Key changes to statutory sick pay under the Employment Rights Act 2025

The Employment Rights Act 2025 introduces the most significant reforms to statutory sick pay (SSP) in a number of years. These changes will take effect on 6 April 2026 and will have substantial implications for both employers and employees.

The current position

Under the existing framework, SSP operates with numerous qualifying conditions. Employees must earn at least £125 per week (the lower earnings limit) to qualify for SSP and payment only begins from the fourth qualifying day of sickness absence. This leaves the first three days unpaid unless an employer operates a more generous scheme.

This regime has long been criticised for excluding low-paid workers from statutory protection and questions have been raised about why a minimum earnings limit is required at all when the purpose of SSP is to ensure that those who are too unwell to work receive some financial support.

What is changing?

The Employment Rights Act 2025 introduces three fundamental changes to the SSP regime:

Removal of waiting days

The long-standing requirement for employees to wait three days before receiving SSP will be abolished. From April 2026, eligible employees will receive SSP from their first qualifying day of sickness absence.

The government believes this change will support phased returns to work, as employees will be entitled to SSP for each day not worked due to sickness. For example, a full-time employee returning to work on a three-day-per-week basis following a lengthy absence will receive SSP for the remaining two days.

Abolition of the lower earnings limit

The requirement to earn at or above £125 per week will be removed entirely, extending SSP eligibility to all employees regardless of earnings. This change will bring additional workers – including part-time staff, those on zero-hours contracts and lower-paid employees – within the scope of statutory sick pay protection.

New payment calculation

For lower earners, SSP will be calculated as 80% of normal weekly earnings or the flat weekly rate (£123.25 from April 2026), whichever is lower. The 80% calculation is intended to strike an appropriate balance between providing financial security to employees while limiting additional costs for businesses.

Enforcement and the Fair Work Agency

The Act also establishes a new single enforcement body, the Fair Work Agency, from 7 April 2026. Once operational, the Fair Work Agency will assume responsibility for enforcing SSP payments alongside other statutory entitlements, including holiday pay.

Financial implications for employers

The government estimates that removing the waiting period and the lower earnings limit will cost employers approximately £450m annually, equating to roughly £15 per employee.

The reforms are likely to have the greatest impact on employers with large, low-paid workforces that don’t currently offer contractual sick pay and those experiencing higher rates of short-term sickness absence.

Practical steps for employers

To prepare for these changes, employers should consider the following actions:

• Review and update sickness absence policies to remove references to waiting days and the lower earnings limit. Any equivalent waiting period in company sick pay schemes should also be reviewed
• Ensure payroll systems are updated to accommodate the new 80% calculation for lower earners and the removal of the three-day waiting period. Employers should liaise with payroll providers to confirm when system updates will be available
• Carry out an absence audit covering the past 12 to 24 months to model the financial impact of the changes and adjust budgets accordingly
• Train managers on dealing with sickness absences effectively, maintaining accurate absence records and identifying patterns that may warrant further investigation
• Strengthen return-to-work interviews and absence management procedures. Consider appropriate trigger points for formal discussions about attendance.

Conclusion

While the SSP reforms under the Employment Rights Act 2025 have received less attention than some of the Act’s more headline-grabbing proposals, their impact on employers’ operations and bottom line should not be underestimated. The changes represent a fundamental shift towards broader worker protection, bringing the lowest-paid employees within the scope of statutory sick pay for the first time.

Employers that prepare thoroughly for these reforms by updating policies, adjusting payroll systems and reviewing absence management procedures will be best placed to manage the transition smoothly when the changes take effect in April 2026.