Statutory Sick Pay Update (Employment Rights Act 2025)

The UK Government, via the Employment Rights Act 2025, has reformed Statutory Sick Pay (SSP) effective as of April 2026 by removing the Lower Earnings Limit (making SSP available to all employees regardless of earnings) and removing the three-day waiting period (so SSP is payable from the first full day of sickness absence), with the rate set at the lower of 80% of average weekly earnings or the flat rate (£123.25 per week).

These changes, enforced by the new Fair Work Agency, aim to enhance worker financial security, support recovery, and increase workplace productivity, though they increase costs and compliance burdens for employers, especially in low-wage sectors.

• How has the Government reformed the Statutory Sick Pay (SSP) framework?
• What is the Fair Work Agency?
• What this all means for employers
• Quick recap
• How can Croner help?

The Employment Rights Act 2025 is a key part of the UK Government's plan to Make Work Pay. It has reformed existing laws to:

• Improve worker rights.
• Create a more equitable economy.
• Increase job security and living standards.

The Act has transformed Statutory Sick Pay (SSP) and entitlement to it. In this article, Croner explains the current SSP rules — now fully in force — and what they mean for employers.

Need business support? Avoid employment tribunals by speaking to Croner’s employment law and HR experts.

We can help you ensure your contracts, policies, and payroll stay compliant under the new rules. Simply call 01455 858 132.

How has the Government reformed the Statutory Sick Pay (SSP) framework?

Under the current rules:

• There is no Lower Earnings Limit. All employees qualify for SSP, regardless of earnings. This extends coverage to low-paid, part-time, and zero-hours workers.
• SSP is now the lower of:
• 80% of the employee's average weekly earnings (calculated over the relevant prior period), or
• The statutory flat rate (£123.25 per week).

For most employees (those whose 80% AWE exceeds the flat rate), the standard flat rate applies.

• SSP is payable from the first full day of sickness absence.

These rules support employees through illness by allowing proper recovery time, providing financial security, reducing the spread of infectious diseases, and improving overall workplace productivity.

What is the Fair Work Agency?

SSP (and other employment rights) will be enforced by the Fair Work Agency (FWA), the single enforcement body established under the Employment Rights Act 2025. The FWA will be operational as an executive agency of the Department for Business and Trade. It will independently investigate breaches of employment law, including SSP compliance, holiday pay, minimum wage compliance, and more.

FWA powers will include:

• Inspecting workplaces and demanding documentation to prove compliance.
• Issuing Notices of Underpayment requiring settlement of outstanding statutory payments.
• Issuing Labour Market Enforcement Orders to correct non-compliant behaviour immediately.
• Taking legal action against employers who fail to comply.

What this all means for employers

Employers are now operating under the reformed SSP system:

• All businesses, including those who employ low-wage or part-time workers, must now pay SSP to eligible staff. 
• Payroll systems must calculate SSP from the first full day of absence and apply the correct rate (80% AWE vs. £123.25 flat rate for lower earners).
• Sickness absence policies, employee handbooks, and contracts must align with entitlements after the first full day of absence, as well as universal eligibility.
• HR, payroll, and managers must manage the new rules correctly to handle expectations and minimise errors.
• The FWA will enforce compliance through inspections, underpayment notices, back-payments, and legal action — non-compliance risks fines, settlements, and orders.

Government estimates indicate an extra £450m in annual SSP costs UK-wide (£15 per employee on average), with higher impact for sectors with many low-paid staff.

Quick recap

• There is no Lower Earnings Limit — SSP is available to all employees regardless of earnings. All workers will receive the lower of 80% of average weekly earnings or the flat rate (£123.25). However, low-wage workers will tend to receive 80% of their average weekly earnings.
• SSP is payable from the first full day of absence. 
• The Fair Work Agency enforces compliance through inspections, notices, and legal proceedings against non-compliant employers.

How can Croner help?

With the new SSP rules in full effect, if you're wondering "How do I maintain compliance with statutory sick pay requirements?" or "Is my documentation and payroll fully aligned?", Croner’s experts are ready to help!

Our advisors provide 24/7 support for compliance checks, policy reviews, and system audits. For free, same-day advice and a compliance review, call us today on 01455 858 132 for free, same-day initial support.