Changes to Statutory Sick Pay from April 2026

This is a guest blog by REC business partner, Brabners LLP

From 6 April 2026, significant reforms to Statutory Sick Pay (SSP) will come into force under the Employment Rights Act. These changes represent one of the most substantial updates to SSP in decades and will reshape how recruitment businesses, particularly those supplying PAYE temporary workers and flexible employees, manage sickness absence, payroll, and client expectations. Understanding the implications now will ensure compliance and support conversations with clients in respect of commercial terms.

What Is Changing?

The reforms are part of the Government’s package to Make Work Pay and aim to broaden access to sick pay and ensure financial protection for workers.

• SSP will be payable from day one: The current three unpaid waiting days will be abolished, meaning SSP must be paid from the first day of incapacity. This accelerates employer liability and removes the buffer many recruitment businesses have traditionally relied on.
• Removal of the Lower Earnings Limit (LEL): Currently, workers must earn at least £125 per week to qualify for SSP. From April 2026, this threshold disappears, significantly expanding SSP eligibility, especially for part-time, casual, or low-paid workers.
• Increased administration and cost exposure: With day‑one SSP and broader qualification, employment businesses supplying temporary workers will see increased cost pressure, greater administrative responsibility, and the need for immediate payroll adjustments
• Earnings‑linked calculation for low earners: SSP for low earners will be calculated at 80% of their normal weekly earnings, unless the statutory rate is lower. The statutory rate itself will increase to £123.25 per week.

What This Means for Recruitment Businesses

These reforms will impact recruitment businesses operationally, commercially, and contractually.

Key implications include:

• Higher payroll costs due to increased SSP eligibility and earlier entitlement.
• More complex absence management due to ensuring that SSP entitlement is not abused where the worker is engaged by a number of employment businesses.
• Tighter margins, particularly for employment businesses who supply large numbers of PAYE temps where short-term absence is common and the client is unwilling to alter commercial terms to take increased costs into account.
• Greater client scrutiny to ensure that employment businesses are compliant, as the Fair Work Agency’s remit will include enforcement of SSP compliance once it becomes active.
• Increased risk of disputes over entitlement calculations for workers with no guaranteed or irregular working patterns and discrimination claims if the SSP claims are not processed properly, particularly increased exposure to sex and disability discrimination claims.

How to prepare

1. Review worker contracts to ensure it’s clear when their engagement starts and that the SSP provisions are compliant with the new rules, including declarations in respect of claiming SSP elsewhere and that the worker is unfit for all assignments.
2. Update payroll systems and software so that day one entitlement is possible, the LEL is removed and the calculations are being done correctly.
3. Refresh absence management procedures: consider sickness absence reporting requirements in light of day one entitlement to SSP, and set out how disputes need to be resolved.
4. Train consultants and onboarding teams so they understand changes and how to process claims for SSP compliantly.
5. Consider revisiting commercial terms with end clients to reduce impact on profitability of supplying temporary labour or at least highlighting commercial and operational impact of supply arrangements.
6. Review future guidance published by Government, specifically in respect of calculating SSP for workers with irregular hours.

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