Many of the reforms discussed below have since been enacted. Under the Employment Rights Act 2025, from 6 April 2026 SSP is payable from the first day of sickness and the Lower Earnings Limit (earnings threshold) has been removed. The sections below describe the debate as it stood before these changes took effect.
Trade union leaders have supported calls to reform the UK's Statutory Sick Pay (SSP). From April 2026, the SSP rate will be £123.25, or 80% of average earnings (whichever is lower), for up to 28 weeks.
The current state of statutory sick pay (SSP) in the UK
The SSP system had long been criticised for the three-day waiting period before an employee became eligible for sick pay, and for a rate that barely covers the average person's regular earnings. (This waiting period was abolished from 6 April 2026, with SSP now payable from the first day of sickness.)
At the time of writing, the earnings threshold to be eligible for SSP was £123 per week, and the government had begun consultations on reforming it in 2025. Campaigners hoped to remove this threshold and introduce a percentage replacement rate — changes that took effect on 6 April 2026, when the Lower Earnings Limit was removed and an 80% replacement element was introduced.
What changes to statutory sick pay could mean for SMEs
The reforms increase SSP costs for employers, and small and medium-sized businesses are expected to feel this most acutely — particularly those employing part-time, low-paid or casual staff. SSP remains non-recoverable through PAYE, so employers bear the full cost; there is no small-employer rebate. The government estimates the changes will increase employer SSP costs by around £450 million per year across the economy. Business groups such as the FSB have argued this could discourage SME hiring and have called for a rebate to be reintroduced.
Expert recommendations
Eligibility from day one: To address worries about income delays during acute illness, the Department for Work and Pensions recommended making SSP available from the first day of illness — a change that was enacted from 6 April 2026.
Supporting staff long-term: The Work Foundation has stated that it’s vital for employers to create programs that support employees with chronic health conditions, making sure they stay valuable and productive.
Increase SSP Rates: CIPP advises maintaining the current waiting period while raising SSP rates to offer more support for vulnerable employees.
Key takeaways
As the UK is in the midst of a participation crisis, and health matters are central to economic inactivity, reforming SSP is crucial to getting people well and back to work. There needs to be a balance between addressing the current system’s inadequacies without hindering the viability of SMEs, which are the backbone of business in the UK.
If policymakers can resolve the issues that vulnerable workers face while still keeping businesses thriving, the UK’s SSP system will be a true safety net for our workforce.
