What Is Statutory Sick Pay?
Statutory Sick Pay, almost always shortened to SSP, is the legal minimum an employer must pay an employee who is off work sick. It is paid by the employer, not by the government, through the normal payroll run.
For 2026/27 it is £123.25 a week, or 80 percent of the employee's average weekly earnings, whichever is lower. It runs for up to 28 weeks.
That "whichever is lower" is new. So is the fact that it starts on day one. So is the fact that there is no longer any minimum you have to earn to get it. All three of those changed on the same day.
What Changed on 6 April 2026
The Employment Rights Act 2025 made three changes to SSP, and they all took effect together on 6 April 2026.
| Until 5 April 2026 | From 6 April 2026 | |
|---|---|---|
| When it starts | Fourth qualifying day (three unpaid waiting days) | First qualifying day |
| Who qualifies | Only employees earning at least the Lower Earnings Limit, £125 a week | All employees, whatever they earn |
| How much | Flat £118.75 a week | Lower of £123.25 or 80% of average weekly earnings |
The government estimates that removing the earnings threshold brings around 1.3 million additional employees into SSP, and that the package costs employers roughly £450 million a year, about £15 per employee.
We will come back to that £15 figure, because it is doing a lot of work in the public debate and it does not survive contact with an actual payroll.
How Much Is SSP? The £154.06 Line
Most coverage stops at "£123.25 or 80 percent, whichever is lower" and leaves you to work out which one applies to you. Here is the number that decides it.
£123.25 divided by 0.8 is £154.06.
So:
- Earn £154.06 a week or more, and 80 percent of your earnings is above the flat rate. You get £123.25.
- Earn less than £154.06 a week, and the flat rate is above 80 percent of your earnings. You get 80 percent of what you actually earn.
That single threshold resolves every case, and we have not seen it published anywhere else. It matters because it tells a payroll team, in one number, which employees need a real calculation and which ones do not.
What that looks like in practice
| Weekly earnings | Weekly SSP | Proportion of pay replaced |
|---|---|---|
| £101.68 (8 hrs at National Living Wage) | £81.34 | 80% |
| £152.52 (12 hrs at NLW) | £122.02 | 80% |
| £154.06 | £123.25 | 80% |
| £476.63 (37.5 hrs at NLW) | £123.25 | 25.9% |
| £1,000 | £123.25 | 12.3% |
Per day and per month
SSP is quoted weekly but paid daily. The daily rate is the weekly amount divided by the number of qualifying days in that week, meaning the days the employee normally works.
Someone on the flat rate working a five day week gets £123.25 ÷ 5 = £24.65 a day.
Someone on the flat rate working three days a week gets £123.25 ÷ 3 = £41.08 for each of those three days. The weekly total is the same either way.
Across a year the flat rate works out at roughly £534 a month, though nobody is paid it that way.
Who Qualifies for SSP Now
To get SSP an employee must:
- Be classed as an employee and have done some work for the employer
- Have been off sick for at least one full working day
- Tell the employer within its notification deadline, or within seven days if no deadline is set
That is the whole list. There is no longer any earnings condition. The old requirement to earn at least the Lower Earnings Limit is gone.
Who still does not get it:
- The self-employed. SSP is an employment right and sole traders are not employees. The route for self-employed people who cannot work is Employment and Support Allowance.
- Anyone who has already had 28 weeks of SSP in the current or a linked period.
- Employees receiving Statutory Maternity Pay or Maternity Allowance.
- Agency workers are often entitled, depending on the arrangement, and the answer is not automatic.
Note that the Lower Earnings Limit itself has not been abolished. It is £129 a week for 2026/27 and it still matters for Statutory Maternity Pay, Statutory Paternity Pay and your National Insurance record. It has simply been removed from the SSP test.
How to Calculate SSP, Step by Step
- Confirm there is a period of incapacity for work. At least one full working day off sick.
- Work out average weekly earnings. Take gross pay across the eight week reference period ending with the last payday before the absence began, and divide by the number of weeks. Gross pay means everything subject to Class 1 National Insurance, so overtime, bonuses and commission count.
- Compare. Is 80 percent of that figure below £123.25? If yes, use it. If no, use £123.25.
- Divide by qualifying days in the week to get the daily rate.
- Pay for every qualifying day of absence, starting with the first.
New starters without eight weeks of history are dealt with by using their contractual pay as the baseline, so a day one entitlement genuinely works from day one.
Linked periods. Two absences eight weeks or less apart are treated as one continuous period. That matters more now than it used to: under the old rules linking mainly determined whether you had to serve waiting days again, and waiting days no longer exist. What it still does is count toward the 28 week limit.
Absences that straddled 6 April 2026. Employees already on SSP when the rules changed and who would have received less under the new 80 percent cap keep the flat rate for the rest of that absence. The protection ends when they return to work.
Notification and Fit Notes: The Distinction That Now Costs Money
Two rules that look similar and behave completely differently.
