Employers, payroll providers and payroll/HR software developers have been waiting more than 12 months for further information on the new Statutory Sick Pay (SSP) changes, which will come into effect from 6 April 2026. These major reforms to SSP are part of the Employment Rights Act 2025.
While we await further guidance for employers, in December, some information was released to guide payroll software developers, which will still need to be developed, tested and made available to employers and payroll providers in time for April.
Key changes to SSP from 6 April 2026
Removal of Lower Earnings Limit (LEL): SSP will be available to all employees, regardless of earnings, meaning 1.3 million more workers will be eligible for SSP.
SSP calculation: The payment rate of SSP will be the lower of:
80% of Average Weekly Earnings (AWE), still based on 8 weeks prior to the critical date and earnings that are subject to National Insurance, or;
The flat rate (£123.25 subject to Parliamentary approval and annual uprating).
Waiting days removed: SSP will be payable from day 1 of sickness, not day 4, meaning the Period of Incapacity to Work (PIW) is now one day and employees don’t have three unpaid days.
Linked periods: Absences within 56 days are treated as one continuous period, which is the same as the existing legislation.
Transitional protection: Employees already on SSP before 6 April 2026 and still off sick will continue at the uprated flat rate during their continuous absence.
How SSP will be calculated
SSP is based on the lower of 80% of Average Weekly Earnings (AWE) or the flat rate. However, according to recently published software developer notes, lawyers are still considering how AWE for those currently below the Lower Earnings Limit (LEL) and who are off sick in the relevant period, and who become eligible for SSP from 6 April 2026, should be calculated. The policy intent is to ensure that those who might be negatively affected are transitionally protected, and while it aims to limit the burden on employers, employees will be allowed to continue receiving the uprated flat rate until:
they return to work because they are fit for work/no longer incapable of work
they have exhausted their entitlement (i.e. up to 28 weeks)
their contract of employment ends
the start of the exclusion period due to pregnancy (when the Statutory Maternity Pay or Maternity Allowance period begins).
SSP Payment from 6 April 2026 (no waiting days required):
What will happen during the transitional period for those already on SSP?
During this transitional protection period, an employee who earns between £125.00 (increasing to £129 from 6 April 2026, pending Parliamentary approval) and £154.05 per week, and who was already receiving SSP due to sickness before 6 April 2026 - and who continues to be off sick on that date - will continue to receive flat rate SSP at the uprated amount of £123.25 (also subject to Parliamentary approval) for the remainder of their absence.
This would only apply to a continuous sickness absence. The transitional protection period would end when they return to work, when their SSP entitlement ends, their contract ends or the start of the exclusion period due to pregnancy begins (as set out above), whichever is soonest.
Worked Examples under new 6 April 2026 Reforms
1. Employees Serving Waiting Days
Waiting days are abolished from 6 April 2026.
2. Linked Periods
Absences within 56 days are treated as one continuous period.
Example 1 – 2 periods of sickness with a two-week gap
Amina earns £140 per week and goes off sick on 13 April 2026. Her AWE is £140pw in the 8-week relevant period, and therefore her SSP rate will be £112 per week (80% of her average weekly earnings).
Amina returns to work on 4 May 2026 for two weeks, then goes off sick again on 18 May for a further two weeks. Because the gap between the two sickness periods is less than 56 days, the two spells of sickness are linked and are treated as one continuous Period of Incapacity to Work (PIW).
During her second spell of illness, rather than being paid 80% of her average earnings for the 8-week period before 18 May, her entitlement remains the same as that calculated for her initial period of sickness (i.e. £112 per week). This is because where PIWs are linked, the first PIW should be used for the purposes of calculating average weekly earnings.
Example 2 – linked periods of sickness where salary changes
Ellis went off sick on 4 May 2026 for four days. His average weekly earnings over the 8 week relevant period were £135pw, so his rate of SSP is £108 per week (80% of his average weekly earnings £135pw).
Later that month, Ellis receives a pay increase, raising his average weekly earnings to £165 per week. He then goes off sick again on 8 June for five days. Because the gap between the two sickness periods is less than 56 days, the two spells of sickness link and are treated as one continuous PIW.
During his second spell of illness, rather than being paid 80% of his average earnings for the 8-week period before 8 June, his entitlement remains the same as that calculated for his initial period of sickness (i.e. £108 per week), even though his earnings have since increased.
Ellis returns to work on 15 June. On 20 November he goes off sick again. This time he has broken the 8 week linking period. As his average earnings in the relevant period prior to 20 November are £165 per week, his SSP rate during his November sickness absence is the SSP flat rate of £123.25. (This is because £123.25 is the lower of 80% of £165)
3. Transitional Protection
Employees on SSP before 6 April 2026 and still off sick will continue at the uprated flat rate (£123.25) until:
They return to work
Their SSP entitlement ends (28 weeks max)
Their contract ends
Pregnancy exclusion period begins
Example 1 – Sickness starts prior to 6 April 2026 but ends after
Joan earns £125 per week. She is off work sick before 6 April 2026 and is in receipt of SSP and she returns to work on 8 April 26.
Example 2 – Sickness starts and ends prior to 6 April 2026
Clare, like Joan, earns £125 per week. She was off sick but returned to work on 4 April 26. She therefore has no transitional protection because she wouldn’t see a drop in SSP income on 6 April. Her SSP rate would be:
Example 3 – Sickness starting prior to 6 April 2026 and ending later
Mary earns £148 per week. She is also off work sick before 6 April 26 and comes back to work on 8 April 26. Her SSP rate would be:
Employer checklist
Ahead of the incoming changes, and further guidance, employers can start to prepare and should take the following steps:
Confirm with your software supplier when payroll systems will be updated for 80% vs flat rate calculation
Ensure system and policies no longer refer to waiting days for SSP purposes and processes
Understand the rules and apply transitional protections for eligible employees (this may need to be manual depending on your software)
Communicate changes to your staff before April 2026
If you use a payroll service provider, await instructions in case further information is needed, especially for the transitional arrangements. (Armstrong Watson’s payroll services will be providing more information to payroll clients, once the payroll software providers share how they intend to implement the changes.)
Why this matters
The Government has introduced these changes to increase SSP coverage, simplify entitlement, and ensure fairer pay for lower earners. Employers should act now to update systems and policies, while awaiting further guidance, which is expected soon.
To learn more about our payroll services contact help@armstrongwatson.co.uk.
