SSP from Day One: The £450 Million Cost UK Employers Weren’t Warned About

By Robert Marjoram, Together Accounting | May 2026

£450 million a year. That’s what the DWP Impact Assessment says the new Statutory Sick Pay rules will cost UK employers, every year, from 6 April 2026 onwards. Drill down to a single worker and the number gets sharper.

A Saturday-only zero hours worker who calls in sick used to cost you nothing. From 6 April 2026, that one missed shift of sick leave costs you £20.55 in Statutory Sick Pay. That’s the change in one line.

Back in April I wrote about the true cost of employing someone in the UK for 2026-27. I covered the NIC rise, the National Living Wage, the threshold drag. I didn’t cover the statutory sick pay changes 2026 brought with it. Nobody did, properly. So here it is: the bit that quietly slid into law on the first day of the 2026-27 tax year, and what the new rules actually cost you.

The Headline Numbers

£450m extra annual cost to UK employers (DWP Impact Assessment)

1.3m workers newly eligible for SSP from 6 April 2026

£123.25 per week flat SSP rate, or 80% AWE if lower

0 waiting days. The 3-day rule is gone. SSP pays from day one.

• £450 million extra annual cost to UK employers (DWP Impact Assessment, improving access to Statutory Sick Pay)
• £1.07 billion total modelled annual SSP cost to employers under the new regime
• 1.3 million workers newly eligible for SSP from 6 April 2026
• £123.25 per week flat SSP weekly rate, or 80% of average weekly earnings if lower
• £24.65 per day on a standard 5-day working week
• £20.55 per day for a 6-day working week (single Saturday shift = £20.55)
• £17.61 per day on a 7-day week
• 0 waiting days. The 3-day wait is gone
• 0 recovery. No rebate scheme. Employers absorb 100% of the cost
• 43% of employers told an Acas-commissioned YouGov survey of 1,011 senior decision-makers (February 2026) that day-one SSP would have the biggest workplace impact of any Employment Rights Act 2025 change

On paper, £15 per employee per year sounds harmless. In practice, the £15 average hides a brutal sector split. A solicitor’s office with eight salaried staff will barely feel it. A cafe with eight part-timers, a care home, an events business with twelve casuals on the books over peak season: those small employers are now writing cheques they’ve never written before.

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Four Things Changed on 6 April 2026

Sections 10 to 13 of the Employment Rights Act 2025 were switched on by Commencement No. 3 Regulations 2026 (SI 2026/373). Four practical changes hit your payroll on the same day.

1. SSP from day one. The three “waiting days” are gone. If an employee is too ill to work and notifies you, SSP is payable from the first qualifying day. Not day four. Day one.

2. The SSP earnings floor has been abolished. Previously, an employee had to earn at least £125 per week (the SSP Lower Earnings Limit) to qualify for SSP at all. From 6 April 2026, there’s no earnings floor. The part-timer doing six hours a week now qualifies. The casual on £80 a week now qualifies. Everyone on your PAYE qualifies.

3. Day-one paternity leave. The right to take paternity leave is now a day-one right, not subject to 26 weeks’ continuous service. The right to be paid Statutory Paternity Pay still requires a 26-week qualifying period. So a brand-new dad on day one of his job can take the two weeks off, but you’re not paying him SPP unless he’s been with you for six months.

4. Collective redundancy protective award doubled. If you make 20+ redundancies at one site within 90 days and fail to consult properly, the maximum protective award per affected employee has doubled from 90 days’ gross pay to 180 days’ gross pay. For a 20-person redundancy at an average £150 per employee per day, the maximum exposure went from £270,000 to £540,000.

These are statutory obligations. There’s no opt-out. Any employer still enforcing a three-day waiting period after 5 April 2026 is underpaying SSP and creating tribunal exposure.

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The Critical Nuance Nobody Is Spelling Out

The SSP Lower Earnings Limit (£125/week) is gone. Wiped from the statute book. That’s what allowed 1.3 million low-paid workers in.