Late notification can reduce SSP. An employer does not have to pay SSP for days before the employee told them they were sick, if the employee missed the deadline without a good reason. The employer sets the deadline. If it has not set one, the default is seven days.
A late fit note cannot. An employer can ask for a fit note once an absence passes seven calendar days, but it cannot withhold SSP because the note arrived late. Self certification covers the first seven days and no employer can demand a doctor's note for them.
Under the old rules this distinction was nearly academic for short absences, because the first three days were unpaid anyway. A vague notification policy cost nothing. Now day one is payable, so the notification deadline written in your handbook is the only lever you have over the cost of a one day absence. Most small employers have never looked at it.
SSP or Company Sick Pay?
These get confused constantly, and the difference is simple.
SSP is the legal floor. Every eligible employee gets it. You cannot contract out of it.
Company sick pay, sometimes called occupational or contractual sick pay, is whatever the employment contract promises on top. Full pay for the first four weeks, half pay for the next eight, that sort of thing. It is entirely voluntary.
Where a contractual scheme exists, SSP is normally absorbed into it rather than paid on top. The employee gets the contractual amount and the employer treats part of it as satisfying the SSP obligation.
This has an important consequence for the April 2026 changes. An employer that already pays full sick pay from day one has seen no cost increase at all. The reform is invisible to them. Every penny of the £450 million lands on employers paying the statutory minimum.
What SSP Actually Costs an Employer
Three things about the cost that are routinely missed.
You cannot get any of it back. The Percentage Threshold Scheme, which let employers recover SSP above a proportion of their National Insurance bill, was abolished on 6 April 2014. Nothing replaced it. SSP is a straight cost with no recovery mechanism, and the April 2026 changes did not introduce one.
SSP is earnings. It goes through PAYE with Income Tax and National Insurance deducted like any other pay. Where the employee is above the £5,000 secondary threshold, the employer also pays employer National Insurance at 15 percent on the SSP itself.
The waiting days change costs far more than the earnings threshold change. This is the part that got lost.
Removing the Lower Earnings Limit brought in 1.3 million people, which sounds enormous. But those are mostly employees on very few hours, receiving 80 percent of a small number, on relatively few absence days.
Removing waiting days changed the treatment of every short absence in the country. The ONS reports that minor illnesses account for 30.4 percent of all sickness absence, the largest single category. Colds, flu, stomach upsets. The classic one to three day spell. Under the old rules, an absence had to run past three qualifying days before the employer owed a single penny of SSP, so almost that entire category was free. It is not free any more.
Put a number on one employee. Four separate two day absences across a year, an absence record well inside normal, generates eight days at £24.65. That is £197.20 from one person, where the same record generated nothing before 6 April 2026.
Now hold that against the government's headline of £15 per employee.
Directors and Owner Managers
There is a change here that has gone almost entirely unremarked.
A director paying themselves a salary at the £5,000 secondary threshold earns £96.15 a week. That sat below the old Lower Earnings Limit of £125, so they got no SSP at all. From 6 April 2026 they qualify, at 80 percent of £96.15, which is £76.92 a week.
Two caveats. Dividends are not earnings, so they do not count toward average weekly earnings. A director on a £5,000 salary and £40,000 of dividends still calculates SSP on the £5,000. And a director taking the full £12,570 personal allowance as salary was already above the old limit, so nothing changes for them.
It is a small entitlement. But it is a real one that did not exist before, and it belongs in the arithmetic when you set directors' pay for the year.
What Employers Should Do Now
Rewrite the sickness policy. Anything referring to waiting days, the fourth qualifying day, or a minimum earnings threshold is now wrong. Wrong policies get relied on.
Set a notification deadline and communicate it. As above, this is the one genuine control you have over the cost of short absences, and it only works if it is written down and people know it.
Check your payroll software is on the new rules. Not just the rate. The 80 percent comparison and the day one start are logic changes, not rate changes, and a system that only had its rates updated will quietly produce wrong answers for your lowest paid staff.
Identify who sits below £154.06 a week. Those are your real calculations. Everyone above that line is on the flat rate and needs no working out.
Budget realistically. If you pay statutory minimum sick pay and you have short absence patterns, model your own number. £15 per employee is a national average across employers who saw no change at all and employers who saw a great deal of it.
Do not forget the Fair Work Agency, which came into being in April 2026 and has enforcement powers over SSP. Underpayment stopped being purely a private dispute between employer and employee.
Our View
The £15 per employee figure is close to meaningless as a planning number. It is a national mean spread across every employer in the country, including the large share who already pay contractual sick pay from day one and whose cost increase is exactly zero. Averaging across a population where a big chunk of the sample is structurally at nil tells you nothing useful about the businesses that are not. For an employer paying statutory minimum in a sector with frequent short absences, the real figure is a multiple of it. Our worked example above gets to £197 from a single employee without straining.
