Occupational sick pay after the 2026 SSP reform

What changed on 6 April 2026

The Employment Rights Act 2025 made two changes to statutory sick pay, both in force from 6 April 2026:

1. No waiting days. SSP is now paid from the first full day of sickness absence. Before April, it started on the fourth qualifying day.
2. No lower earnings limit. Employees no longer need to earn above a threshold to qualify. SSP is now the lower of the flat weekly rate (£123.25 in 2026/27) and 80% of the employee's average weekly earnings. Anyone earning less than about £154 a week receives 80% of their earnings rather than the flat rate, including some staff who used to qualify for the full rate.

The main rules now:

• SSP is paid for the days the employee would normally have worked (their qualifying days).
• The employee must have been ill for at least one full working day and have told you within your deadline, or within 7 days if you haven't set one.
• Periods of sickness 8 weeks or less apart are linked. SSP is paid for up to 28 weeks in a period of sickness or a linked series. A continuous series of linked periods can't run for more than 3 years.
• Average weekly earnings are worked out over an 8-week period.
• A fit note is needed after more than 7 days in a row, including non-working days.

SSP is the legal minimum. You can pay more through an occupational (company) sick pay scheme, and many employers do.

Why your company scheme needs a second look

Most company sick pay schemes were written around the old SSP rules. Five places where the reform changes how a scheme behaves:

1. Waiting days in your own scheme. If your scheme pays nothing for the first one, two or three days, those days are now covered by SSP. The employee is entitled to SSP from the first full day of sickness, whatever your scheme says. A scheme that says "no sick pay for the first three days" is now inaccurate as written.

2. Service qualifications. Many schemes pay company sick pay only after a qualifying period of service, often three or six months. SSP now applies from the first full day of sickness for new starters too, once they have started work. Your scheme should say clearly what a new starter receives: SSP only, until they qualify for company sick pay.

3. Lower-paid and part-time staff. Employees who used to earn below the lower earnings limit now qualify for SSP at 80% of their earnings. If your payroll or HR system had them flagged as ineligible, it needs updating.

4. How company pay and SSP fit together. Check that your scheme says company sick pay includes SSP, so employees receive one payment, not both. Check too that the wording still works where 80% of earnings is the lower figure.

5. Cost of short absences. Each one-day or two-day absence now carries an SSP cost for every eligible employee. If your company scheme already paid everyone from day one, the change is smaller. It mainly affects staff whose company entitlement has run out, and short absences now count towards the 28-week SSP limit. For employers with waiting days or service qualifications, the cost of short-term absence has gone up.

In the lumi reward benchmark, "Reviewing" is the common answer on whether occupational sick pay has been reviewed against the April 2026 SSP reform (32.6%). "Not reviewed" (29.6%) and "Aligned" (28.8%) are alternatives, and 9.0% are aligned and enhance occupational sick pay (n = 267). Full figures and method: Occupational sick pay: UK benchmark 2026.

The design decisions

A company sick pay scheme comes down to a handful of choices. None has a right answer. Each is a trade-off between cost, fairness, simplicity and how you want to be seen as an employer.

1. Do you pay above SSP at all?

Some employers pay SSP only. Others pay enhanced company sick pay to everyone, or to some groups.

In the lumi reward benchmark, statutory sick pay only is the common answer on how occupational sick pay compares with SSP (44.0%). A combination of enhanced sick pay and SSP is an alternative (38.5%), and enhanced occupational sick pay above SSP is rare (17.5%) (n = 257).

2. Who is eligible, and from when?

The choice is between day-one eligibility and a service qualification (commonly three, six or twelve months).

• Day one: simpler, and consistent with the direction of statute. It is also a clearer message to new joiners. The cost is paying company sick pay to people who may not stay.
• Service qualification: limits early-tenure cost and can reward commitment. It needs clear wording on what new starters get in the meantime: SSP from the first full day of sickness.