The National Insurance Lower Earnings Limit (£129/week for the 2026-27 tax year) still exists. It’s a completely separate concept, governing whether an employee builds up NIC credits towards their State Pension and benefit entitlements. It hasn’t moved.

Two different LELs. One has been abolished, the other hasn’t. If your previous accountant or HR adviser is telling you “the LEL has been abolished” without that qualification, ask them which one. They might be in for a surprise.

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Who Qualifies for SSP Under the New 2026 Rules

Effectively, every employee on your payroll qualifies. The Government estimates 1.3 million workers were brought into SSP entitlement by abolishing the SSP earnings floor. That includes:

• Zero-hours workers earning below £125/week
• Part-time staff working short shifts in hospitality, retail and care
• Casual and seasonal workers
• Newly hired employees who haven’t yet built up earnings history
• Multi-job workers whose per-employer earnings are low

Self-employed workers, contractors paid via a personal service company, and workers without employee status remain outside SSP. But if HMRC treats them as an employee for PAYE, they qualify. Directors paying themselves a modest salary through a limited company are well inside scope too, which makes this a useful moment to revisit your optimal director salary position for 2026-27 and confirm the payroll obligations stack up.

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How Much Is SSP in 2026?

From 6 April 2026, the SSP weekly rate is £123.25, or 80% of the employee’s average weekly earnings if that’s lower. On a standard 5-day week, that’s £24.65 per day. The HMRC employer guidance sets out exactly how to calculate SSP for each worker.

Here’s the cost mechanics in plain English:

• The standard SSP weekly rate is £123.25. That’s the flat rate.
• OR 80% of the employee’s average weekly earnings (AWE), if 80% AWE is lower. The 80% rule only bites for low earners.
• The crossover point is £154.06 per week AWE. Earn more than that, you get the flat £123.25. Earn less, you get 80% of what you actually earn.
• AWE is calculated over the 8 weeks ending on the last normal payday before the first complete day of sickness.
• The daily rate depends on the employee’s qualifying days. £24.65 on a 5-day week. £20.55 on a 6-day week. £17.61 on a 7-day week.
• Maximum duration is still 28 weeks per period of incapacity for work.

What If I Already Pay Company Sick Pay?

This is the question every small employer asks once they’ve seen the headline numbers. SSP is the statutory floor. If you also offer company sick pay (sometimes called occupational sick pay or contractual sick pay) above that floor, the new rules don’t touch it. They only change the statutory minimum sitting underneath your policy.

If your contract pays full pay for the first two weeks of illness, you carry on paying full pay. The SSP calculation still happens in the background for HMRC reporting, but your employee’s take-home is governed by the company sick pay terms in their contract. The only thing the 2026 rules force you to revisit is any clause that tries to push SSP below the new statutory entitlement. Anything on top is yours to design.

For most small employers offering modest company sick pay, the real question is whether your enhanced rate is still competitive against the new statutory baseline. If you used to pay “full pay for week one then SSP from week two”, that gap just narrowed because SSP now starts on day one too.

Do Qualifying Days Still Matter?

Yes. SSP is still only payable for an employee’s contracted working days, called “qualifying days”. A part-timer working Monday and Wednesday who’s sick from Thursday to Sunday still gets nothing, because none of their qualifying days fall in the sickness period.

What’s changed is that the first qualifying day in the absence is now payable. Before 6 April, the first three qualifying days were unpaid by law. Now, day one pays.

Do Linked Absence Rules Still Apply?

Yes, but with a sharper edge than before. Two periods of incapacity for work (PIWs), each of at least one full qualifying day, falling within eight weeks of each other, still link to form a single PIW. The four-day minimum that used to apply to a PIW is gone. From 6 April 2026, a PIW can be formed by a single qualifying day of incapacity. The eight-week linking gap is unchanged.

