Will day-one sick pay force businesses to rethink their benefits?
From April 2026, the Government will require all businesses to pay Statutory Sick Pay (SSP) from the first day of sickness. While this change is well-intentioned and will benefit an estimated 1.3m workers, it will also increase costs for many businesses - with small firms likely to feel the greatest impact.
We’re already hearing clients ask:
- Should we reduce our Occupational Sick Pay (OSP) to offset the new SSP costs?
- Or should we keep our current arrangements and absorb the additional expense?
For sectors facing higher sickness rates, the financial implications could be significant. That makes budgeting and data review essential to prepare for the changes.
Where to start
- Review your sickness data – understand patterns of absence and estimate the number of additional SSP days you’ll need to cover.
- Assess your financial data – model the scale of potential cost increases and factor these into your forecasts.
- Seek advice – your accountant or finance team can help you with both data analysis and financial planning.
Balancing costs and employee relations
Cutting back OSP might make financial sense, but it can also harm employee morale. Staff often see OSP as a valued benefit, and reducing it could be perceived negatively. If budgets allow, retaining your existing arrangements may help maintain goodwill and support staff wellbeing.
Next steps for employers
Whatever you decide, you’ll need to:
- Review and update employment contracts, sickness policies and procedures.
- Take advice from finance, HR consultants and/or employment law specialists to ensure changes are implemented smoothly and in line with the legislation.
Whether you adjust OSP in response to the new SSP rules will depend on your financial capacity and strategic priorities. A careful review of your data, financial forecasts, and workforce considerations will help you make an informed decision - and ensure compliance when the new rules take effect in April 2026.
We’re here to help
If you have any questions on how to manage the impact, contact a member of our specialist team today.