The Employment Rights Bill and Statutory Sick Pay

The Employment Rights Bill (the Bill) proposes significant reform to UK employment law, including notable changes to statutory sick pay (SSP). The Bill seeks to eliminate the ‘qualifying period’ for SSP and expand eligibility.

It is not clear when the changes to SSP will be implemented, but the expectation is April 2026.

The qualifying period

Currently, employees are only eligible for SSP after the first three days of illness. However, the Bill proposes to remove this qualifying period, allowing employees to receive SSP from the very first day of illness.

The change is designed to provide employees with immediate financial support during periods of illness but will course have cost implications for employers, especially those who have high levels of short-term absence.

Eligibility

Under the current system employees whose average weekly earnings in a relevant period are less than £125.00 per week, are excluded from receiving SSP due to the Lower Earnings Limit.

The Bill proposes to remove the Lower Earnings Limit meaning that every employee, no matter how few hours they work, will qualify for SSP.

However, rather than paying the flat weekly rate, currently £118.75, the intention is for lower earners to have their SSP calculated at 80% of their normal weekly earnings or £118.75, whichever is lower.

Practical considerations

Employers need to consider several practical aspects to effectively adapt to the proposed changes to SSP under the Bill. Some key aspects are:

Payroll and systems

Updating payroll systems to remove the qualifying period and account for the expansion of eligibility to lower earners.

Policy revisions

Policies and handbooks may need to be updated. For example, employers offering enhanced sick pay which aligns with when SSP is paid might want to amend that policy, or risk employees receiving full pay from the first day of illness.

Training and support

Managers and HR personnel should be trained on the changes and how to manage sick leave effectively, including management of short-term absences, capability concerns and medical referrals.

Financial planning

Employers should anticipate increases in cost. An impact assessment from the Department for Work and Pensions suggests the cost to businesses of removing the qualifying period and Lower Earnings Limit (with a percentage rate of 80%), is an additional £450 million annually, about £15 more per employee. Budgeting for this and assessing financial impact will be important for maintaining financial stability.

Absence management

Employers may see an increase in short-term absences, so they should start monitoring absence patterns and ensure return to work processes are robust.

Next steps and further support

Timing is everything as the change to SSP interacts with wider provisions of the Bill, namely the restriction of ‘fire and re-hire’ practices which seek to make it automatically unfair to dismiss and employee for refusing a contract variation.

Employers who need to amend contractual terms to respond to the SSP change, for example adjusting enhanced sick pay that was aligned to SSP to ensure it doesn’t become payable from day one, may find themselves prohibited from dismissing an employee who refuses that change.

The Brachers Employment and HR team will continue to update resources as developments occur. For more in-depth guidance or support on The Employment Rights Bill, book a free 30-minute consultation with a member of our Employment team today.

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This content is correct at time of publication