The Employment Rights Bill is bringing in two big reforms to Statutory Sick Pay (SSP) for employers:

1. SSP from Day One of Sickness

The current rule, where SSP kicks in only after three consecutive qualifying days of sickness, will be removed. Under the new legislation, SSP will be payable from the very first day of absence.

2. Lower Earnings Limit (LEL) Removed, Plus an 80% Earnings Rule

Right now, employees earning below the lower earnings limit aren’t eligible for SSP. The Bill removes this threshold, meaning about 1 million low paid workers will now qualify. Instead of granting them the full flat rate, they will be entitled to receive the SSP rate at that time or 80% of their average weekly earnings, whichever is less.

When Will These Changes Take Effect?

The reforms are coming into effect in April 2026.

What These Changes Mean for Businesses

Financial Impact

• Immediate costs: Employers will start paying SSP from day one, not day four. This could notably increase costs especially in sectors with larger workforces potentially leading to frequent short term absences such as the hospitality and care sectors.

• Overall cost estimates: Analysts suggest direct SSP related costs may rise by approximately £425 million, while benefits to business (via improved productivity and reduced presenteeism) could reach £2.4 billion. So the benefits should outweigh the costs in the long run.

 A Healthier and more Productive Workforce Perhaps?

When employees feel financially secure during illness, they’re less likely to come into work unwell and risk infecting others or dragging down productivity. Offering SSP from day one may also improve morale, employee loyalty, and retention especially among low paid and vulnerable workers.

Administrative and Cultural Shifts

• Payroll & policy changes: Payroll systems and employee handbooks will need updates to accommodate SSP from day one, and to compute 80% earnings correctly.

• Managing short term absence: With immediate SSP entitlement, businesses may face increased short term absence. Employers should train managers and sharpen return to work interviews to stay on top of absence trends.

• Enhanced scrutiny: The establishment of a Fair Work Agency (another development from the employment rights bill) will increase enforcement of SSP compliance meaning mistakes could lead to greater penalties.

Thoughts for Business Owners

These SSP reforms are undeniably a significant shift but in many ways, they’re a positive move for both staff and employers. A healthier, supported workforce is often more motivated, less likely to take extended sick leave, and more loyal in the long run.

Tips to prepare:

• Audit and update: Your sick pay policies and payroll systems will need to be updated.
• Train managers:  particularly in handling short term absence and return to work conversations.
• Calculate potential cost impacts: factor in more frequent short absences and broader eligibility.
• Communicate proactively with staff: Transparency will help maintain trust during the transition.

Employers who plan ahead and adapt promptly may find they’re far better positioned to thrive in this new workplace landscape and avoid any sick pay discrepancies. 

Also keep an eye out for further information about the Fair Work Agency, who they are and what they are responsible for.