Statutory Sick Pay (SSP) changed materially on 6 April 2026. For small employers, the headline is straightforward: more people can qualify, payment can start on the first full day of sickness, and some lower-paid employees receive an earnings-based amount rather than the flat weekly rate. The operational consequences are less simple. Payroll needs the right settings, managers need a consistent reporting process, and the business needs a realistic plan for a cost it cannot reclaim from HMRC.
This matters especially to owner-managed firms, hospitality businesses, retailers, care providers, trades and other employers with part-time, variable-hours or lower-paid teams. A single short absence can now create an SSP payment where it previously did not. The aim is not to treat every absence as a payroll problem; it is to make sure employees are paid correctly, health issues are handled fairly, and the business has evidence for every decision.
This practical checklist explains the rules in plain English and sets out the payroll, policy, notification and record-keeping actions UK small businesses should take now.
What changed on 6 April 2026?
The April 2026 reforms removed two familiar SSP restrictions. First, the Lower Earnings Limit no longer decides whether an otherwise eligible employee can receive SSP. In other words, eligibility is no longer ruled out simply because someone earns below a particular weekly threshold. Second, the previous three waiting days were removed. SSP is now payable from the first full day of sickness absence, provided the employee meets the conditions for SSP and the day is a qualifying day.
The weekly SSP amount for the 2026/27 tax year is the lower of 80% of the employee’s average weekly earnings or £123.25. The word “lower” is crucial. £123.25 is not a universal payment for everyone. A person with average weekly earnings of £145 receives 80% of that figure, or £116 a week, because £116 is lower than £123.25. Someone whose average weekly earnings are £185 receives £123.25 because 80% of £185 is £148, which is higher than the statutory cap.
HMRC’s manual SSP calculation guidance confirms both the new calculation and the need to pay SSP on the normal payday. Its employer entitlement guide also confirms that SSP is paid for the days an employee normally works, known as qualifying days, and remains payable for up to 28 weeks where entitlement continues.
These rules apply to sickness absences from 6 April 2026, with detailed transitional rules for some absences that began before that date. If you are still dealing with a long-running absence that crossed the changeover, use HMRC’s specific guidance on absences spanning 6 April 2026 rather than applying a simplified rule by assumption.
Why the change needs a small-business response
Many businesses previously used the three unpaid waiting days as a practical dividing line between a brief illness and an SSP case. That line has gone. A one-day illness can now meet the sickness-duration requirement, although payment is only due for the employee’s normal working days and only where the employee is otherwise eligible.
Removing the earnings threshold also means payroll teams must not use old “below the Lower Earnings Limit” logic to reject SSP. This is particularly relevant for workers with short shifts, part-time contracts, seasonal patterns, fluctuating hours or recent changes in pay. The calculation may be modest for a low earner, but it still needs to be accurate.
There is a direct cash-flow point too: employers cannot recover SSP from HMRC. HMRC’s 2026 to 2027 rates and thresholds guidance makes this explicit. Small Employers’ Relief can increase recovery for certain other statutory payments, but it does not apply to SSP. Build SSP into absence-cost forecasts and do not assume it can be offset through your PAYE payment.
How to calculate SSP after April 2026
Start with the correct average weekly earnings
Average weekly earnings, often shortened to AWE, are normally based on the relevant period before the first complete day of sickness. For a regular weekly-paid employee, that will commonly be an eight-week period. HMRC’s rules are more precise: the relevant period ends on the last normal payday before the first complete day of sickness and starts the day after the payday at least eight weeks earlier.
Include earnings on which Class 1 National Insurance contributions are due, or would be due if pay were high enough. Do not substitute contracted hours, an estimated monthly salary, or an informal “usual earnings” figure for the payroll evidence. Recent starters who have not received eight weeks’ pay can still qualify, so payroll needs to follow the applicable calculation rather than dismissing the case because the employee is new.
Apply the lower-of test
Once AWE is established, calculate 80% and compare it with £123.25. Pay the lower amount as the weekly SSP rate. Do not round the AWE figure to whole pence before making the calculation.
- Example one: AWE is £185. Eighty per cent is £148. The lower figure is £123.25, so the weekly SSP rate is £123.25.
- Example two: AWE is £145. Eighty per cent is £116. The lower figure is £116, so the weekly SSP rate is £116.
- Example three: AWE is £90. Eighty per cent is £72. The weekly SSP rate is £72, subject to the normal qualifying-day calculation for the actual absence.
Convert the weekly rate into a daily amount
For an absence that does not cover a full SSP week, calculate a daily rate. Divide the weekly SSP rate by the number of qualifying days the employee normally has in that week, then multiply by the qualifying days missed through sickness. Qualifying days should be configured carefully for every working pattern: they are not automatically Monday to Friday.
For example, an employee has AWE of £145 and works four qualifying days each week. Their weekly SSP rate is £116. The daily rate is £29. If they are sick on two qualifying days, SSP due is £58. If another employee has the £123.25 weekly rate and normally works five qualifying days, their daily rate is £24.65. Three qualifying days of sickness would produce SSP of £73.95.
Use HMRC’s calculator where it fits the case, and use the manual guidance where linked periods, unusual pay patterns or other complexities require it. Retain the calculation support, not just the final figure placed in payroll.
Payroll actions: a practical implementation checklist
Payroll software should have been updated for 6 April 2026, but employers should verify the result rather than rely on a supplier’s general assurance. Ask your provider or bureau to confirm, in writing if possible, that it can calculate day-one SSP, accepts eligible employees below the former earnings threshold and applies the lower-of-80%-or-£123.25 rule.
