Statutory Sick Pay has undergone its most significant overhaul in decades. The changes that took effect on 6 April 2026 affect every UK employer, but the operational impact falls hardest on small and mid-sized businesses where payroll processes are often less automated and absence policies less formalised.

This guide sets out exactly what changed, what it means for your costs, and what you need to do right now.

What changed on 6 April 2026

Three structural changes to SSP came into force simultaneously:

  • The three-day waiting period has been abolished. SSP is now payable from day one of sickness absence.
  • The Lower Earnings Limit (LEL) has been removed. Every worker on a contract of employment now qualifies for SSP, regardless of how much they earn.
  • An 80% cap applies to workers earning below £123.25 per week. Rather than receiving the full flat rate, low earners receive 80% of their average weekly earnings.

The standard SSP rate remains £123.25 per week for workers earning at or above that threshold.

These reforms were introduced through the Employment Rights Bill and represent the first fundamental change to SSP eligibility since the scheme was created in 1983.

Day one SSP: the waiting days are gone

Previously, employees received no SSP for the first three "qualifying days" of any period of incapacity for work. That gap no longer exists. From 6 April 2026, SSP is payable from the first qualifying day an employee is absent due to illness.

What this means in practice:

  • A worker who is off sick for two days now receives two days of SSP. Under the old rules, they would have received nothing.
  • Short-term absences that previously cost the employee everything now trigger a payment obligation for the employer.
  • The financial incentive for employees to "push through" minor illness and attend work while unwell is reduced.

For employers, the most immediate effect is an increase in the volume of SSP-eligible absences. Sickness episodes of one to three days, which previously generated no SSP liability, now require processing and payment.

The Lower Earnings Limit is gone

Before 6 April 2026, workers earning below the LEL (previously £123 per week) were excluded from SSP entirely. The government estimated this left approximately 1.3 million low-paid workers with no statutory sick pay entitlement at all.

That exclusion has been removed. Every employee now qualifies for SSP from day one of their employment, regardless of earnings level.

This is a significant change for employers in sectors with large numbers of part-time, casual, or low-paid workers: retail, hospitality, social care, logistics, and cleaning services in particular.

The 80% rule for low earners

To prevent a situation where SSP exceeds a worker's normal pay, the government introduced a proportional cap. Workers earning less than £123.25 per week receive SSP at 80% of their average weekly earnings, rather than the full flat rate.

Example: A part-time worker earning £100 per week falls ill. Under the old system, they would have received nothing (earnings below the LEL). Under the new rules, they receive £80 per week in SSP (80% of £100).

Payroll teams need to identify which employees fall below the £123.25 threshold and calculate their SSP at the correct rate. This adds a variable calculation to what was previously a simple flat-rate payment.

New SSP rate: £123.25 per week

The SSP flat rate for 2026/27 is £123.25 per week. This applies to all qualifying employees whose average weekly earnings meet or exceed that figure. For those earning below it, the 80% rule described above applies.

SSP remains payable for up to 28 weeks in any period of incapacity for work. The qualifying conditions around linked periods of incapacity and periods of entitlement are unchanged.

Operational impact on employers

Absence tracking becomes payroll-critical

With SSP payable from day one, every single day of sickness absence now has a direct payroll consequence. Previously, short absences could be noted without triggering any payment. That buffer no longer exists.

If your absence tracking is informal, paper-based, or relies on managers remembering to log short absences, you have a compliance gap. Absence records must now feed directly into payroll from day one to ensure correct SSP calculation and payment.

Payroll systems need updating

Your payroll software (or outsourced payroll provider) must be configured to:

  • Calculate SSP from qualifying day one, not qualifying day four.
  • Remove the LEL check from SSP eligibility.
  • Apply the 80% rate for employees earning below £123.25 per week.
  • Handle the variable rate calculation alongside the existing flat rate.

If you use managed payroll, confirm with your provider that these changes have been implemented. If you run payroll in-house, check that your software has been updated and test the calculations before your next pay run.

Part-time and low-paid workers are now covered

Employers who previously had no SSP obligations for their lowest-paid staff now do. This affects workforce planning, cost forecasting, and how you communicate sick pay entitlements to your team.

Every employee should receive updated information about their SSP entitlement. Contracts, staff handbooks, and induction materials that reference the old waiting period or the LEL need revising.

The sick pay gap: why SSP alone is not enough

Even with these improvements, SSP at £123.25 per week is a fraction of most employees' normal earnings. For a worker on the UK median salary of approximately £35,000, SSP replaces roughly 18% of their gross weekly pay. The gap between normal earnings and SSP, sometimes called the "sick pay gap," remains substantial.

