earnings limit who are off sick on or after 6th April will become eligible for SSP under the new rules.
What’s Not Changing?
- Linked Periods: Absences within 56 days are treated as one continuous period, preserving the 28-week maximum entitlement.
- 28 weeks’ Entitlement: SSP is paid for a maximum of 28 weeks, even if the employee remains off work sick after this time. Many employers use the 28-week point to start considering capability processes, reasonable adjustments to help the employee back to work (in the case of a disability) and medical reports.
- Reporting Requirements: employees can self-certify for the first seven days of absence and must then provide fit notes. They must report absence according to their employer’s specific requirements, although for SSP purposes, employers cannot insist that employees notify them personally, nor that the employees use a specific form or document.
- Contractual Obligations: many employees are entitled to contractual sick pay, over and above SSP. This will not change unless employers take steps to change it, consulting with employees and seeking their agreement if necessary.
If you have any queries in relation to this or any other employment law issue, please email tmcs@thomas-carroll.co.uk and our employment specialists will be happy to help.
