How much will Statutory Sick Pay changes cost your organisation?

The way UK Statutory Sick Pay (SSP) is handled changed on 6th April 2026. As part of a swathe of reforms under the Employment Rights Act 2025, who is entitled to statutory sick pay has changed, as well as the amount employees are entitled to, and when they receive it.

In this article, we break down what these changes mean for your organisation, and what the increase in sick pay costs will look like in practical terms.

What is statutory sick pay and what is its current rate in 2026?

Statutory sick pay is the legal minimum amount employers are required to pay employees when they take sickness absence from work.

If an employee meets the eligibility criteria, organisations are obliged to pay SSP through their normal payroll.

As of April 2026, the flat weekly rate of SSP has increased to £123.25 for the 2026/27 tax year. For employees whose weekly wage earnings fall below that amount, SSP is to be calculated at 80% of their average weekly pay instead.

Whichever figure is lower between the flat rate and 80% weekly earnings is what the employee will receive in SSP.

Who is eligible for SSP?

As of April 2026, all employees are eligible for statutory sick pay regardless of how much they earn.

Previously, the now-scrapped Lower Earnings Limit meant that employees had to earn at least £125 per week in order to qualify for SSP.

Without this threshold in place anymore, it’s estimated that SSP now covers an additional 1.3 million UK workers, which includes a significant number of people in part-time, casual or lower-paid jobs.

When are employees eligible to receive SSP?

Previously, statutory sick pay was only payable to employees on their fourth day of sickness absence.

Since April 2026, that has changed to be payable from day one of sickness absence – so even short absences of one or two days now qualify for the entitlement.

Key drivers of increased costs

The changes to SSP present a significant financial and administrative challenge for employers.

One of the main drivers for an increase in cost in the removal of the three-day waiting period once an employee has called in sick. Having to pay SSP from day one (instead of from day four) is an entirely new cost that did not exist before April 2026.

Secondly, eligibility for SSP has been broadened with more than one million workers now qualifying for it where previously they did not. That means there may be part-time workers or lower-earners in your organisation that now qualify, the costs of which have to be accounted for. It also means you may see different rates being paid to different employees, depending on their wage.

The flat weekly rate for SSP has also increased to £123.25. While a modest sum in itself, it’s still a factor that contributes to the overall increased cost of sickness absence.

Examples of SSP costs

To calculate statutory sick pay, you work out each employee’s average weekly earnings over the eight weeks before their sickness absence began. Then, compare 80% of that figure against the flat rate of £123.25, and pay the employee whichever is lower.

For example:

An employee earns £500 per week. 80% of £500 is £400. Since £123.25 is lower, you pay the weekly flat rate.
An employee earns £130 per week. 80% of £130 is £104. Since £123.25 is higher, you pay £104 per week.
An employee earns £100 per week. 80% of £100 is £80. Since £123.25 is higher, you pay £80 per week. This employee would have not qualified for any SSP previously.

You can use the Gov.UK SSP Calculator to check different amounts, or refer to the rates and thresholds for employers for further information.

The total cost of removing the unpaid waiting days and the Lower Earnings Limit to businesses is estimated to be an additional £450 million per year, approximately £15 more per employee.

Industries that typically see higher rate of sickness absence (such as public sector and healthcare roles) are expected to see the biggest financial impact from the SSP changes.

What to do now

For organisations still transitioning through these changes, here’s what to do next:

Update your sickness absence policy, ensuring it clearly states that SSP is now payable from day one. Remove reference to unpaid waiting days and the Lower Earnings Limit.
Review your employee records, checking that all employees’ earnings data is up to date, including any part-time or casual staff members who now qualify for SSP for the first time.
Inform your people managers, letting them know that SSP is payable from day one and that all employees are eligible.
Review your return-to-work processes, ensuring these are consistently followed to help keep track of all sickness absences.
Communicate changes to SSP, and your newly updated sickness absence policy, to all of your employees.
Check that your payroll software has been updated with the new SSP calculations.
Consider whether your current sick pay arrangements are still appropriate. Many organisations offer occupational or company sick pay, meaning they pay employees above the SSP minimum anyway (at least for a set time period before falling back to SSP rates, depending on the length of the absence). Nevertheless, policies may need to be updated to remove any reference to the old SSP rules.

For many organisations, the additional costs that come from the new SSP changes will be manageable, but noticeable.

However, these changes still require attention to ensure your organisation is remaining compliant with the law.

It is also expected that sickness absence rates will increase following these changes, as more employees feel comfortable taking one or two days absences knowing they will receive financial support where previously they would not.

Managing absence effectively remains paramount. Ensuring policies, processes and practices are consistently adhered to, with the right systems and tools in place to help HR and people managers.