Statutory Sick Pay reform: The steps employers must take now
The Employment Rights Act 2025 has made material changes to Statutory Sick Pay, representing a significant shift in how employers support ill employees.
Key changes from April 2026
From April 2026, eligible employees will receive Statutory Sick Pay from day one of absence and the lower earnings limit (which previously excluded an estimated 1.3 million low-paid employees) has been abolished entirely. The weekly rate of Statutory Sick Pay will now be the lower of the prescribed weekly rate or 80% of normal weekly earnings (to avoid the rate of Statutory Sick Pay being more than the actual earnings of lower paid eligible employees).
Implications for employers and employees
This is positive for employee welfare. Employees will no longer face the choice between attending work while unwell or losing income during the first three days of illness. The removal of the earnings threshold also extends protection to part-time and low-paid employees who were previously left without support.
However, for employers this isn't just a technical change – it's a fundamental shift in the cost of employing staff. Employers must prepare for the practical implications and quickly as it seems almost certain that they will paying more Statutory Sick Pay, making those payments more often and having to process these more complex payments through their payroll systems.
Next steps
It’s critical that employers review and update their sickness and absence management policies now, ensure payroll systems can handle day-one Statutory Sick Pay payments, and budget accordingly. Employers should also amend their template employment contracts in time to state that Statutory Sick Pay becomes due immediately (not after three consecutive days of sickness) and train line managers on the new rules.
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