Employment Rights Bill bitesize: Statutory Sick Pay

The Employment Rights Bill was published on 10 October 2024, setting out a wide range of ambitious workplace reforms. For an overview of the Bill, see our ‘headlines’ article. 

In this series of ‘bitesize’ articles, we look at different key provisions of the Bill in more detail, consider the implications for employers and explain what the next steps will be. 

Statutory Sick Pay: what does the Bill say? 

Statutory Sick Pay (SSP) is the minimum statutory payment an employee is entitled to receive when they are ill and unable to work. Under the current rules, SSP is only available to employees earning above the Lower Earnings Limit (currently £123 a week), and only from their fourth full day of sickness absence. The Bill proposes to remove both of these requirements so that SSP is available to those earning below the Lower Earnings Limit and is payable from the first day of sickness absence.  

For lower earners, the rate of SSP will be a percentage of their weekly earnings up to the flat weekly rate of SSP (currently £116.75), to be set by the Secretary of State after consultation. 

The Government has published a separate Factsheet setting out its proposals for reforming SSP. 

What does this mean for employers? 

The changes will mean that more employees will become eligible to receive SSP, which might result in higher levels of short-term sickness absence among some lower-paid staff. Employers will need to consider whether changes to their current capability procedures are necessary in order to minimise absences. 

The costs of SSP to businesses are currently estimated by the Government to be around 0.06% of total annual spending on wages, rising to 0.09% with the proposed reforms. The Government expects that the reforms will reduce the overall rate of sickness absence and increase productivity by enabling employees to take time off work to recover from illnesses more quickly. 

Although the Bill is unlikely to become law until 2025, with the majority of reforms it introduces not taking effect until 2026, employers can start preparing for the changes by reviewing their existing contracts and procedures to assess the impact of the new eligibility rules. Many employers will already offer contractual sick pay terms that are more generous than SSP and can continue to apply different criteria for entitlement to such pay.  

What are the next steps? 

Consultation is already underway to set the percentage replacement rate for those earning below the current rate of SSP, likely to be between 60% and 80% of earnings. The Government is welcoming responses from individual employers, business representative organisations, Trade Unions and employees until 4 December 2024. Once the consultation has concluded, the Government plans to amend the Employment Rights Bill to specify the applicable percentage rate of SSP for low earners.