Day‑One Sick Pay Reform: How UK Firms Could Gain £2bn in Productivity Under Employment Rights Bill

As the UK grapples with rising economic inactivity and low productivity, the government’s sick pay reform offers a solution. Critics argue it will increase costs and impact recruitment, but data has shown it could benefit businesses by over £2 billion.

Read on as we uncover yet another element of the upcoming UK Employment Rights Bill reforms. We discuss current entitlements, the proposed employment law changes, and the expected date of their implementation. 

If you’ve any questions about the new employment laws or believe your rights have been breached, please contact Redmans Solicitors. As experts in the sector, we can analyse your circumstances, answer your queries and provide specialist advice.

To learn how we can help you today, simply:

• Give us a call on 020 3397 3603
• Request a callback via our online form

How Much is Statutory Sick Pay?

In the UK, employees are entitled to £118.75 a week for up to 28 weeks, paid by their employer. That is, provided they are legally classed as an employee, have been ill for more than three consecutive days and earn a minimum of £125 per week, on average. Although this entitlement provides employees with support during sickness, there has long been an argument that more must be done.

What Are the Key Sick Pay Changes in the UK?

The sick pay reform is part of broader government-proposed employment law changes, aimed at strengthening workplace protections and employee rights, many of which are rooted in the Employment Rights Act 1996.

The first critical change concerns scrapping the eligibility period required to obtain financial support. Currently, UK employees are only entitled to Statutory Sick Pay (SSP) from the fourth consecutive day of illness. While this period includes “non-working days,” it leaves individuals financially vulnerable, particularly those whose absence falls on working days. Going forward, the government aims to make SSP available from the outset. This ensures that employees are financially supported from the beginning of any illness.

Secondly, the government aims to tackle another key barrier to access. As it stands, employees earning an average of less than £125 weekly are not entitled to any SSP at all. The government plans to remove this eligibility threshold, thus extending sick pay coverage to an estimated 1.3 million low-income workers.

Finally, with SSP made available to a larger workforce, the government will introduce new employment laws regarding the amount paid. For those already entitled to SSP, the financial support on offer will remain unchanged. However, for those in the lower earnings bracket who aren’t currently entitled to SSP, the lower of £118.75 or 80% of their average weekly earnings will be available.

The UK Employment Rights Bill reforms relating to sick pay are scheduled to come into effect by April 2026. That said, the exact implementation timeline or specific provisions may still be subject to change, so employees should stay informed on any forthcoming updates.

Sick Pay Reform: A Cost or a Long-Term Investment for Employers?

Following the announcement of the sick pay reform, some critics within the business community raised concerns. The Federation of Small Businesses, for example, argued that easier access to SSP could encourage more employees to take leave, thereby increasing costs and forcing some employers to “think twice about their hiring plans.”

However, the Trades Union Congress (TUC) has provided data-backed arguments to the contrary, even insisting that all employees should receive 80% of their average weekly earnings, not just low-income workers. Research, commissioned by the TUC and undertaken by WPI Economics, highlighted that while these sick pay changes in the UK will cost around £425 million annually, they will benefit businesses by £2.4 billion. The reason for this is that:

• Presenteeism Will Decline: Since financial support would be provided immediately, fewer employees would be inclined to work when sick. In turn, this would help prevent the spread of illness, ensuring minimal impacts on business operations.
• Recovery Times Will Shorten: With individuals more likely to take early rest, their recovery times will speed up, enabling them to return to optimal performance as quickly as possible.
• Workplace Morale Will Increase: When employees feel supported, both physically and financially, they are more likely to be content with their employer. This can help reduce staff turnover and prevent the loss of talented employees.
• Long-Term Absences Will Diminish: By encouraging staff to take early sick leave, minor illnesses are less likely to develop into more serious conditions. This can, again, help maintain a healthy and happy workforce, ensuring productivity doesn’t suffer.

Therefore, while enhanced access to SSP may initially increase costs, the workplace benefits are expected to outweigh them long-term. Viewed through this lens, the sick pay reform is not just a cost, but a strategic investment in wellbeing and sustained productivity.

Get Help with Redmans

While the sick pay reform would enhance employee rights, it’s essential to note that entitlements already exist. As mentioned, employees who are unwell for more than three consecutive days can claim financial support, provided they satisfy the other eligibility criteria.

Should one’s employer fail to satisfy this right, it’s crucial that the individual acts quickly. They could first have an informal chat to uncover whether the issue was simply a mistake, but if the employer doesn’t rectify the matter, a formal grievance could be raised.

In circumstances where internal avenues fail to provide a satisfactory outcome, external measures can be pursued. Acas early conciliation is generally a good starting point, as it’s free and required before a claim can be brought. However, as a last resort, employment tribunal proceedings can be initiated, where, if the employee succeeds, compensation may be awarded.

Redmans Solicitors are employment law specialists with years of experience helping employees in such circumstances. If your employer isn’t providing SSP when you believe they should, and you want legal assistance, contact us without delay. Following a brief consultation, we can provide the answers you’re looking for and outline your possible options.

It only takes a moment to find out how we can help, simply:

• Give us a call directly on 020 3397 3603
• Complete our online form to request a callback