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Statutory Sick Pay: a practical guide for UK SME employers

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Statutory Sick Pay (SSP) is a core element of UK employment law, but upcoming reforms in 2026 mean many employers will need to rethink how they manage sickness absence. For SME business owners and HR managers, understanding SSP is essential to remain compliant while controlling absence-related costs. 

From April 2026, significant changes often referred to as SSP ERA Changes 2026 will remove waiting days and alter how SSP is calculated. These updates will affect payroll processes, absence management, and how employers support employees returning to work. 

For SMEs, the challenge is balancing legal compliance with operational efficiency. Poor management of SSP can lead to payroll errors, employee disputes, and even tribunal claims. 

This article explains what SSP is, what is changing in 2026, and how UK employers can manage sickness absence effectively. You’ll also find practical steps, common pitfalls, and a checklist to help ensure your business stays compliant and well-managed. 

Statutory Sick Payimpact hr ident

  • What is Statutory Sick Pay? 

    Statutory Sick Pay (SSP) is the minimum amount employers must pay eligible employees who are off work due to illness. 

    It is governed primarily by the Employment Rights Act and supported by guidance from ACAS. SSP applies when an employee is too unwell to work and meets eligibility criteria such as minimum earnings and qualifying days. 

    Key points: 

    • SSP is paid by employers, not the government 
    • It is payable for up to 28 weeks 
    • Employees must meet eligibility criteria (including earnings thresholds) 
    • It applies to periods of incapacity for work 

  • What’s changing in 2026? 

    The SSP ERA Changes 2026 introduce two major reforms: 

    1. Removal of waiting days
      From 6 April 2026, SSP will be payable from day one of sickness absence. Previously, the first three days were unpaid “waiting days.”
    2. New calculation methodThe Lower Earnings Limit (LEL) will be removed, meaning all employees are eligible for SSP.
      SSP will be the lower of:

      • A flat weekly rate (£123.25 from April 2026), or
      • 80% of the employee’s normal weekly earnings

      Normal earnings are calculated over an eight-week reference period.

  • When does Statutory Sick Pay (SSP) arise in practice? 

    SSP typically arises when: 

    • Employees call in sick for several days 
    • Long-term absence occurs 
    • Employees return on a phased basis following illness 
    • Recurring or linked absences occur 

    A notable change from 2026 is how phased returns to work will be treated. Employees working reduced hours may now receive SSP for non-working days during recovery. 

Statutory Sick Pay

Why Statutory Sick Pay matters for UK businesses 

SSP is not just an administrative requirement it has real business implications. 

Financial impact 

  • Increased costs due to removal of waiting days 
  • More employees qualifying for SSP earlier 
  • Potential higher absence-related payroll costs 

Productivity loss 

  • More frequent short-term absences now carry a direct cost 
  • Managing phased returns becomes more complex 

Legal risk 

Failure to manage SSP correctly can result in: 

  • Unlawful deduction from wages claims 
  • Breach of statutory rights 
  • Employment tribunal exposure 

Example scenario 

An employee returns to work on a phased basis, working three days per week. Under the new rules, they may be entitled to SSP for the remaining two days. If this is not handled correctly, disputes over pay can arise quickly. 

Reputational and engagement impact 

  • Poor handling of sickness absence can damage trust 
  • Inconsistent application creates employee dissatisfaction 
  • Weak processes affect retention and morale 

Legal responsibilities for employers 

UK employers must comply with SSP regulations and ensure accurate and fair application. 

