The Three Pillars of the 2026 Reform
The overhaul removes the “gates” that previously prevented millions of workers from accessing sick pay.
Removal of Waiting Days (Day 1 Payment)
Previously, SSP only kicked in after three unpaid “waiting days.” From 6 April 2026, SSP is payable from the first full day of sickness.
- Impact: Even a single day of sickness absence now triggers an SSP liability.
- Phased Returns: This change makes phased returns easier to calculate, as SSP can be paid for the specific days an employee is still too unwell to work.
Abolition of the Lower Earnings Limit (LEL)
The earnings threshold (previously £125/week) has been scrapped. All employees now qualify for SSP, regardless of how little they earn.
- New Beneficiaries: This extends coverage to approximately 1.3 million additional workers, including part-time, casual, and multi-job workers.
The “80% Rule” Calculation
Because low earners are now eligible, a new “dual-rate” system ensures they aren’t paid more in sick pay than they earn in a normal week. SSP is now the lower of:
- 80% of the employee’s Average Weekly Earnings (AWE).
- The Statutory Flat Rate (£123.25 per week).
Key Figures for the 2026/27 Tax Year
| Feature | Current Rule (Pre-April 2026) | New Rule (From 6 April 2026) |
| Standard Weekly Rate | £118.75 | £123.25 |
| Waiting Days | 3 Days | None (Day 1 Right) |
| Earnings Threshold | £125 per week | None (All eligible) |
| Calculation Logic | Flat rate only | Lower of 80% AWE or Flat Rate |
| Maximum Duration | 28 Weeks | 28 Weeks (Unchanged) |
Transitional Arrangements
For absences that straddle the 6 April 2026 start date, HMRC has issued specific guidance:
- Absence started before April 6: If an employee is already off sick, they continue under the old rules for the portion of the absence occurring before April 6 (including waiting days). From April 6, they switch to the new rate.
- Protection for Middle-Earners: If an employee earns between £125 and £154.05, the 80% rule might technically lower their pay compared to the old flat rate. To prevent this, “Transitional Protection” ensures they receive the full £123.25 flat rate as long as their current sickness period continues.
Operational Checklist for Hewitt’s Payroll
To ensure compliance, payroll systems and HR policies must be updated ahead of the deadline:
- Update Payroll Software: Ensure the system can handle the “80% of AWE” calculation for low-earners and remove the 3-day waiting period logic.
- Review Sickness Policies: Employee handbooks and contracts that mention “waiting days” or “earning thresholds” for SSP will be legally inaccurate from April 2026 and must be amended.
- Tighten Absence Reporting: Since Day 1 now carries a cost, manual or delayed reporting of sickness can lead to significant payroll corrections. Encourage “Day 1” notification from all staff.
- Prepare for the Fair Work Agency (FWA): A new enforcement body, the FWA, launches in April 2026. They will have the power to fine employers who fail to pay the correct SSP on time.
Note: While waiting days are gone, the “linking” rule remains. Absences within 8 weeks (56 days) still link, and the Average Weekly Earnings from the first absence period should be used for the calculation