HR Newsletter No: 171 - Important Update: Statutory Sick Pay Changes Are Coming – What UK SMEs Need to Know Now

From we believe April 2026 (pending confirmation), a major change is coming that will affect every employer in the UK – particularly small and medium-sized employers.

The Government’s upcoming Employment Rights Bill will abolish the three-day waiting period for Statutory Sick Pay (SSP), and remove the lower earnings threshold. In short, employees will now be entitled to SSP from day one of absence, regardless of how much they earn or how short their absence is.

This is more than just a technical tweak – it represents a significant shift in the cost and risk landscape for employers.

What’s Changing?

What this means in practice is as follows:

1. SSP From Day One

Gone will be the days of the unpaid first three days off sick. From April 2026, Statutory Sick Pay will be payable from the very first day of absence. No more waiting until day four.

2. No Minimum Earnings Threshold

Currently, employees need to earn at least £125 per week to qualify for SSP. This threshold is being removed. That means even workers on very low or irregular incomes – for example, someone working just one minimum-wage shift per week – will now qualify.

3. SSP Based on Actual Earnings

SSP will be calculated at 80% of an employee’s average weekly earnings, capped at whatever the current statutory rate of SSP will be. So, for part-time or low-paid workers, SSP will reflect their actual pay, rather than being a flat rate.

4. Knock-On Effects for Enhanced Sick Pay (OSP)

Many employers provide enhanced schemes that offer Occupational Sick Pay (OSP).  Those that strictly mirror SSP rules means that their OSP only kicks in after three days of absence. These policies will now need to be reviewed and amended, or you risk employees receiving full pay from day one, potentially without any contractual change.  You have less time than you think to make these changes easily – see below.

5. Financial Impact of Short-Term Absence

This reform will increase the cost of short-term absence. The employee who regularly calls in sick for a couple of days at a time, or perhaps regularly on Mondays or Fridays, will now be paid for those days.

What Employers Should Do Now

This change is fast approaching. While April 2026 may seem a way off, the time to prepare is now. Here are four immediate action points for employers:

• Review and update sickness absence policies. Ensure your documentation is aligned with the incoming changes and ready to roll out well in advance.

• Reassess and adjust your Occupational Sick Pay Schemes. If your current OSP model assumes a waiting period, you’ll need to reconfigure it, or risk unforeseen costs.

• Monitor absence trends and tighten up return-to-work procedures. Robust absence monitoring is more important than ever – as is early intervention and support.

• Train Line Managers. Equip your Managers to handle frequent short-term absences and longer-term sickness cases confidently, including knowing when and how to refer to occupational health.

Employment Contracts and Legal Considerations

This new legislation also introduces tighter protections for employees. Under section 104I of the Employment Rights Bill, if you need to amend employment contracts in response to this SSP change – for instance, to adjust OSP terms – and an employee refuses, you may not be able to dismiss them without risk. Doing so could constitute an automatically unfair dismissal.

That means timing and process are critical. Consult legal advice where necessary and ensure any contract amendments are handled transparently, fairly, and lawfully.

Don’t Be Caught Out

This may seem like a small adjustment in policy – but it carries real operational and financial consequences for employers, particularly those with:

• High sickness absence rates

• OSP schemes linked closely to SSP

It’s especially likely to bite on Monday and Friday mornings, when short-term absences spike.

There’s still time to prepare – but not much. Acting early means you can make the necessary changes in a measured, strategic way, rather than rushing to react at the last minute.

Final Thoughts

The reform of Statutory Sick Pay is a meaningful shift in employment rights. It supports fairness and inclusivity – but it also brings new obligations for employers.

Take this time to prepare, review your policies, and educate your Managers. Getting ahead of this change will help protect your business, and support your employees effectively when the new rules take effect.

If you need support reviewing your policies or planning for the transition, don’t hesitate to get in touch.

Clients are welcome to raise any concerns with our Consultant team, who would be pleased to advise you on any element of the issues arising from this newsletter.