That matters because the 28-week maximum applies across the linked PIW. It also means an employee who returns to work briefly between absences doesn’t get a fresh set of (now zero) waiting days.

Can an Employer Insist on a Fit Note?

Yes, with the usual rule. For the first seven calendar days of sick leave the employee can self-certify. From day eight onwards, you can require a fit note from a registered healthcare professional. None of that has changed. What’s changed is entitlement, not evidence. If the employee provides a fit note and qualifies, you pay. From day one.

Self-certification is the part most small employers get wrong. A proper self-certification form (HMRC’s SC2 or your own equivalent) recording the dates of absence, the reason, and the employee’s signature, is what protects you when SSP enquiries land. Get the self-certification in writing for every absence, even one-day ones, and a fit note from day eight. That’s the evidence chain HMRC expects.

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Three Sectors: What the SSP Changes Actually Cost

The £15-per-employee average is meaningless on its own. The shape of your workforce decides what the new rules actually cost you.

Restaurant with 8 part-time staff (high-absence sector)

Professional services firm with 5 fee-earners and 3 support staff

Events business with 12 zero-hours casuals (peak-season exposure)

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What Your Payroll and Absence Policies Have to Do Right Now

Six actions, in order.

1. Update your absence policy. Any clause that says “the first three days are unpaid” or “you must earn above £X to qualify for SSP” is now legally wrong. Strike it out. Replace it with “SSP is payable from the first qualifying day of absence at the rate set by HMRC.” If your contracts of employment cross-refer to this absence policy, the contracts are now misaligned too. Get them updated. While you’re in there, separate out your company sick pay terms cleanly from the SSP floor so future rate changes don’t muddle the two.

2. Check your payroll software is applying the 80% AWE calculation for low earners. Most cloud payroll tools updated their tax tables for the April 2026 rates automatically. Far fewer have built the 80% AWE comparison logic correctly. The default behaviour of “look up the flat rate” overpays every low-earner sick day. Run an SSP calculation for a low-earning worker through your payroll software and see what comes back. Plenty of tools default to the flat rate even after the April 2026 update, and the difference doesn’t show up until someone is actually paid SSP. Any PAYE reporting after 5 April 2026 that doesn’t reflect the new SSP rules is a compliance risk. Run a test absence through your software for a worker on £60/week and calculate SSP manually too: it should pay £48 (80% AWE), not £123.25 (flat rate). If you’d rather have us run through it with you, our payroll service covers exactly this kind of compliance check.

3. Get your FPS reporting right. Every SSP payment has to flow through to HMRC via your Full Payment Submission (FPS) in the same pay period it’s paid. Make sure your payroll software is tagging SSP separately from gross pay on the FPS, because the figure feeds into your year-end reporting and any future SSP enquiry. If you process payroll in-house, run one FPS export after a sick leave week and confirm the SSP line shows up cleanly. If you outsource, ask your provider to show you the same.

4. Capture qualifying days properly for every employee, including zero-hours. Your payroll needs to know which days each worker is contracted to work. For casuals, that’s a real piece of admin. A simple spreadsheet attached to each pay run is enough. Without it, you can’t calculate SSP accurately at the daily rate.

5. Tighten your absence management process. Self-certification for days 1 to 7, fit note from day 8. That’s unchanged. But because day one now costs you money, you want a clear notification rule, a written self-certification form for every absence, a return-to-work conversation, and a record. Not to be heavy-handed. The evidence matters more now that there’s no three-day buffer absorbing the borderline cases. Good absence management isn’t about chasing people, it’s about keeping the paperwork tidy so the SSP calculation and the fit note chain are defensible.

6. Model your annual exposure now, not after the first sick note. Take your worker count, multiply by your sector’s absence rate in days per worker per year, multiply by the daily SSP rate that applies. Calculate the monthly cost and the annual cost and build both into your forecast for the 2026-27 tax year. That’s your new cost line.

