Statutory Sick Pay Reform: What Employers Are Still Getting Wrong, Five Months On

A reform that's already in force

If you run payroll for even a handful of staff, you'll know Statutory Sick Pay (SSP) changed shape back on 6 April 2026. It wasn't a small tweak. Two of the rules that had defined SSP for decades were removed in one go, and five months on, the Chartered Institute of Payroll Professionals (CIPP) has just published an FAQ addressing the questions employers are still asking about it. That's usually a sign the reform hasn't fully bedded in yet, so it seems a good moment to go back over the basics.

What actually changed

Two changes matter most for day-to-day payroll:

• No more waiting days. SSP used to only kick in from the fourth day of sickness. That three-day wait has gone, and SSP is now payable from the first qualifying day of any period of incapacity for work.

• No more lower earnings limit. Previously, anyone earning below the Lower Earnings Limit for National Insurance simply didn't qualify for SSP at all. That cut-off has been scrapped, bringing an estimated 1.3 million more part-time and lower-paid workers into scope.

In place of the old flat weekly rate for everyone above the threshold, SSP is now calculated as 80% of an employee's average weekly earnings (worked out over the 8 weeks before the sickness began), capped at the standard SSP weekly rate. In practice, that means higher earners are likely to receive the capped rate, while lower earners receive a smaller, earnings-linked amount rather than nothing at all.

Why this is still catching people out

A few things seem to be behind the ongoing confusion CIPP is fielding questions on:

• Payroll software needs to run the 80%-of-earnings calculation correctly for every case, not just apply the old flat rate, and not every system, or every user of that system, has caught up.

• Because there's no waiting period, the timing of SSP1 forms (used when an employee isn't entitled to SSP, or it's ending) matters more than it used to. Getting these out late causes real financial disruption for the employee, since Universal Credit and Employment and Support Allowance claims can hinge on that paperwork.

• Sickness absence policies and staff handbooks written under the old rules, three waiting days, one flat rate, earnings threshold, are technically inaccurate now, even if nobody's noticed yet.

• Managers who deal with day-to-day absence reporting may simply not have been told the rules changed, which means inconsistent handling across a business.

A quick compliance checklist

Worth setting aside half an hour to work through this if you haven't already:

• Confirm your payroll software (or provider) is applying the 80% average-weekly-earnings calculation, capped at the current SSP rate, rather than a flat figure.

• Check your average weekly earnings calculation is using the correct 8-week reference period and NI-liable pay.

• Update your written sickness absence policy and any contractual wording that still references waiting days or an earnings threshold.

• Review your process for issuing SSP1 forms so they go out promptly, since delays now have a more immediate knock-on effect for employees.

• Brief line managers on the headline change: sick pay is now due from day one, for effectively all employees, not just those earning above a threshold.

• If your workforce includes a lot of part-time or variable-hours staff, budget for the fact that more people are now entitled to something, more often, than before.

What this means locally

For small and medium employers across Bury and the wider Greater Manchester area, this reform tends to bite hardest where staffing includes a lot of part-time, seasonal, or lower-paid roles, retail, hospitality, care and similar sectors in particular. The cash cost is usually manageable once it's been modelled properly; it's the administrative side, getting the calculation and the paperwork right for every case, that tends to cause the most friction in the first year.

If you're not confident your payroll setup is handling the new SSP rules correctly, or your policies haven't been updated since before April, it's worth having someone check rather than assuming your existing system already accounts for it. Jackson Lee Accountants, based in Bury, works with small business owners across Greater Manchester on exactly this kind of payroll compliance question, and is happy to run through your current setup with you.