First-day sick pay entitlement: What it means for businesses

Recent changes to statutory sick pay (SSP) have sparked concern among employers, particularly as SSP will become payable from the first day of illness from April, with no lower earnings limit. During a recent Azets payroll compliance webinar attended by 419 delegates, the sentiment was clear: businesses feel unprepared for the upcoming shift.

Feedback gathered through live polling highlighted widespread apprehension about the impact of the new SSP rules. Nearly 60% of attendees indicated that the change will negatively affect their organisation.

From our conversations with clients, many worry about affordability, especially where new starters may require sick pay shortly after joining. This shift could place additional cost pressures on employers already managing multiple compliance requirements.

The UK has 2.73 million PAYE/VAT-registered businesses, and every one of them will be touched by the expanding payroll compliance landscape. April also marks the launch of the Fair Work Agency (FWA) – a new government body responsible for enforcing employment rights, including statutory sick pay and holiday pay, under the new Employment Rights Act.

For many organisations, the introduction of the FWA represents a step change in scrutiny. Our poll revealed that half of respondents felt unprepared for its arrival. Many also expressed limited understanding of what the regulatory framework will look like in practice.

The UK is on the cusp of "the largest shake‑up in employment rights in living memory." Employers large and small may face enforcement action – including potential prosecution – if they fail to comply with the strengthened rules.

The concerns extend beyond SSP. When asked about pension salary sacrifice, nearly 40% of attendees said they are operating schemes likely to be affected by upcoming government changes designed to curb tax advantages for both employers and employees.

The government has positioned the reforms as a major step forward for workers. It states that more than 18 million UK employees will benefit from enhanced protections. The reforms aim to curb exploitative practices such as unfair fire-and-rehire tactics, while expanding access to flexible working and guaranteed hours.

Ultimately, the changes are intended to support worker wellbeing, improve productivity, and create a fairer environment for employees.

While the reforms are significant, businesses have time to prepare – but that preparation must start now. Payroll and HR teams, particularly within SMEs, must ensure they understand the implications and review existing processes to remain compliant.

For employers already stretched by operational pressures, expert guidance can help navigate the complexities ahead and ensure readiness for the new regulatory environment.

If you would like support in preparing for the upcoming changes to SSP, payroll compliance, or the introduction of the Fair Work Agency, please contact our specialists via the form below.