3. How much, and for how long?

The usual structure is a period at full pay followed by a period at half pay, in any rolling 12 months. The periods are either fixed or increase with length of service.

• Flat entitlement: simple to administer and explain.
• Service-linked scale: rewards tenure, but adds complexity and can produce different treatment for people doing the same job.
• Rolling 12 months vs per absence: a rolling window stops entitlement renewing with each new absence.

In the lumi reward benchmark, the median period for which enhanced occupational sick pay is provided is 12 weeks, with a 25th percentile of 5 weeks and a 75th percentile of 26 weeks, across a range of 0 to 52 weeks (n = 147).

4. Waiting days in the company scheme

After the reform, a company waiting period no longer means "no pay". It means "SSP only" for those days. Removing company waiting days now costs less than it used to, because SSP covers those days anyway. Keeping them can still act as a deterrent to short-term absence.

In the lumi reward benchmark, a waiting period of up to 3 days before occupational sick pay applies is the common answer (66.2%). No waiting period is an alternative (33.1%), and a waiting period of more than 3 days is rare (0.7%) (n = 136, 'not applicable' answers excluded).

5. Contractual or discretionary?

A contractual scheme is an entitlement. It is clear for employees, but harder to change later. A discretionary scheme gives you room to manage cases, but it has to be applied consistently, or discretion becomes a source of claims.

If you plan to reduce contractual sick pay terms, note that new restrictions on dismissing and re-engaging staff to change their terms start in January 2027. Take advice before changing terms without agreement.

6. Conditions for payment

Most schemes attach conditions to company sick pay. These include reporting by a set time, providing fit notes, attending return-to-work meetings and occupational health appointments, and not working elsewhere while off sick. Decide which conditions apply, and whether breaking one suspends company sick pay only. SSP rules still apply separately.

In the lumi reward benchmark, "Partly" is the common answer on whether eligibility rules for occupational sick pay are clearly defined and documented (64.7%). "Yes" is an alternative (24.1%) and "No" is rare (11.3%) (n = 133).

7. Long-term absence and income protection

If you offer group income protection, align its deferred period with the end of your company sick pay. A gap leaves the employee on SSP only. An overlap means paying twice.

8. Governance

Decide who reviews extended or repeated absence cases, and whether discretionary extensions need sign-off. Write the eligibility rules down so managers apply them the same way.

In the lumi reward benchmark, reviewing some extended or repeated occupational sick pay cases before approval is the common answer (71.6%). Reviewing all cases (15.2%) and reviewing none (13.2%) are both rare (n = 250).

Related points to cover in the policy

• Holiday while off sick. Holiday entitlement builds up as normal during sickness absence. An employee can ask to take paid holiday while off sick, but you can't make them. Employees on long-term sick leave can carry over up to 4 weeks' unused holiday, to be used within 18 months (Acas).
• Written terms. Sick pay terms must be available to employees from day one. They can go in the written statement of employment particulars or in a separate document employees can reasonably access, such as the intranet (GOV.UK).
• Health information is special category data under UK GDPR. Say who sees fit notes and occupational health reports, and for how long you keep them.
• Equality. Absence linked to disability or pregnancy needs particular care, both in how sick pay is applied and in absence triggers. Take advice on individual cases.

A ten-point review checklist

1. Does the scheme say anywhere that nothing is paid for the first days of absence? Correct it: SSP applies from day one.
2. Does it say what a new starter receives before qualifying for company sick pay?
3. Is company sick pay stated as inclusive of SSP?
4. Has payroll removed the lower earnings limit test and added the 80% calculation?
5. Is the entitlement period rolling 12 months or per absence, and does the wording say which?
6. Are the conditions for payment listed, with what happens if one is breached?
7. Does the scheme say whether it is contractual or discretionary?
8. Does the income protection deferred period line up with the end of company sick pay?
9. Are holiday accrual and carry-over during sickness covered?
10. Is there a named owner for reviewing long or repeated absences?

The occupational sick pay policy template works through each of these as a decision point.