Are You Ready for the 2025 Statutory Sick Pay Shake-Up?
- 22nd May 2025
The UK government is set to implement major changes to Statutory Sick Pay (SSP) that will have wide-ranging implications for both employers and employees. These reforms, part of the proposed Employment Rights Bill, are expected to come into effect by autumn 2025 and will transform how SSP is applied, most notably introducing entitlement from day one of sickness absence and removing the lower earnings threshold.
What’s Changing?
1. Day-One SSP Entitlement
Currently, employees are only eligible for SSP from the fourth consecutive day of absence. The forthcoming changes will remove this three-day waiting period, granting SSP from the first day of illness.
This will significantly benefit employees, especially those in lower-paid or zero-hours contracts, who previously faced a difficult choice between losing income and working while unwell. According to GOV.UK, SSP for 2025/26 is projected to be £118.75 per week, compared to just £47.50 under the current waiting rules for a one-week absence.
However, this will likely increase costs and risks for employers. Not only will they shoulder the full cost of SSP (unlike other statutory payments, SSP is not recoverable from HMRC), but there may also be a rise in short-term absences and potential abuse of sick leave policies.
2. Removal of the Lower Earnings Threshold
At present, employees must earn at least £125 per week to qualify for SSP. The new legislation proposes scrapping this requirement, broadening SSP access. While this means lower-paid employees will qualify, they will receive either the flat rate or 80% of their average weekly earnings, whichever is lower.
A small cohort of workers earning between £125 and £148 per week may receive less per day under this structure, but crucially, they will be entitled to more qualifying days.
3. No SSP Recovery for Employers
In contrast to statutory maternity, paternity, adoption, and parental bereavement pay, where smaller employers can reclaim up to 108.5% of payments due to compensation from April 2025, SSP remains non-recoverable, placing the full financial burden on employers.
What Should Employers Do Now?
Review and Update Policies
Now is the ideal time for employers to update sickness policies, review payroll systems, and train line managers on handling potential increases in sick leave.
Mitigate Risk of Abuse
To counter misuse, best practices include:
- Requiring regular check-ins from employees during absence.
- Holding return-to-work interviews.
- Monitoring absence trends to identify patterns or potential abuse.
Assess Financial Impact
With SSP costs potentially more than doubling for short absences, employers should assess how this might affect cash flow, especially for smaller businesses. Toni Beecroft, Partner at Forrester Boyd notes:
“While these changes rightly prioritise employee wellbeing, employers, particularly small businesses, must take a proactive approach to policy review and cost planning. Ignoring these reforms could lead to financial strain and HR challenges.”
Need Support?
At Forrester Boyd, we work closely with SMEs and larger organisations to prepare for legislative changes like these. Whether you need help updating your HR policies, configuring payroll software, or understanding your eligibility as a small employer for statutory pay recovery, our team is here to help. Please do contact us should you wish to discuss this in further detail.
Stay Updated
To read more about the removal of the lower earnings threshold and other SSP changes, visit the UK Government’s factsheet here.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