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Fair Work Agency: Direction of Travel, Not the Current Rulebook

The Fair Work Agency launched on 7 April 2026, the day after the SSP changes took effect. It consolidates four enforcement bodies (the Gangmaster and Labour Abuse Authority, the Director of Labour Market Enforcement, the Employment Agency Standards Inspectorate, and HMRC’s National Minimum Wage unit) into a single agency with proactive inspection powers and penalties of up to £20,000 per worker.

It isn’t currently the enforcement route for SSP. The FWA’s launched remit covers National Minimum Wage, employment agency compliance, gangmaster licensing, and tribunal award enforcement. SSP disputes still go to the Employment Tribunal as they always have.

But the direction of travel is clear. The FWA was built to be expanded by regulation. SSP enforcement landing inside its remit at some point during this Parliament is the smart bet. Don’t run your business as though only your employees can complain. Run it as though a regulator could pull your payroll records, your FPS history, and your absence management file and audit them.

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What’s Coming in 2027

Three more big changes are already legislated:

6 April 2026		SSP from day one, LEL abolished, day-one paternity leave, protective award doubled Sections 10-13 of the Employment Rights Act 2025 in force. Every employee on your PAYE qualifies for SSP from their first day of absence. The £125/week earnings floor is gone. Maximum protective award for collective redundancy failures rises from 90 to 180 days’ gross pay.
7 April 2026		Fair Work Agency launched Four enforcement bodies consolidated into one agency with proactive inspection powers and penalties of up to £20,000 per worker. Current remit covers National Minimum Wage, employment agency compliance, and tribunal award enforcement. SSP enforcement remains via Employment Tribunal for now.
1 Jan 2027		Unfair dismissal qualifying period: 2 years down to 6 months Any employee with six months’ service on that date gets immediate unfair dismissal protection. Anyone you take on from July 2026 onwards is protected from January 2027. This changes how you handle probation and the first six months of every new hire from now.
2027		Fire-and-rehire protections and zero-hours guaranteed hours Dismissal and re-engagement on worse terms becomes automatically unfair in most cases. Zero-hours workers gain the right to be offered guaranteed hours after a qualifying period. Exact dates subject to further regulations, the direction is set.

• 1 January 2027: The unfair dismissal qualifying period drops from two years to six months. Any employee with six months’ service on that date gets immediate protection. That qualifying period change rewrites how you handle probation, performance management, and the first six months of any new hire from now. Anyone you take on in July 2026 is protected from January 2027.
• January 2027: “Fire and rehire” (dismissing then re-engaging on worse terms) becomes automatically unfair in most cases.
• Throughout 2027: Zero-hours workers gain the right to be offered guaranteed hours after a qualifying period of regular work. The detail is in further regulations, but the direction is set.

The next 18 months are the most concentrated period of employment law change for small employers since the introduction of the National Minimum Wage. We wrote about how government employment policies are squeezing small businesses earlier this year, and the picture has only got sharper since. You can be ready, or you can find out the hard way.

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The Bottom Line

This isn’t a catastrophe. For most of our small employer clients, the direct cash hit will sit somewhere between a few hundred and a couple of thousand pounds a year. It’s the pattern that matters: every minor illness now costs you something, every part-timer is now in scope, every payroll cycle now needs the 80% AWE calculation, every absence now needs the self-certification or fit note paperwork on file, and every payment has to land on the FPS correctly. The admin overhead is bigger than the cash, and that’s where the statutory sick pay changes 2026 actually bite for small businesses.

What you do this week: pull your absence policy, your company sick pay clauses, and your employment contracts off the shelf, send them to whoever drafted them, and tell them to align the wording with the 6 April 2026 rules. Run one test absence through your payroll for a low-earning worker and calculate SSP manually to make sure it pays out correctly and reports correctly on the FPS. Pull your zero-hours headcount and write down what each one is contracted to work.

Forty minutes of work that saves you a tribunal claim or an overpayment unwind down the line.