This matters for three reasons:

  • Employee financial wellbeing. Workers who fall ill face an immediate and steep income drop, creating financial stress that can slow recovery.
  • Retention and recruitment. Candidates increasingly evaluate benefits packages, and sick pay provision is a visible indicator of how an employer treats its people.
  • Presenteeism. When employees cannot afford to be off sick, they attend work while unwell, reducing productivity and risking spreading illness to colleagues.

Voluntary sick pay top-ups

Many employers operate contractual sick pay (also called occupational or company sick pay) that tops up SSP to full or partial salary for a defined period. If you do not currently offer this, the April 2026 changes make it worth reviewing.

A common structure is full pay for a set number of weeks, followed by half pay, then SSP only. The specific terms depend on your sector, budget, and workforce profile, but even a modest top-up (for example, four weeks at full pay) significantly reduces the financial shock of illness for employees.

Cash plans

Health cash plans allow employees to claim back everyday health costs: dental check-ups, optical care, physiotherapy, and consultations. They are relatively low cost for employers (often £5 to £15 per employee per month) and serve a dual purpose. They support preventative health, which can reduce sickness absence, and they provide a tangible, visible benefit that employees use regularly.

For employers looking to strengthen their benefits offering without committing to a full private medical insurance scheme, cash plans are a practical starting point.

Income protection

Group income protection (GIP) provides a replacement income (typically 50% to 75% of salary) when an employee is unable to work due to long-term illness or injury. It picks up where SSP and contractual sick pay leave off, covering absences that extend beyond the initial weeks.

GIP is particularly relevant for employers whose workforce includes roles that are difficult to fill temporarily. It keeps the employment relationship intact, funds rehabilitation support, and reduces the pressure on managers to resolve long-term absence through dismissal.

Cost implications for employers

The financial impact of the April 2026 changes depends on your workforce profile:

  • Day one SSP increases costs most for employers with high volumes of short-term absence. If your average short-term absence is two days, you are now paying SSP for episodes that previously cost nothing in statutory terms.
  • Removing the LEL creates new SSP costs for employers with significant numbers of low-paid or part-time workers. The 80% cap limits the per-person cost, but the aggregate effect across a large workforce can be material.
  • Administrative costs increase for every employer. More SSP calculations, more variable rates, and tighter compliance requirements all add processing time.

There is no SSP rebate scheme for small employers (that was abolished in 2014). The full cost of SSP sits with the employer.

Modelling the impact on your specific payroll is straightforward: review your absence data from the past 12 months, identify how many absence episodes were three days or fewer, and calculate the additional SSP that would have been payable. Add the newly eligible low-earning employees, and you have a reasonable estimate.

Practical checklist: what to update now

Use this as a working list for your HR and payroll teams:

  • Payroll software: Confirm SSP calculation has been updated (day one payment, no LEL, 80% rule for low earners).
  • Absence management system: Ensure every day of sickness absence is recorded and linked to payroll.
  • Employee contracts and handbooks: Remove references to the three-day waiting period and the Lower Earnings Limit.
  • Staff communications: Notify all employees of their updated SSP entitlement, especially part-time and low-paid workers who were previously excluded.
  • Manager training: Brief line managers on the changes so they can answer employee questions and understand the importance of prompt absence reporting.
  • Fit note process: Review how fit notes are collected and processed. With day one SSP, even short absences may require documentation depending on your internal policy.
  • Cost modelling: Estimate the additional SSP cost based on your absence data and update your budget forecasts.
  • Sick pay policy review: Consider whether your contractual sick pay terms need adjusting in light of the new SSP baseline.
  • Compliance monitoring: Note that the new Fair Work Agency has powers to investigate and enforce SSP compliance. Ensure your records are audit-ready.

Closing the gap: how benefits support your workforce

SSP reform raises the floor, but it does not close the gap between statutory minimums and what employees actually need when they are unwell. Employers who pair the new SSP baseline with a considered benefits strategy, including contractual sick pay top-ups, cash plans for preventative care, and income protection for long-term absence, build a more resilient workforce and a stronger employer proposition.

The businesses that respond well to these changes will be the ones that treat SSP reform not as a compliance exercise but as a prompt to review their overall approach to employee health and financial protection.

If you are reviewing your benefits provision in light of these changes, PerkIQ can help you benchmark your current offering, identify gaps, and compare providers, all in one place.

Sources

  • Employment Rights Bill 2024-26, UK Parliament. Sections relating to Statutory Sick Pay reform.
  • HM Revenue & Customs, SSP rates and thresholds for 2026/27.
  • Department for Work and Pensions, "Statutory Sick Pay reform: impact assessment," 2025.
  • Office for National Statistics, Annual Survey of Hours and Earnings, 2025.
  • Fair Work Agency, establishment and enforcement powers under the Employment Rights Bill.

Published April 2026. This guide is for informational purposes and does not constitute legal or financial advice. Employers should consult their legal and payroll advisers for guidance specific to their circumstances.