Are you a small employer and want to understand the significant changes to Statutory Sick Pay from April 2026, and the potential gains and costs for your business? Read on…
Current Statutory Sick Pay Rules (until 05th April 2026)
When an employee is absent from work through sickness, they qualify for Statutory Sick Pay (also known as SSP) only if two conditions apply:
- The employee earns an average of more than the current Lower Earnings Limit, which for 2025–26 is £125.00 per week.
- They are sick for at least 3 days (called waiting days) before SSP starts on day 4.
What’s Changing With Statutory Sick Pay from April 2026
- Firstly, the government will remove the minimum earnings requirement, so all employees qualify for SSP, regardless of their earnings or hours.
- Secondly, SSP will start from Day One, ending the three unpaid waiting days.
- Finally, the new calculation method means employees receive the lower of:
- 80% of their normal weekly earnings, or
- The SSP flat rate (set annually by the government).
The Government will continue publishing SSP rates each year. Employees will get 80% of their average weekly earnings or the SSP flat rate, whichever is lower.
For example, the 2025–26 flat rate is £118.75 per week (£23.75 per day for a five-day worker). However, the government has not yet released the 2026–27 rate.
HMRC’s consultation document can be found here
Costs versus Potential Gains for your business?
Potential Gains: workforce health, retention, morale
- Presenteeism: An employee who can afford to take a sick day is less likely to work when unwell, avoiding mistakes, low productivity, and spreading illness. Because of this, the business avoids turning a ‘tummy bug’ into a workplace mini-pandemic. This prevention protects customer service, keeps productivity steady, and helps everyone, including you, stay healthier. Employees who rest recover faster and return to work ready to perform at full capacity.
- Staff Retention and Recruitment Costs: Employers who pay fair sickness absence pay show responsibility and care for their team’s wellbeing. This approach encourages loyalty and goodwill. In addition, it attracts and keeps employees in a market where recruitment and training costs matter. As a result, the business gains a better reputation as a conscious and supportive employer, with word-of-mouth recommendations spreading in your community and industry.
- Improved Morale & Engagement: Valued and trusted employees often contribute more creatively and effectively, offsetting the cost of SSP. Furthermore, the new SSP rules, combined with an updated ‘return to work’ policy, improve communication and demonstrate concern for wellbeing.
- Operational Gains: A uniform SSP approach makes it easier to predict sickness absence costs. Moreover, tracking absence from day one helps you identify patterns, support employees with underlying issues, and intervene early.
Costs: what we know right now
Businesses will face increased costs. The TUC forecasts business benefits (such as reduced presenteeism) but at the same time warns of around £425 million in extra employer costs. Employers have not been able to reclaim SSP from the government since 2014, the same year Employment Allowance was introduced.
The 2025–26 weekly SSP flat rate is £118.75, or £23.75 per day for a five-day worker. For example, under current rules, an employee absent for one week receives £47.50 because the first three days are unpaid waiting days.
Under the new rules, the same employee would get £118.75 for a week’s absence, an extra £71.25. The government has not yet announced the 2026–27 rate.
Summary: Costs vs Potential Gains of the 2026–27 SSP Changes
| The Costs | The Potential Gains |
| Higher wage bill – Employers must fund SSP from day one, for more staff, with no ability to reclaim it. | Reduced presenteeism – Fewer sick employees at work means lower infection spread, fewer knock-on absences, and better productivity overall. |
| Broader eligibility – Removal of the lower earnings limit means more casual, part-time, and low-hours workers now qualify. | Improved staff loyalty – Employees who feel supported during illness are more likely to stay, reducing turnover and recruitment spend. |
| Possible short-term increase in short absences – Easier access to SSP could see an initial spike in day-one sick days. | Enhanced employer brand – Fair and inclusive sick pay provision helps position your business as a responsible and attractive employer. |
| No government rebate – All SSP costs remain with the employer, unlike some other statutory payments. | Better absence data – Standardising day-one recording improves tracking and enables earlier interventions for attendance issues. |
| Operational adjustments needed – Payroll, HR systems, policies, and contracts all need updating before April 2026. | Stronger workplace culture – Clear, fair policies backed by good communication can improve trust and morale. |
While the 2026 SSP reforms bring extra costs and responsibility, they also give you the chance to create a healthier, more loyal workforce. Therefore, they can become an investment that returns value through better retention, stronger reputation, and improved productivity.
What PayrollAbility will do to support you with changes to SSP from 2026-27
Following the roll-out of Employer and Employee Connect from July 2025, Employer and Employee Connect will let you view each employee’s absence calendar, helping you track patterns and trends. Additionally, when you update calendars in the Employer Portal, we can keep absence records accurate and ensure you follow the new SSP rules. This process allows us to pay employees SSP in the next available payroll without delay.
PayrollAbility will calculate payments correctly, either 80% of average weekly earnings or the flat rate, depending on earnings.
In conclusion, although the 2026 SSP reforms increase costs and require more attention, they also help you build a healthier workplace, reduce illness across teams, and enhance your reputation as an employer of choice. Managed well, these changes can strengthen loyalty, maintain productivity, and boost your standing in the market.
