By hayley - These reforms include three major updates:
1. SSP from Day One
The current three waiting days before sick pay eligibility will be abolished. Employees can claim SSP from their first qualifying sickness day.
2. No Earnings Threshold
The Lower Earnings Limit (currently £125/week) will be removed. This ensures part-time, low-paid, and more zero-hours workers qualify for SSP
3. New Pay Calculation: 80% of Wages or Flat Rate
Rather than a static flat rate, SSP will transition to 80% of an employee’s normal weekly earnings, capped at the current flat rate (currently £125/week). This gives low earners a larger safety net but still retains a firm cap to protect employers
Additionally:
- A new Fair Work Agency will be established to enforce these SSP rules, along with other employment rights, taking over from HMRC
- The flat rate itself will be uprated with inflation before April 2026
Why These Reforms Matter
1. Greater Inclusivity & Well‑Being
Up to 1.3 million previously excluded low-wage workers will now receive SSP, helping them take time off when ill, especially important for those with chronic issues.
2. Healthier Workplaces & Productivity
By removing barriers to taking sick leave, these reforms are expected to curb presenteeism (the act of being at work while sick) and reduce contagious illness spread, supporting broader economic productivity
3. Employer Responsibilities Increase
While these changes promote equity, approximately £500 million in additional annual costs, or about £15 per employee, is anticipated. Small businesses in particular warn of significant financial pressure, with the pressure will be placed on the employer to manage absenteeism more efficiently.
What Employers Should Do Now
With 6 months before April 2026, it's essential for employers to take proactive steps:
1. Review Budgets & Forecast Costs
Prepare for higher SSP expenditure, especially if your workforce includes many part-time or low-paid employees. Model different absence scenarios to assess financial impact.
2. Update Payroll & HR Systems
Ensure your systems can:
- Remove the three waiting days from the calculation structure
- Calculate SSP as 80% of earnings, up to the flat-rate cap
- Include all employees regardless of earning level.
3. Revise Contracts & Policies
Update employment contracts, staff handbooks, and sickness absence policies to reflect:
- Day‑one entitlement to SSP
- Expanded eligibility
- New calculation methodology
Clear communications will help avoid confusion or disputes
4. Train Managers & Teams
Managers need clear guidance on:
- When SSP begins
- Reporting procedures
- Supporting staff during short‑term illnesses
Training prevents procedural breakdowns and ensures fairness.
5. Strengthen Absence Management
To avoid potential misuse or spikes in absence:
- Implement robust policies around sick notice and certification
- Encourage a supportive but accountable sickness culture
- Consider absorptive policies for repeat short-term illnesses
6. Prepare for Enforcement & Financial Returns
Be ready for oversight from the new Fair Work Agency. Track SSP correctly so you can respond to any audits.
Tips for Smoother Transition
- Start early: Begin policy reviews and payroll planning now, ten months isn’t much time.
- Engage providers: Forge dialogue with software vendors to schedule timely updates and how Sick records will be managed.
- Communicate clearly: Use staff briefings and written FAQs to explain what is changing and why.
- Model costs: Use absence data to build multiple costing scenarios, consider worst-case situations.
- Be compassionate but consistent: While encouraging time off for illness, maintain structured policy enforcement.
In Summary
The 6th of April 2026, marks a transformative moment. These shifts enhance fairness and wellbeing for employees, especially those on lower incomes, but they also bring operational and financial challenges for employers.
By planning now, budgeting, updating systems, revising contracts, and training staff, you can ensure a compliant, cost-effective, and supportive rollout.
We await the government’s detailed guidance before implementation. Meanwhile, businesses should act now to prevent last-minute scrambling.
Embrace these reforms, although I know they come with an employer burden, not just as a legal obligation, but as an opportunity to strengthen your organisation’s reputation, employee morale, and health resilience. Cash flow and business planning are essential to ensure your business stays healthy too. The future of work is here, and it starts with sick pay from day one.
Hayley