16. March 2026

The End of the "Earnings Gap" — Why Every Employee Now Matters

Yesterday, we discussed the "Day 1" revolution. Today, we’re diving into the second half of that earthquake: The abolition of the Lower Earnings Limit (LEL).

Until now, Statutory Sick Pay (SSP) was reserved for those earning a minimum amount (the LEL). This effectively locked out approximately 1.3 million of the UK’s lowest-paid workers—predominantly part-time staff, students, and those in the hospitality and retail sectors—from any financial support during illness.

As of April 6, 2026, that door is wide open. But for employers, it comes with a new, more complex math problem.

1. No More Earnings Threshold

The requirement to earn at or above the LEL (which was £125/week last year) has been removed. Whether an employee earns £500 a week or £50 a week, they are now entitled to statutory support from their very first day of absence.

2. The "80% Rule": A New Calculation

Because the flat rate of SSP (£123.25) could actually be more than what some low-earners take home, the Employment Rights Act 2025 introduced a cap to prevent "sick pay profit."

From April 6th, the rate of SSP will be the lower of:

• The standard flat rate of £123.25 per week.
• 80% of the employee’s average weekly earnings.

3. Why This is a Payroll Minefield

In the old system, SSP was usually a simple "on/off" switch. In the 2026 system, your payroll team (or software) must perform a bespoke calculation for every lower-paid worker who calls in sick.

Example:

• Staff A (Full-time): Earns £450/week. 80% is £360. Since the flat rate (£123.25) is lower, they get the £123.25.
• Staff B (Part-time): Earns £130/week. 80% is £104. Since £104 is lower than the flat rate, they get £104.

The Strategic Impact

This isn't just a payroll update; it's a culture shift. For companies with large part-time workforces (like the retail and hospitality giants we discussed recently), your "eligible" population for sick pay could increase by 20–30% overnight.

The Fair Work Agency (FWA), launching April 7th, has already stated that underpayment of SSP for low-earners will be a primary enforcement target. With penalties of up to £20,000 per employee, a "rounding error" in your 80% calculation is a risk you cannot afford.