The reform is well designed and badly explained. Look at the replacement rate column in our table. Someone on eight hours a week now gets 80 percent of their pay replaced. Someone on a full time National Living Wage salary gets 26 percent. Someone on £1,000 a week gets 12 percent. UK sick pay is now, proportionally, most generous to the lowest paid, which is a genuinely progressive design and almost certainly the right one. Nobody has said so, because the entire conversation was about whether £123.25 is enough. Judged as a flat rate it plainly is not. Judged as a floor that converts to a percentage for the people who need it most, it is a more thoughtful piece of policy than it has been given credit for.
The administrative change is bigger than the financial one for most small employers. Before 6 April, SSP was a lookup. Does this person earn more than £125 a week, yes or no, then skip three days and pay a flat figure. Now it is a calculation, every time: eight weeks of gross pay, an average, a comparison, a division by qualifying days. And it runs on absences as short as one day, so it happens far more often. For a business with variable hours or zero hours staff, that is a genuine new per absence workload where previously there was frequently nothing at all to do.
The same businesses keep getting picked. Hospitality, retail and social care employ the largest share of the newly eligible 1.3 million, carry the highest rates of short term absence, and are least likely to offer contractual sick pay. They also absorbed employer National Insurance at 15 percent with a £5,000 threshold, a National Living Wage of £12.71, and the business rates arithmetic of April 2026. Each of these measures is defensible on its own. Nobody appears to have added them up. We would rather see an honest cumulative impact assessment on low margin, labour intensive sectors than five separate ones that each conclude the effect is manageable.
Bring back a rebate for small employers, or admit you are taxing them. The Percentage Threshold Scheme was abolished in 2014 on the reasoning that employers should manage absence themselves. That argument has some force when the employer controls the first three days. It has much less when the liability starts on day one and covers every employee regardless of earnings. Day one sick pay is a good policy. Funding it entirely from the payroll of the smallest employers, with no recovery mechanism at all, is a choice that was made quietly and deserves revisiting.
Nobody should be reading a handbook that still mentions waiting days in 2027. Yet plenty will be. Policy documents get written once and inherited, and this is the sort of change that produces underpayments running for years before anyone notices. With the Fair Work Agency now able to enforce, the cost of that drift has gone up.
How IAK Can Help
Statutory payments are the part of payroll where small errors compound silently. Nobody audits an SSP calculation on a two day absence. Get the average weekly earnings basis wrong for one variable hours employee and the same mistake repeats every absence, for years, until somebody complains or an inspection finds it.
Our payroll service handles statutory payments as standard: average weekly earnings worked out on the right basis, the 80 percent comparison applied properly, daily rates split by actual qualifying days, and SSP reported correctly through RTI alongside Income Tax and National Insurance. We will also read your sickness policy and tell you plainly whether it still describes rules that stopped existing on 6 April 2026.
For owner managed companies we build statutory payments into the annual salary and dividend decision rather than treating them as a payroll afterthought, because the level you set your salary at now determines what you are entitled to when something goes wrong.
If you run payroll in house and have not revisited SSP since the change, or you are not sure whether your software is applying the new logic rather than just the new rate, contact us for a free consultation. You may also find our guides to PAYE, National Insurance, directors' remuneration, salary sacrifice, tax codes and what an accountant actually does useful, along with our salary calculator.
Sources
- Statutory Sick Pay (SSP): what you'll get, GOV.UK, on the £123.25 weekly rate, the 80 percent of normal weekly earnings comparison, the eight week averaging period and the 28 week maximum.
- Statutory Sick Pay (SSP): eligibility, GOV.UK, on the qualifying conditions, linked periods eight weeks apart, the three year limit on linked absences and the exclusions for Statutory Maternity Pay and exhausted entitlement.
- Statutory Sick Pay changes, Business.gov.uk, on the three changes taking effect on 6 April 2026 under the Employment Rights Act 2025, and the actions employers are expected to take.
- Statutory Sick Pay: employer guide, GOV.UK, on the employer's obligation to pay, the interaction with contractual sick pay schemes and the continued accrual of annual leave during sickness.
- Statutory Sick Pay: notice and fit notes, GOV.UK, on notification deadlines, the seven day default, the rule that SSP need not be paid for days notified late, and the rule that SSP cannot be withheld for a late fit note.
- Employment Rights Act 2025: changes to statutory sick pay from April 2026, Brodies LLP, on the estimated 1.3 million additional employees brought into scope, the £450 million annual cost estimate and the transitional protection for absences straddling 6 April 2026.
- Sickness absence in the UK labour market: 2025, Office for National Statistics, on the 2.0 percent sickness absence rate, 4.4 days lost per worker and minor illnesses accounting for 30.4 percent of absence.
- Abolition of the Statutory Sick Pay Percentage Threshold Scheme, CIPP, on the withdrawal of SSP recovery for employers from 6 April 2014.