Expected reforms to statutory sick pay (SSP) under the Employment Rights Bill are poised to be among the most significant. This is for two main reasons: the potential for increased costs to businesses, and the fact that these changes will most heavily impact small and medium-sized enterprises (SMEs), which make up 99% of all businesses (House of Commons Library Business Statistics published 11 November 2024).
Currently, SSP is paid from the fourth day of absence and the employee’s average weekly pay must be at or above the current lower earnings limit (currently £125 per week). The reforms involve removing the earnings criteria and the waiting days, meaning this change in structure could expand eligibility by up to 1.3 million employees because of the widening of eligibility and paying SSP from the first rather than the fourth day of absence (Department for Work and Pensions factsheet on SSP).
The aim of reforming SSP is to improve financial security for employees, yet, it could lead to unintended consequences:
Higher Absenteeism
If employees begin to view sick pay as an automatic entitlement, paying SSP from the first day could lead to more frequent, short-term absences. These intermittent absences are often more difficult for businesses to manage and cover than long-term ones, making them more disruptive. This will likely increase the administrative burden on employers, who must dedicate more time and resources to managing these absences. Consequently, more employees might face formal absence procedures, which also adds to administrative work and could even risk higher unemployment.
Financial Implications for SMEs
An increase in costs will be substantial, particularly for small and medium-sized enterprises (SMEs) that often operate on tight margins with less financial flexibility. With the added burden on management time, resources, and costs, employers may adopt a more commercial approach when managing people with frequent absences (although would need to be mindful of potential legal protections under the Equality Act).
Rising Sickness Absence Trends
Interestingly, recently published statistics by the Chartered Institute of Personnel and Development (CIPD), in conjunction with Simplyhealth, found that annual sickness absence levels had reached an average of 9.4 days per employee: an additional 1.6 days since the last survey in 2023 and an additional 3.6 days from pre-pandemic levels. Surely, with changes to SSP, sickness absence rates will only continue to rise?
Insights from the 2025 Health and Wellbeing at Work Report
The 2025 Health and Wellbeing at Work report, which involved a survey of 1,100 HR professionals in April 2025, identified:
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78% of respondents said that minor illnesses such as cold, flu, stomach upsets and headaches, was one of the top three most common causes of short-term absence, i.e. absences of up to four weeks in duration.
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41% of respondents said that mental ill health such as depression and anxiety was one of the top three most common causes of long-term absence, i.e. four weeks or more.
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Mental ill health is the second most common cause in short-term absence and 64% of respondents said that they were taking steps to identify and/or reduce stress in the workplace.
With absences soaring over the past year—reaching record high absenteeism with a 62% increase on pre-pandemic levels—and the changes ahead to SSP, employers must take steps now to prepare the business.
Preparing for Statutory Sick Pay Reform in April 2026
Changes to the structure of SSP are expected to be in force from April 2026. Therefore certain key questions will need to be asked to prepare, such as:
- Are costs are to increase?
- Should the business absorb these costs?
- How the business does absorb these costs, how?
- Does the business pass the costs onto its customers through its services?
This illustrates the wider repercussions of the reforms. Rather than purely considering the reform for managing people, businesses must understand the wider implications.
The team at HR Solutions are keeping a close eye on any further developments to the Employment Rights Bill, and we will make sure to keep you updated further as things progress.
