While a lot of the discussion around the Employment Rights Act centres on the way in which workers will gain more rights, there is a tendency to overlook the financial impact on businesses.
Given that some of the notable changes are set to take place from April 2026, it is imperative that employers prepare their payroll processes ahead of time so that they can stay compliant when the rules change.
One of the biggest changes is to Statutory Sick Pay (SSP), so it is worth knowing your new obligations surrounding it.
What are the changes to SSP?
The reason why SSP may soon weigh heavily on the minds of those managing payroll is that it will require a more immediate response than it does currently.
At the moment, SSP is awarded following a three-day waiting period, meaning that only people on their fourth day of illness are entitled to SSP.
The waiting period is going to be scrapped from 6 April 2026, meaning that SSP will need to be awarded from the moment an employee calls in sick.
This is designed to give employees the confidence that they can take time away from work for even relatively minor illnesses without fearing the impact it will have on their livelihood.
It may be hoped that this could see a reduction in the spread of disease by disincentivising employees from coming into workplaces while sick and spreading germs.
However, it does mean that payroll records need to be dynamic enough to handle sudden changes to pay requirements.
To make matters more challenging, the Lower Earnings Limit (LEL) that used to be a barrier to qualifying for SSP is going to be removed.
This means that even low-paid or part-time employees will be entitled to SSP where previously this was denied to them.
For some employers, the structure of their business might have meant they never really had to manage SSP for many workers.
Nearly all employees will now be entitled to SSP and payroll processes need to be able to cope with this increased pressure.
How will the new SSP be calculated?
Alongside changing how and when SSP is awarded, there have been slight revisions to the way in which it is calculated.
SSP will be paid at the lower of either:
These changes are designed to better reflect the earnings of employees while still maintaining the statutory minimum.
What happens if a worker is already off sick when SSP changes?
The new SSP regulations take effect from 6 April, regardless of what else may be happening at the time.
This means that if you have an employee off sick, then they will need to be given the updated SSP treatment.
For instance, if a worker falls ill on 4 April, then their SSP will be payable from 6 April rather than 7 April as it would have been previously.
How can employers prepare for the change?
While employees are likely to be positive about the changes to SSP, it is possible that employers could find them to be more of a headache if they do not manage their obligations effectively.
The changes to SSP are only part of the major overhaul introduced by the Employment Rights Act and need to be tackled alongside other reforms that could similarly impose financial challenges.
The best course of action is to seek financial advice on how to manage your payroll obligations without fearing becoming non-compliant.
Our team can help you to understand the impact the Employment Rights Act will have on your business’s finances.
Speak to our team today to sort out your SSP payroll obligations.