- Check that the SSP rate is set for the 2026/27 tax year and that daily-rate calculations reflect different numbers of qualifying days.
- Review each employee’s recorded working pattern, including compressed hours, weekend staff, rotating shifts and term-time arrangements.
- Make sure the system identifies the first full day of sickness. A person who becomes unwell midway through a shift may require different treatment for that partial day under contractual pay arrangements.
- Test a low-paid part-time example, a standard five-day employee, a recent starter and a variable-hours worker before the next payroll close.
- Ensure SSP is shown and paid through payroll on the usual pay date, with tax and National Insurance dealt with in the normal way.
- Put a named person in charge of checking exceptions, manual adjustments and linked absences.
- Separate SSP costs in management reporting so directors can see the impact on staffing, overtime, cover and cash flow.
Do not confuse statutory entitlement with any enhanced company sick pay scheme. If your contract promises full pay for a defined period, payroll may need to pay company sick pay first or top up SSP, depending on how the scheme is drafted. The statutory amount can usually count towards contractual sick pay, but the wording matters. Have your accountant, payroll adviser or employment-law adviser review any unclear clause before changing an employee’s pay.
Update the sickness policy, not just payroll
A policy written under the former rules may say that SSP starts on the fourth qualifying day or refer to an earnings threshold. Those statements are now outdated. Replace them promptly in the staff handbook, induction material, manager guidance, intranet pages and any absence-reporting form.
A good small-business sickness policy should explain, in accessible language, when and how an employee must report illness; who they contact; the information they should provide; the normal qualifying days; how self-certification and fit notes work; the distinction between SSP and enhanced contractual sick pay; and how the business will keep in touch during longer absences.
Keep the reporting rule reasonable. According to HMRC’s notice and fit notes guidance, an employee should notify the employer within the deadline set by the employer, or within seven days if no deadline exists. You cannot insist on an in-person notification or a special form. You may be able to withhold SSP for days when notification was late, unless there was a good reason for delay, but this should be applied carefully and consistently.
Require a fit note only when an employee has been off sick for more than seven calendar days in a row, including non-working days. Do not withhold SSP merely because a fit note arrives late. A fit note can be issued by several healthcare professionals and can be digital or printed; train managers not to reject it simply because it does not look like an old-style GP paper certificate.
Communicate the new rules without creating confusion
Send staff a short update explaining that the rules changed on 6 April 2026. State that eligible employees may receive SSP from the first full day of sickness, that payment depends on their normal working days and average weekly earnings, and that the business will calculate it through payroll. Avoid promising a flat £123.25 payment to every employee.
Give managers a separate briefing. They need to know that they should record the date and time of notification, the first day the employee was unable to work, expected return information where known, and any request for adjustments or support. They do not need a detailed diagnosis. Health information is sensitive personal data, so restrict access and keep records proportionate.
For recurring or long-term conditions, focus communication on what work may be possible and whether temporary adjustments could help, rather than pressing for medical detail. Changes to duties, hours, equipment, location or return arrangements may be appropriate in some circumstances. Consider disability-discrimination duties and take advice where a condition may be a disability or where absence management could lead to formal action.
Record keeping: make every SSP decision auditable
SSP records are not merely an administrative comfort blanket. HMRC can require an employer to produce records that show SSP has been paid correctly. The updated SSP2 record sheet is optional, but it is a useful model for the information a business should capture. The form says employers must keep SSP records for at least three years after the end of the tax year to which they relate.
For each absence, retain a clear record of the dates of sickness, the employee’s qualifying days, the date notice was received, self-certification or fit-note evidence where applicable, the AWE relevant period and earnings used, the weekly and daily rate calculation, payments made, and any reason SSP was not paid. Keep a copy of correspondence explaining the outcome.
Also record linked periods. Periods of sickness can be linked when they are eight weeks or less apart, and the rate can remain tied to the first linked period. This is an easy area for mistakes when managers keep informal absence notes while payroll holds only separate pay-period data. Use one reliable absence register and reconcile it with payroll before every pay run.
If an employee is not eligible, or entitlement ends, provide form SSP1 within the required timescale. HMRC says it should normally be issued within seven days of the first day off if the employee does not qualify, or within seven days when SSP ends unexpectedly. Its eligibility and SSP1 guidance also explains the 28-week limit and other exclusions that can still apply despite the removal of the earnings test.
A 10-point owner’s checklist
- 1. Confirm payroll software or your payroll bureau applies the post-6 April 2026 rules.
- 2. Remove references to waiting days and the Lower Earnings Limit from policies and manager notes.
- 3. Check qualifying days for every non-standard work pattern.
- 4. Test the 80%-of-AWE versus £123.25 calculation using real but anonymised payroll scenarios.
- 5. Budget for SSP as an unrecoverable employment cost.
- 6. Set a clear, accessible absence-notification route with a sensible deadline.
- 7. Train managers on fit notes, confidentiality and supportive contact.
- 8. Maintain a central absence and SSP record, including linked periods.
- 9. Keep calculation evidence and SSP records for at least three years after the relevant tax year.
- 10. Issue SSP1 promptly whenever a worker cannot receive SSP or their entitlement ends.
Conclusion: treat SSP as part of good absence management
The 2026 SSP changes are not just a rate update. They alter who may be paid and when payment starts, while leaving the cost with the employer. Small businesses that update payroll, contracts, absence procedures and records together will be in the strongest position to pay people accurately and avoid preventable disputes.
Use the checklist before your next payroll run, ask your payroll provider to validate the setup, and give every manager a simple absence-reporting script. A clear process protects cash flow, supports employees when they are unwell and gives your business a dependable audit trail if HMRC asks questions later.
