Hi there founders and business growers! The world of Statutory Sick Pay (SSP) is changing, and as a small business or startup, being prepared is essential to keeping your payroll compliant while supporting your employees. Whether it’s calculating the new SSP rates, adjusting eligibility criteria, or managing payroll software, these reforms bring both opportunities and challenges. Here’s everything you need to know to stay ahead of the game.
Why SSP Reforms Are Happening
The government’s “Plan to Make Work Pay” aims to make sick pay fairer and more inclusive. The current system leaves millions of workers, especially low earners and part-time employees, unable to claim statutory payment during illness. The reforms are designed to address this by:
- Removing the three-day waiting period so SSP starts from day one.
- Scrapping the Lower Earnings Limit, opening SSP to more employees.
- Introducing percentage-based SSP for those below the current weekly SSP rate.
The goal is to ensure no one must choose between their health and financial stability during sickness absence.
Payroll Processing: Be Ready for New Rates and Compliance
As an employer, ensuring compliance with these SSP reforms starts with your payroll processing. Accurate calculations of the new SSP rates, including the potential shift to percentage-based payments for lower earners, will be critical. Employers must:
- Understand the updated eligibility criteria for SSP to ensure employees receive the correct entitlements.
- Adjust their payroll software to handle changes, including daily rates and weekly rates for qualifying days.
- Keep track of fit notes and manage disputes with HMRC or the Statutory Payment Dispute Team to avoid errors.
If you're unsure where to start, we recommend reviewing our detailed post: What is Statutory Sick Pay (SSP)? A Guide for Employers and Employees. It covers everything from SSP eligibility to holiday pay and employment and support allowance interactions.
SSP Reforms: Challenges and Opportunities
Complexity in Payroll Calculations
With the shift to percentage-based sick pay rates, employers will need to track the number of qualifying days and ensure that payments don’t exceed the weekly SSP rate. This can be particularly tricky for employees earning below the current daily rates.
Employee Retention Through Support
A strong sick leave policy shows employees that their health matters, boosting morale and loyalty. Supportive employers are more likely to retain top talent, reduce absenteeism, and foster a positive workplace culture.
Protecting Your Business
The IoD has highlighted concerns about statutory payment disputes, particularly for SMEs. By ensuring compliance and preparing your payroll software to handle SSP changes, you can avoid pitfalls and protect your business.
Practical Tips to Stay Compliant when Managing Sick Leave
Upgrade Your Payroll Systems
Ensure your systems can handle the new calculations for SSP rates, including percentage-based payments and first-day entitlements. Modern payroll software often includes automatic updates for legislative changes.
Stay Informed
Review HMRC updates and keep an eye on any changes to HM Revenue and Customs guidance. Regularly consult reliable resources like our SSP guide.
Engage With Your Employees
Communicate the changes clearly to your team, including how SSP will work for their specific situations, such as extended illnesses or partial returns to work.
Prepare for Audits
Document everything—fit notes, qualifying days, and payment records. This ensures you’re ready to address any questions from HMRC or other regulatory bodies.
Takeaway: Balancing Compliance and Care
These SSP reforms signal a shift toward fairer, more inclusive workplaces. While the changes bring challenges—particularly in payroll processing and cost management—they also provide an opportunity to build stronger, healthier teams. By staying informed, updating your processes, and leveraging the right tools, you can make the transition seamless and compliant.
As an employer, you’re at the forefront of this evolution. Start preparing now to ensure you’re ready to calculate sick pay rates, manage qualifying days, and support your team when they need it most. For more guidance, check out our comprehensive SSP Guide for Employers and Employees. 🚀
