What Do the New Sick Pay Rules Mean?

On 6 April 2026, the biggest overhaul of Statutory Sick Pay (SSP) since 1983 came into force under the Employment Rights Act 2025. If you are an employer, a payroll manager, or an employee, the rules you knew have changed. This explains what the new sick pay rules mean in clear, practical terms so you know exactly where you stand.

In short, three things have changed:

SSP is now paid from the first day of sickness absence (the three “waiting days” are gone).
The Lower Earnings Limit has been removed, so all eligible employees qualify regardless of how much they earn.
SSP is now paid at 80% of average weekly earnings, or the flat rate of £123.25 per week, whichever is lower.

Below, each change is broken down in detail, along with what employers must do now and how enforcement has changed.

Change 1: SSP is payable from day one

Before 6 April 2026, employees had to be off sick for four consecutive days before SSP started, with the first three days classed as unpaid “waiting days”. Those waiting days have been abolished. SSP is now payable from the first qualifying day of sickness absence, regardless of how long the employee remains off.

For employers with high rates of short-term absence, this represents a genuine cost increase. For employees, it removes a financial penalty that often pressured people to work while unwell.

Change 2: The earnings threshold has been removed

Previously, only employees earning above the Lower Earnings Limit (£125 per week in 2025/26) qualified for SSP. That threshold has gone. Every eligible employee now qualifies, including part-time staff, lower-paid workers, and many on casual or variable-hours contracts who were previously excluded.

Change 3: How SSP is now calculated

The new calculation is straightforward. Employees receive whichever is lower of:

80% of their average weekly earnings (AWE), or
The flat SSP rate of £123.25 per week (2026/27).

Worked examples:

An employee earning £200 per week: 80% = £160, so they receive £123.25 (the flat rate is lower).
An employee earning £135 per week: 80% = £108, so they receive £108 (80% is lower).

This structure ensures the lowest earners are not suddenly receiving more in sick pay than their normal wage, while still guaranteeing protection for everyone above that level.

What about phased returns to work?

This is one of the most practically significant changes. Under the old rules, SSP was not payable on days an employee partially worked, which made phased returns financially punishing. Under the new rules, because incapacity is now assessed day by day, SSP is payable for each qualifying day the employee is still absent during a phased return.

Example: An employee who usually works five days a week returns on three days and stays off sick for two. SSP is payable for those two qualifying sick days, with normal pay for the three working days.

Transitional rules for absences spanning 6 April 2026

For sickness absences that began before 6 April 2026 and continue beyond it, HMRC guidance sets out specific rules:

Employees currently serving waiting days on 6 April become entitled to SSP from that date.
Employees previously excluded because they earned below the Lower Earnings Limit may now qualify from 6 April, provided they still meet other eligibility criteria.
Employees already receiving SSP on 6 April should be paid the new flat rate of £123.25 from that date.
Where an employee would receive less under the new 80% calculation than the flat rate, transitional protection keeps them on the flat rate until their absence ends or their 28-week entitlement runs out.

Linked absences, long-running absences exceeding 28 weeks by 6 April, and cases involving backdated pay rises have specific rules set out in the official HMRC guidance.

The Fair Work Agency

The legal update would be incomplete without covering enforcement. On 7 April 2026, the government launched the Fair Work Agency (FWA), a new body with genuine enforcement powers over SSP for the first time.

The FWA can:

Issue Notices of Underpayment, payable within 28 days.
Impose a mandatory penalty of 200% of the underpaid sum, capped at £20,000 per worker.
Recover its own enforcement costs from non-compliant employers.

In practical terms, underpaying three employees by £500 each in SSP could result in the original £1,500 plus a £3,000 penalty on top. SSP compliance is no longer a back-office issue.

What employers must do now

If you have not yet taken action, the priorities are:

Update sickness absence policies and employee handbooks to remove references to waiting days and the earnings threshold.
Check your payroll system calculates SSP correctly under the new 80%-or-flat-rate rule, including transitional edge cases.
Train line managers on day-one entitlement and how phased returns now interact with SSP.
Audit records to identify which staff are newly covered, particularly part-time and lower-paid workers.
Review contracts for outdated SSP wording.

Please note this is subject to change and should used as guidance only, not be taken as legal advice

Frequently Asked Questions

Is SSP still paid after seven days without a fit note?

No. Employees can still self-certify for the first seven days. A fit note is still required from day eight onwards.

How long can SSP be paid for?

Up to 28 weeks, unchanged.

Are there exemptions for small businesses?

No. The rules apply to all UK employers regardless of size.

Is SSP taxable?

Yes. It is subject to Income Tax and National Insurance as normal earnings.