Statutory Sick Pay and Parental Leave Rights

These reforms have changed eligibility criteria, reduced length of service requirements and widened entitlement. This has resulted in wide-ranging implications for UK employers and while all organisations will be affected, the biggest impact will be felt by smaller and medium sized employers.

Reforms to Statutory Sick Pay (SSP)

The Employment Rights Act 2025 has changed the rules and rates which govern SSP, altering eligibility and the method of calculating SSP entitlement.

SSP is the legal minimum obligation placed on employers to pay eligible employees who are unable to work due to sickness. If the employee meets the eligibility criteria, the employer is legally obliged to pay the employee SSP through their payroll.

Three key changes took effect on 6 April 2026, fundamentally reshaping entitlement and employer obligations:

Removal of Three-Day Waiting Period

Previously, SSP was only payable from the fourth qualifying day of sickness absence, with the first three days treated as ‘waiting days’. This effectively excluded many short-term absences from eligibility.

From 6 April 2026, SSP is now payable from the first full day of employee absence. This change significantly broadens the scope of payable sickness absence, meaning even a one or two day employee sickness absence will now trigger SSP entitlement. For employers who experience frequent short-term absences, this may lead to a significant increase in payroll costs. This change may also lead to an increase in absence levels across the workforce as the financial deterrent to short-term absenteeism has been removed, potentially exposing weaknesses in absence management systems.

Removal of the Lower Earnings Limit

Previously, employees were required to earn a minimum of £125 per week to qualify for SSP. From 6 April 2026, this threshold has been removed, extending eligibility to all employees regardless of their earnings level.

This reform is estimated to bring approximately 1.3 million additional workers within the scope of SSP entitlement. Employers with part-time or casual workers should anticipate an increase in eligibility for SSP entitlement and prepare for the associated costs. To put this into perspective, the Government estimated in their economic analysis of the Employment Rights Act 2025 that the reforms to SSP will cost employers approximately £450 million annually, an average of £15 per employee.

Revised Rate Calculation

The method for calculating SSP has also been updated. Rather than a fixed weekly rate of £118.75, employees are now entitled to the lower of:

• The new flat rate of £123.25 per week; or
• 80% of their average weekly earnings.

For lower-paid employees, this introduces a proportional calculation, requiring greater administrative accuracy. Errors in SSP calculations may expose employers to unlawful deduction of wages claims as well as tribunal proceedings and reputational risk. Accordingly, this reform is not just an administrative update. Accurate and reliable payroll systems and consistent application are essential.

What are the implications for Casual Workers?

The reforms to SSP introduce both greater inclusivity and complexity for casual workers. Casual workers have previously experienced an uncertain position within the SSP framework as many of these workers fell outside SSP eligibility due to the earnings threshold. With this restriction now removed, many casual workers will now qualify for SSP, regardless of their weekly earnings. However, determining entitlement for SSP raises challenges where working hours are irregular.

The critical issue concerns the identification of ‘qualifying days’. A qualifying day is defined as the day on which the worker would ordinarily be expected to work. As the three-day waiting period has been removed, this means casual workers could now qualify for SSP from their first day of absence. In the absence of clarity surrounding regular working hours, as is usually the case for casual workers, the default statutory position applies with the hierarchy being as follows:

1. Days agreed between employer and employee;
2. In the absence of agreement, Wednesday only;
3. In limited circumstances, all days except those when no work is performed

If an employer and a casual worker have never formally agreed qualifying days, and the worker is absent due to sickness (claiming SSP), the outcomes may vary significantly. It could potentially result in an underpayment or an unnecessary cost on the employer. Employers should therefore prioritise clear contractual terms concerning qualifying days for casual workers and maintain accurate records as these can be used as supporting evidence.

Reforms to Paternity Leave and Unpaid Parental Leave

Prior to 6 April 2026, to be eligible for statutory paternity leave, an employee was required to have a minimum of 26 weeks’ continuous service by the relevant qualifying week. The relevant qualifying week is the 15th week before the expected week of childbirth. Unpaid parental leave historically required one year of service to be eligible for it. These requirements created barriers for employees commencing employment close to the birth or adoption of a child.

From 6 April 2026, both paternity leave and unpaid parental leave have become “day-one” rights. Employees are now eligible from the very start of their employment, removing the previous service requirements.

Bereaved partner’s paternity leave has also become a “day-one” right from 6 April 2026. It allows an eligible employee to take up to 52 weeks’ leave to look after a child where the mother, or primary adopter, or intended parent having a baby through surrogacy, dies within the first year of the child’s birth, or placement for adoption.

Transitional Rules

If the expected birth date or adoption date is between 5 April 2026 and 25 July 2026, a transitional notice period applies. In this case, employees can provide notice for paternity or adoption leave 28 days prior to the start date. From 26 July onwards, standard notice rules apply (15 weeks before the week that the baby is expected).

Practical Implications for Employers

The effect of these reforms is to bring forward the point at which statutory rights and employer liabilities arise. This shift requires a proactive response from employers. The following are examples of proactive steps that employers should take.

Policy Review and Updating

Employers should take time to review paternity leave and unpaid parental leave policies to remove the previous service requirements. It should also be ensured that these policies reflect the new day one entitlement for both types of leave. Sickness absence policies will need to be updated to reflect first-day SSP entitlement.

Contractual Clarity

Particular attention should be given to contracts for casual workers, ensuring that qualifying days for SSP are clearly defined to avoid ambiguity and potential claims.

Conclusion

The 2026 reforms to SSP and parental leave entitlement represent a substantive shift, expanding employee protections whilst increasing employer obligations.

For employers, especially small to medium organisations, the key to effective adaption of these reforms is to review policies as early as possible and make sure employee contracts are drafted clearly, leaving no room for ambiguity. Failure to address these areas may result in increased costs and exposure to claims.