Statutory Sick Pay (SSP) Reforms Under the Employment Rights Act 2025: What Employers Need to Know
The Employment Rights Act 2025 is reshaping the employment landscape, and one of its most significant changes affects how we handle statutory sick pay. If you're running a business, these reforms will directly impact your payroll, budgeting, and absence management from April 2026 onwards.
Think of it as removing the barriers that previously kept some of your hardest-working employees from accessing basic sick pay protection. While this brings additional responsibilities for employers, understanding these changes now gives you the advantage of proper preparation and strategic planning.
What's Actually Changing?
The SSP reforms under the Employment Rights Act 2025 centre around two fundamental shifts that will affect virtually every employer in the UK.
Goodbye to the Lower Earnings Limit
Currently, your employees need to earn at least £123 per week (the lower earnings limit) to qualify for statutory sick pay. This threshold has excluded many part-time workers, those on zero-hours contracts, and employees in lower-paid roles from receiving any statutory protection when they're genuinely ill.
From April 2026, this earnings threshold disappears completely. Every employee on your payroll will be entitled to SSP when they're sick, regardless of how much they typically earn. This means your weekend staff, casual workers, and part-time team members will all have the same sick pay rights as your full-time employees.
The End of the Three-Day Wait
Here's where the change becomes even more significant for your day-to-day operations. Under current rules, employees wait three days before SSP kicks in: meaning they only start receiving payment from the fourth day of illness.
The new system eliminates this waiting period entirely. From April 2026, your employees will receive SSP from their very first day of sickness absence. No more complicated calculations about when the three-day period starts or ends: it's simply day one coverage.
How Much Will You Pay?
The payment calculation remains unchanged: SSP will continue at 80% of the employee's usual weekly earnings or the statutory rate (currently £116.75 per week), whichever is lower. This ceiling provides some protection against unlimited liability, but the removal of waiting periods means you'll be making these payments more frequently.
Timeline: When Do These Changes Take Effect?
April 2026 is your key date. The Employment Rights Act received Royal Assent on December 18, 2025, but these specific SSP reforms won't take immediate effect. This phased approach gives you roughly four months to prepare your systems, policies, and budgets.
This timing aligns with other significant changes in the Employment Rights Act, including day-one rights for paternity leave and reforms to trade union access. By clustering these changes together, the government aims to create a single implementation date that businesses can plan around.
What This Means for Your Business
Financial Impact: Let's Talk Numbers
The most immediate impact will be on your payroll costs. Previously, if an employee earning £100 per week took two days off sick, you paid nothing in SSP. Under the new system, you'll pay SSP for both days.
Consider this scenario: You employ ten part-time workers earning £80 per week each. None currently qualify for SSP. From April 2026, each sick day for these employees will cost you SSP. If these employees average just two sick days each per year, you're looking at an additional £1,600 in SSP costs annually.
For businesses with higher absence rates or larger numbers of previously ineligible employees, these costs can escalate quickly. Short-term absences: those lasting one to three days: will have the biggest financial impact because you'll now pay for periods that were previously unpaid.
Administrative Changes
Your HR and payroll teams will need to adjust their processes significantly. The complexity of determining SSP eligibility reduces dramatically (everyone qualifies), but the frequency of payments increases.
Payroll system updates will be essential. Most systems currently include logic for the three-day waiting period and earnings thresholds. These parameters need removing or updating to ensure automatic compliance from April 2026.
Absence reporting procedures may also require adjustment. With first-day payment, you might want to review your evidence requirements and notification processes to ensure they're proportionate to the new reality.
Preparing Your Organisation: A Practical Action Plan
Review and Update Your Policies
Start by examining your current sickness absence policy. Look for any references to the lower earnings limit or three-day waiting periods: these sections need complete revision.
Key policy areas to address:
Eligibility criteria (expand to cover all employees)
Payment timing (from day one)
Evidence requirements for short absences
Absence management rules either to implement into a new policy a Bradford Factor framework or similar approach.
Return-to-work procedures
Integration with any company sick pay schemes
Financial Planning and Budgeting
Conduct an absence audit of the past 12-24 months. Identify employees who took sick leave but didn't qualify for SSP under current rules, and calculate what those absences would have cost under the new system. This gives you a baseline for budget adjustments.
Consider whether you need to review your company sick pay arrangements. If you currently offer enhanced benefits that start after the statutory waiting period, you may want to align these with the new day-one SSP entitlement.
System and Process Updates
Payroll systems require immediate attention. Contact your payroll provider to understand their timeline for updates and ensure compatibility with the April 2026 implementation date. If you manage payroll in-house, schedule system updates well in advance.
Training requirements shouldn't be overlooked. Your managers, HR team, and anyone involved in absence management need to understand the new rules. The changes are significant enough to warrant formal training sessions and updated procedures.
Integration with Broader Employment Rights Changes
These SSP reforms don't exist in isolation: they're part of a comprehensive overhaul of employment rights. Understanding how they connect with other changes helps you plan more strategically.
April 2026 also brings:
Day-one rights for paternity leave
Strengthened trade union access rights
Bans on NDAs in harassment cases
Later in 2026 and 2027, you'll face additional changes including unfair dismissal protection from day one and new obligations around zero-hours contracts. Planning for SSP reforms now positions you well for these subsequent changes.
Strategic Considerations for SMEs
Small and medium-sized businesses face particular challenges with these reforms. Limited HR resources mean changes need to be implemented efficiently, and tighter budgets require careful financial planning.
Consider whether you need external support for implementation. We will support all our retained clients with the standard amendments to policies as apart of our support package. For adhoc clients we can provide support on a [pay as you go basis.
Managing the Transition Smoothly
Communication is crucial throughout this transition. Your employees need to understand their enhanced rights, while your management team needs to grasp the new obligations and costs.
Start preparing your workforce early. Clear communication about the changes helps prevent misunderstandings and ensures everyone knows what to expect from April 2026.
Document everything as you make changes. Keep records of policy updates, system modifications, and training provided. This documentation proves invaluable if questions arise later about compliance or if you need to troubleshoot issues.
Looking Ahead: Making These Changes Work for You
While these reforms increase costs and administrative requirements, they also present opportunities. Enhanced sick pay rights can improve employee wellbeing, reduce presenteeism (where sick employees come to work and potentially spread illness), and demonstrate your commitment to supporting your workforce.
Consider the broader benefits:
Reduced risk of workplace illness transmission
Improved employee loyalty and retention
Enhanced reputation as a responsible employer
Potential productivity gains from healthier workforce
The key to success lies in thorough preparation, clear communication, and viewing these changes as part of building a more sustainable, supportive workplace culture.
Ready to ensure your business is prepared for these SSP reforms? The changes may seem daunting, but with proper planning and the right support, you can navigate this transition smoothly while positioning your organisation for continued success in the evolving employment landscape.
Remember we are here if you need any support or expertise to guide you through making these changes. Call us on 01962 217338 or email hello@proaction-hr.co.uk
