Statutory Sick Pay Rates 2026/27: What Employers Need to Know

The 2026/27 tax year brings the most significant changes to Statutory Sick Pay (SSP) in years. A new rate, a new calculation method, and the removal of a longstanding eligibility threshold all take effect from 6 April 2026.

For payroll teams and people managers, these changes affect how sick pay is calculated for every qualifying absence from that date. This article sets out what has changed, how the new rules work in practice, and what steps organisations should take to ensure compliance from April 2026.

 

What Is the New SSP Rate for 2026/27?

From 6 April 2026, the SSP flat weekly rate rises to £123.25 per week, up from £118.75 in 2025/26.

However, the rate alone does not tell the full story this year. SSP is no longer simply a flat amount paid to every qualifying employee. From April 2026, SSP is calculated as the lower of either £123.25 per week or 80% of the employee’s average weekly earnings (AWE).

This means:

• Employees whose 80% AWE figure exceeds £123.25 receive the flat rate cap of £123.25.
• Employees whose 80% AWE figure falls below £123.25 receive 80% of their AWE instead.

This dual-rate approach is a deliberate design change, intended to make SSP proportionate to earnings rather than excluding lower-paid employees from entitlement altogether.

 

The Removal of the Lower Earnings Limit

Alongside the new calculation method comes one of the most significant structural changes to SSP in recent memory: the Lower Earnings Limit (LEL) has been removed as a qualifying threshold.

Previously, employees whose average weekly earnings fell below the LEL received no SSP at all. From 6 April 2026, that exclusion no longer applies. All employees with a qualifying employment contract are now entitled to sick pay when absent — calculated at 80% of their AWE where that figure is below the flat rate cap.

In practical terms, this means payroll teams can no longer screen out lower-earning employees from SSP entitlement on earnings grounds alone. Every qualifying absence now requires a calculation.

How the Dual-Rate Calculation Works

To determine what an employee is owed, you will need their average weekly earnings (AWE). These are calculated using:

• The eight weeks of pay immediately before the sickness absence begins, or
• The two most recent monthly payslips for monthly-paid employees.

Once you have the AWE figure, apply the following logic:

• If 80% of AWE is greater than £123.25 — pay the flat rate of £123.25. Example: An employee earns £300 per week. 80% of £300 is £240. Because £240 exceeds £123.25, the employee receives £123.25.
• If 80% of AWE is less than £123.25 — pay 80% of AWE. Example: An employee earns £100 per week. 80% of £100 is £80. Because £80 is below £123.25, the employee receives £80.

This is a material change from previous years, where the question was simply whether the employee met the LEL. Now, a separate AWE calculation is required for every employee in every qualifying absence.

 

Daily SSP Rates for 2026/27

Where SSP is paid at the flat rate cap, the daily rate depends on the number of qualifying days — that is, the days the employee is contractually due to work — in that week.

Where an employee’s SSP is based on 80% of their AWE rather than the flat rate cap, divide their weekly SSP figure by their number of qualifying days to arrive at the daily rate.

 

 

Who Is Eligible for SSP from April 2026?

With the LEL removed, the eligibility criteria are more straightforward than in previous years. From 6 April 2026, an employee qualifies for SSP if they:

1. Hold an employment contract.
2. Have performed some work under that contract.
3. Are absent from work due to illness for at least one full qualifying day.
4. Follow their employer’s notification and evidence requirements.

There is no longer an earnings floor to clear. The entitlement question is now primarily about employment status and the nature and duration of the absence.

 

Transitional Rules for Ongoing Absences

Organisations with employees already off sick before 6 April 2026 need to apply transitional rules carefully. The key points are:

• Employees already receiving SSP before 6 April 2026 should move onto the new rate of £123.25 from that date onwards.
• Where an employee’s AWE-based rate under the new rules would be lower than what they were previously receiving, they are protected for the duration of that ongoing absence — they continue to receive the flat rate of £123.25.
• Employees whose continuous sickness absence began before 22 September 2025 do not automatically become eligible for SSP from 6 April 2026.
• If an employee returns to work after 6 April 2026 and then goes off sick again within 56 days (a linked period), the new calculation rules apply in full to the second absence.

Getting your payroll system configured correctly for these transitional scenarios is important. The GOV.UK employer guidance on SSP covers these rules in further detail.

 

 

What This Means for Payroll Processing

The combined effect of the rate increase, the new dual-rate calculation, and the removal of the LEL represents a genuine operational change — not simply a figure to update in your payroll system.

Payroll teams should consider the following before 6 April 2026:

• System configuration — confirm your payroll software is updated to apply the £123.25 cap and the 80% AWE calculation correctly, including for employees who were previously excluded on LEL grounds.
• AWE calculation process — ensure you have a clear, consistent method for identifying the correct eight-week or two-payslip earnings window for each absent employee.
• Transitional absence tracking — identify any employees currently on SSP and determine which transitional rule applies to their specific situation.
• Communication with line managers — managers approving or recording absences should understand that the eligibility question has changed; lower-paid employees are no longer automatically excluded.
• Contractual sick pay schemes — if your organisation operates a contractual sick pay (CSP) scheme that references SSP rates or the LEL, review the wording to ensure it remains accurate under the new rules.

 

Prepare Your Payroll for SSP

The 2026/27 changes to SSP are more than a routine rate update. The introduction of the dual-rate calculation and the removal of the Lower Earnings Limit require payroll teams to review both their system configuration and their processing approach ahead of 6 April 2026.

To ensure your organisation is ready:

1. Update your payroll system to reflect the £123.25 weekly rate and the 80% AWE calculation from 6 April 2026.
2. Establish a consistent AWE calculation method for all sickness absences.
3. Review any employees currently on SSP and apply the correct transitional rules.
4. Check whether your contractual sick pay policy references the LEL or the flat SSP rate, and update it if so.
5. Brief payroll and people management staff on the eligibility changes so absences are assessed correctly from day one.

If your organisation would benefit from support managing these changes, our team is available to assist. Explore Just Payroll Services’ payroll solutions to find out how we can support your organisation’s payroll compliance.