Statutory Sick Pay: What Employers Actually Need to Know in 2026

You get a call on a Monday morning. A member of staff is off sick. Again. You deal with it, cover the work, and move on. What you probably do not stop to check is whether your payroll is handling it correctly under the rules that came into force on 6 April 2026.

The statutory sick pay rules changed significantly this year under the Employment Rights Act 2025, and the majority of small business owners we speak to have not updated their policies, their payroll settings, or their employee handbooks to reflect that. Some are already paying the wrong amount without realising it.

This post covers what has changed, what the most common mistakes are, and what you actually need to do about it.

What You Need to Know About SSP

Statutory Sick Pay is the legal minimum you must pay an eligible employee when they are off sick. It is not optional. If an employee qualifies, you pay it, and you cannot recover it from HMRC in most circumstances.

SSP is paid for up to 28 weeks of sickness absence. From 6 April 2026, the weekly rate is £123.25, confirmed on GOV.UK, up from £118.75. But the rate increase is the least significant part of what changed this April.

The April 2026 Changes: What Is Actually Different

Three changes came into force on 6 April 2026 under the Employment Rights Act 2025. All three affect how you manage and pay sickness absence from the very first day.

1. No More Waiting Days

Under the old rules, the first three days of any sickness absence were unpaid. SSP only started from the fourth day. That waiting period no longer exists. SSP is now payable from the very first qualifying day of sickness absence.

This matters most for short-term absences. An employee who takes two days off sick and returns to work would previously have received nothing. Under the new rules, they are entitled to SSP for both days. If your payroll system still applies a three-day wait, it is now operating illegally and you are already underpaying people.

2. The Lower Earnings Limit Has Gone

Previously, employees had to earn at least £125 per week to qualify for SSP at all. That threshold has been removed entirely. From April 2026, every eligible employee qualifies regardless of what they earn, including part-time staff, people on variable hours, and lower-paid workers who were completely excluded before.

The government estimates this brings around one million additional workers into scope. If your business employs anyone on reduced hours or lower wages, your SSP exposure has increased.

3. A New Calculation Applies to Lower Earners

For employees earning below a certain level, SSP is now calculated as whichever is lower: 80% of their average weekly earnings, or the flat rate of £123.25. Average weekly earnings are worked out over the eight-week period before the absence begins.

In practice, this means your payroll process needs to run two figures and apply the lower one. Many smaller payroll systems are not yet configured to do this automatically. If you use a bureau or third-party provider, confirm in writing that this has been updated.

How Phased Returns Now Work

This is the change that catches the most employers by surprise. Under the old rules, a phased return often broke the run of consecutive sick days needed to maintain SSP entitlement. From April 2026, because incapacity is assessed day by day and waiting days no longer exist, SSP is payable for each day an employee cannot attend during a phased return, even on weeks when they are also coming in.

An employee normally working five days who returns on three days a week following illness is entitled to SSP for the two days they are still absent. Make sure your line managers understand this before they agree any phased return arrangements.

For a broader look at how to manage extended absence, including fit notes, occupational health, and capability, our page on long-term sickness management covers the full picture.

Transitional Rules: What to Do If Someone Was Already Off Sick

If you have an employee who was already off sick before 6 April 2026 and is still absent, specific rules apply to make sure nobody sees a reduction in their SSP as a result of the changes.

Here is how the main scenarios work. An employee already receiving SSP before 6 April continues to receive the uprated flat rate of £123.25 for that period of absence until they return to work, exhaust their 28-week entitlement, or their contract ends. An employee who was serving waiting days on 6 April becomes entitled to SSP from that date onwards. An employee earning below the old Lower Earnings Limit who is off sick on or after 6 April is now eligible for SSP under the new rules and should be paid accordingly.

Each of these cases needs individual review. Your payroll system will not handle transitional cases automatically. HMRC has published detailed guidance on GOV.UK if you need to work through a specific situation.

The Fair Work Agency: This Is Now Being Enforced

From 7 April 2026, the Fair Work Agency has been operating with real enforcement powers over SSP compliance. Underpaying SSP carries a penalty of 200% of the underpaid amount, capped at £20,000 per worker, with a six-year back liability window.

This is not a grace period. If your payroll has not been updated, the risk is active right now.

The Mistakes We See Most Often

Even before April 2026, SSP was an area where well-intentioned employers regularly got things wrong. These are the issues we see most frequently.

