Statutory Sick Pay (SSP) Reform: What does this mean for employers?

The latest Employment Rights Bill brings with it significant legislative changes that widen the eligibility for Statutory Sick Pay (SSP) and that transform the way it is  recorded and processed. 

Under existing legislation some 1.3 million workers do not qualify for SSP from their employer as they earn below the lower earnings threshold, and no worker receives SSP for absences of less than four days.   

However, from 6 April 2026, new rules mean that: 

• SSP will now be payable from Day 1 of sickness 

• SSP will be extended to include lower paid workers, and will either be payable at the statutory rate of SSP, or 80% of average weekly earnings (whichever is lower) 

This represents a major shift in responsibility, whereby for the first time SSP is legally payable but not at a defined weekly rate, placing onus on the employer to calculate and apply the correct rate of SSP. 

What does this mean for employers? 

The impact of these changes is really twofold; firstly, the widened scope of the SSP, and the rate of payment being determined by average weekly earnings, will represent increased cost for many employers. 

For example, an employee earning National Minimum Wage and working 37.5 hours a week (Monday-Friday), who is off sick for one week, would only be entitled to receive SSP for two days under the existing rules (£49.30).  

However, the new rules will mean they are entitled to receive a full week of SSP, amounting to £123.25. 

As another example, an employee working only Tuesdays and Wednesdays in 2026/27, who takes those two days off sick, will immediately be entitled to SSP for that absence where currently those two days of sick leave would not qualify for payment. This takes the SSP payment from £0 to £123.25 for this individual.  

Transitional period  

Worth bearing in mind, is that for some lower earners, with weekly earnings between £125 and £154.05 per week, they will receive less SSP than they are used to. HMRC has established a transitional period to protect pay for affected employees with a continuing sickness prior to 6 April, but these workers will eventually notice a drop in their weekly rate of SSP.   

Aside from increased costs, employers will also need to supply their payroll providers with more information than previously, regarding employee’s sickness – this includes, the first date of sickness, the date they returned to work and their working pattern. 

This information is necessary, even if the sickness was only for a single day and regardless of whether you are paying sick pay at an enhanced rate. 

Paying the correct rate of SSP under the new legislation is crucial; incorrect payments, or failure to pay SSP, could be deemed unlawful deductions from wages. 

Preparing for SSP reform 

With the reform taking effect from 6 April 2026, employers should ensure they are ready to fulfil their new responsibility. A few key things to consider include: 

• Is your software up to date, and able to accommodate the new Average Weekly Earnings (AWE) calculation, ensuring that the correct rates are paid to employees on sick leave? 

• Do you need to review your company sick pay policy/absence management to take account of the new requirements? 

• Are you confident that you can supply your payroll provider with the information they will require to calculate and process the correct deductions? 

How can GH Payscheme help? 

Our dedicated BACS-approved payroll bureau helps hundreds of employers to stay compliant with the latest payroll legislation, ensuring employees are paid accurately and on time. 

Using the information provided to us, we can calculate the relevant SSP rates for your employees and make the appropriate deductions from their pay.  

To discuss the latest SSP changes with us, or to find out more about outsourcing your payroll to a team of specialists, please contact us today.