Ministers are set to announce changes to statutory sick pay (SSP) that will see the lowest paid workers receive 80 percent of their average weekly earnings or the rate of SSP, whichever is lowest.
Under the proposed changes, 1.3 million people on low wages will be better off, the government said.
The news comes ahead of the government’s response to its SSP consultation, due tomorrow (4 March, 2025), alongside other amendments to the Employment Rights Bill.
A range of SSP rates, from 60-80 percent of an employees’ wage, were outlined in the consultation to give employers an idea of the broad costs and potential impacts on low earners. Ministers have chosen to go with the higher percentage and plan to make this change through a government amendment to the Employment Rights Bill.
Before the bill becomes law, the minimum that employees must earn to be eligible for SSP is set to drop. Currently, employees must earn £123 per week to qualify for SSP, however, from April 2025 that limit will fall to £118.75 per week meaning more people will be eligible.
The change to make SSP 80 percent of pay as well as the imminent move to a lower eligibility limit mean that some of the lowest earners are expected to be up to £100 better off per week, compared to the current system. “This safety net will keep more people off welfare, as they won’t need to quit their jobs to get better,” the government said.
“This new fairer rate will be aimed at striking the right balance between providing financial security for employees who fall ill, and the cost to businesses – all while retaining the incentives for people to return to work,” the government added.
Work and pensions minister Liz Kendall said: “For too long, sick workers have had to decide between staying at home and losing a day’s pay or soldiering on at their own risk just to make ends meet.
“No one should ever have to choose between their health and earning a living, which is why we are making this landmark change.
“The new rate is good for workers and fair on businesses as part of our plan to boost rights and Make Work Pay, while delivering our Plan for Change.”
Clare Lusted, head of product proposition at Unum, said: “The government’s proposal to extend SSP eligibility to lower earners and align the replacement ratio with typical earnings represents a promising first step.
“However, it is our view that these changes do not go far enough. Our 2022 report ‘Statutory Sickness Support’ set out proposals for reforming SSP for everyone’s benefit including a conditional employer rebate of sick pay costs to employers who were able to demonstrate that they were effectively managing sickness absence and a financial incentive to purchase workplace health support solutions which were backed in the government’s view by strong evidence.”
She said that access to professional return to work support enables employees to return to work quicker and gain substantial long-term benefits, including improved financial stability, health, and overall wellbeing. This reform would, in turn, benefit employers and the state, she added.
“Group protection policies and the added-value services they can provide are valuable to employers to help manage their employees’ health and wellbeing. Better-managed wellbeing at work can improve workplace participation and performance by keeping employees healthy and productive.”
Rachel Suff, wellbeing adviser at the CIPD, welcomed the government’s progress on SSP reforms, such as moves to end the three day waiting period before you can claim sick pay and the reduction of the lower earnings limit.
However, she said: “We are mindful that a minority of low earners could potentially be worse off under the reform as they will only get 80 percent of their salary when ill.
“There also needs to be further review of SSP to make it more flexible, for example to help employees with fluctuating health conditions.
“More flexibility in how SSP is paid could help support people with phased returns from sick leave, when they may be fit for some work but cannot return to their usual hours. SSP as part of a phased return to work would give people a safety net to return to work, helping them build back up to their usual arrangement, while still being able to access financial support for the time they can’t work.
“The government must also ensure a long enough lead in time for businesses, many of whom are still adapting to the impact of changes in last year’s Budget. Phasing in elements of the Employment Rights Bill and ensuring sufficient support and guidance for employers will be vital to making sure these measures work for employers and employees.”