Employer obligations 

  • Pay SSP to eligible employees 
  • Maintain accurate sickness absence records 
  • Apply SSP rules consistently 
  • Use correct calculation methods 

  • Employee rights 

    Employees are entitled to: 

    • SSP if eligibility criteria are met 
    • Clear communication about payments 
    • Fair treatment during sickness absence 

  • Key legislation 

    • Employment Rights Act 
    • Statutory Sick Pay regulations 
    • ACAS guidance on managing absence 

  • Policies employers should have 

    • Sickness absence policy 
    • Fit note and medical evidence procedures 
    • Phased return to work framework 
    • Payroll and SSP calculation processes 

  • Documentation requirements 

    Employers should retain: 

    • Absence records 
    • Fit notes 
    • SSP calculations 
    • Communication with employees 

  • Common SME risk areas 

    • Misunderstanding SSP eligibility 
    • Incorrect payroll calculations 
    • Lack of evidence for phased returns 
    • Inconsistent application across teams 

Best practice: how employers should manage Statutory Sick Pay 

To manage SSP effectively under the new rules, SMEs should adopt a structured approach. 

  • Update policies and procedures 

    • Revise sickness absence policies to reflect 2026 changes 
    • Remove references to waiting days 
    • Include guidance on phased returns 

  • Strengthen payroll processes 

    • Ensure payroll systems can calculate: 
    • Flat rate vs 80% of earnings 
    • Eight-week average earnings 

  • Manage phased returns carefully 

    • Obtain medical evidence (fit notes) 
    • Clearly document agreed working patterns 
    • Treat non-working days as incapacity where appropriate 

  • Train line managers 

    Managers should understand: 

    • When SSP applies 
    • How to handle absence conversations 
    • When to request medical evidence 

  • Improve documentation 

    • Record all sickness absences accurately 
    • Keep clear audit trails 
    • Document return-to-work discussions 

  • Use HR systems 

    • Absence management systems help track trends 
    • Automate SSP calculations where possible 
    • Identify patterns such as frequent short-term absence 

  • Take a preventative approach 

    • Promote employee wellbeing 
    • Address workplace stress risks 
    • Conduct health & safety risk assessments 
  • Statutory Sick Pay

Common mistakes employers make 

Avoiding these common pitfalls will reduce risk: 

  • Failing to update policies 

    Outdated policies referencing waiting days will lead to confusion and non-compliance. 

  • Incorrect SSP calculations 

    Misapplying the new 80% rule or flat rate creates payroll errors. 

  • Poor handling of phased returns

    Not obtaining medical evidence can result in disputes over entitlement. 

  • Inconsistent application 

    Different treatment across employees can lead to claims of unfairness. 

  • Lack of manager training 

    Untrained managers often mishandle absence conversations and documentation. 

  • Weak record-keeping 

    Missing documentation increases tribunal risk. 

  • Ignoring short-term absence trends 

    Frequent absences can escalate costs without proper monitoring. 

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Your Questions Answered

Everything you need to know about statutory sick pay

  • What does Statutory Sick Pay mean in HR? Reveal

    Statutory Sick Pay is the legal minimum payment employers must provide to eligible employees who are off work due to illness. It forms part of absence management and payroll compliance. From April 2026, SSP will start from the first day of sickness and be calculated using a new earnings-based method. 

  • What are an employer’s legal responsibilities for SSP? Reveal

    Employers must pay SSP correctly, maintain records, and apply the rules consistently. They must also ensure employees are informed about their entitlement and manage absence fairly in line with employment law and ACAS guidance. 

  • Can an employee be dismissed while on SSP? Reveal

    Yes, but only following a fair and lawful process. Employers must consider medical evidence, consult with the employee, and explore reasonable adjustments where applicable. Dismissal should always be a last resort and handled carefully to avoid tribunal risk. 

  • How do SSP ERA Changes 2026 affect businesses? Reveal

    The changes remove waiting days and introduce a new calculation method. This increases employer costs and administrative complexity. Businesses will need to update policies, payroll systems, and absence management processes. 

     

  • How can SMEs manage SSP effectively? Reveal

    SMEs should implement clear policies, train managers, use HR systems, and maintain strong documentation. A proactive approach to absence management and employee wellbeing can also reduce SSP-related costs and disruption. 

Where to find out more A collection of hand-picked useful resources for statutory sick pay from impact HR and beyond

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