How the Employment Rights Bill Will Transform Statutory Sick Pay

The impact on SMEs

While the goal of improving worker protection is welcome, for SMEs the reforms may bring a series of practical challenges:

1. Higher Short-Term Sickness Costs

• SMEs will see an increase in payroll costs, particularly for casual, part-time or lower-paid staff who were previously ineligible.
• Businesses may face more frequent short-term sickness absences as workers feel more financially secure in taking time off.

2. Payroll and System Changes

• Payroll software and manual calculations will need to be adjusted to ensure SSP kicks in from day one of absence.
• Time and attendance systems may need updating to automatically record sick pay entitlements for all workers, regardless of earnings.

3. Increased Risk of Non-Compliance

• Failure to pay SSP correctly could lead to penalties, potential tribunal claims, and damage to your reputation as a fair employer.
• SMEs without internal HR or finance teams may be more exposed to payroll errors and non-compliance.

How SMEs Can Prepare

1. Review and Update Sick Pay Policies

• Clearly outline the new entitlement to day-one SSP.
• Ensure your sickness absence reporting procedures are updated and shared with all employees.

2. Audit Payroll and HR Systems

• Ensure your systems automatically calculate SSP from day one of absence.
• Remove any logic in payroll software that limits sick pay based on previous earnings thresholds.

3. Train Line Managers

• Managers should be clear on when SSP entitlement begins and how to handle sickness absence reporting under the new law.
• Reinforce the importance of early communication when employees are unwell.

4. Monitor Sickness Trends

• Regularly track short-term absence patterns across your business.
• Consider implementing return-to-work interviews to ensure absences are managed sensitively but fairly.