Still Running the Three-Day Wait

If your payroll software still blocks SSP for the first three days, you are underpaying people and breaching the law. Do not assume your provider has updated this. Confirm it explicitly and test a scenario before you take their word for it.

Using an Outdated SSP1 Form

The SSP1 form notifies employees that they do not qualify for SSP or that their entitlement is ending. HMRC updated the form ahead of April 2026. The old version had a box for notifying employees they did not qualify due to the Lower Earnings Limit. That box no longer exists. Using the old form is both incorrect and potentially confusing for the employee.

Policies That Are Now Out of Date

Most sickness absence policies written before 2026 reference waiting days, earnings thresholds, or calculation methods that are now wrong. A policy with inaccurate information creates confusion for managers, undermines your position if there is ever a dispute, and signals to an employment tribunal that you were not on top of your obligations.

Your sickness absence policy needs to reflect the rules as they stand now, not as they stood two years ago.

No Consistent Return-to-Work Process

Return-to-work conversations are one of the most effective absence management tools available and one of the most commonly skipped. Without the deterrent of unpaid waiting days, there is a genuine risk that short-term absence rates creep up in some businesses. A brief, consistent conversation after every absence, however short, makes a real difference over time.

Contracts That Reference Old SSP Rules

If your employment contracts contain contractual sick pay provisions that mirror or reference the statutory rules, those references may now be incorrect. It is worth a quick review to check.

Managers Who Do Not Know What Has Changed

Your line managers are the ones who handle absence day to day. If they do not know that SSP now applies from day one, that part-time staff now qualify, or how phased returns work, they will make mistakes, and those mistakes become your liability. A brief, clear briefing is usually all it takes.

Your SSP Compliance Checklist

Use this to check where you stand right now.

How SSP Connects to the Wider Picture

Statutory sick pay is not just a payroll function. It sits at the intersection of your legal obligations, your employment contracts, your policies, and how your managers behave day to day. Get any one of those wrong and the rest becomes harder to defend.

An employee who is mismanaged during a period of illness is far more likely to raise a grievance or pursue a tribunal claim. And the evidence that matters most in those situations starts with whether you followed the right process from the beginning, including paying the correct amount of SSP from the correct day.

When Absence Becomes a Long-Term Problem

When sickness absence extends, the statutory sick pay rules become just one piece of a larger process. You will need to think about fit notes, occupational health, reasonable adjustments, and ultimately the capability procedure. Our long-term sickness management service is built to support business owners through every stage of that, from the first few weeks of absence through to resolution.

When Absence Starts to Look Like a Conduct Issue

Persistent short-term absence is a different problem to long-term illness and needs to be handled differently. Understanding when you are dealing with a capability matter versus a conduct matter is essential before you start any formal process. Our post on capability versus disciplinary explains the distinction in plain English and is worth reading alongside this one.

The Foundations That Make All of This Easier

The businesses that manage absence most effectively tend to have the same things in place: clear policies and procedures, a well-written employee handbook that people actually read, and managers who feel confident having difficult conversations. Without those foundations, every absence becomes harder to manage than it should be.

Our earlier post on how to manage employee absence covers the broader principles of absence management and works well alongside what we have covered here.

What This Costs and Why It Is Worth Getting Right

The government estimates the April 2026 reforms will cost employers around £450 million annually across the UK, roughly £15 per employee. For businesses with high levels of short-term absence, or those employing a significant proportion of part-time or lower-paid staff, the impact will be felt more sharply than that figure suggests.

The businesses that come out of this in the best shape are not the ones that do the minimum. They are the ones that use it as a prompt to tighten their absence management properly: updated policies, trained managers, a payroll process that works, and a consistent approach to every absence from day one.

The cost of getting it right is modest. The cost of getting it wrong, particularly under the Fair Work Agency's new enforcement regime, is not.

Not Sure Where You Stand?

If you are not confident that your policies, payroll process, and employment contracts reflect the new statutory sick pay rules, we can help you get it sorted. At J Mann Associates, we work with small and medium-sized businesses across Wiltshire and beyond, giving them the HR foundations they need to stay compliant and manage their people with confidence.

You can get in touch here, or if you would prefer to talk it through first, book a free HR consultancy call. There is no obligation and no jargon, just a straight conversation about where you are and what, if anything, needs to change.

Most of the businesses we work with tell us they wish they had picked up the phone sooner. It is usually a much simpler fix than they expected.