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Reform Statutory Sick Pay (SSP)

Liberal Democrat · what the evidence says

An independent, source-checked look at Liberal Democrat’s policy “Reform Statutory Sick Pay (SSP)” — what it would actually do across the things that affect your life. Every claim below quotes the source behind it. How this works.

Inequality & fair shares — Helps

minor · moderate confidence

Extending sick pay to 1.3 million low-paid workers who were previously excluded, and paying from day one, puts more money in the hands of the poorest workers when they are sick — narrowing the gap between low and high earners at those moments. The gains are real but modest in scale relative to overall income inequality.

The evidence

Biggest unknown: Whether small-employer cost pressures lead to reduced hours, job losses, or wage offsets for low-paid workers, which could partially claw back the distributional gains.

Our reading: The core distributional question for O14 is: who gains and who pays? The gains land overwhelmingly at the bottom of the income distribution. Around 1.3 million newly eligible workers are disproportionately low-paid, part-time, and female — and nearly a third live in poverty. Day-one entitlement further concentrates benefit on those least able to absorb unpaid sick days, who are again predominantly lower earners. The government estimates gains of up to £100 per week for the lowest earners, which is material relative to their incomes. The cost side falls primarily on employers, not workers, though the Health Foundation notes a slight risk of job losses for low-paid workers — a real but unquantified countervailing force. Resolution Foundation's modelling puts the employer cost increase at just 0.03 percentage points of the wage bill, suggesting the deadweight loss via employment effects is likely small. There is no funded small-employer rebate currently in place, meaning small businesses bear the marginal cost; if they respond by cutting hours or wages for low-paid staff, some of the distributional gain could be offset. However, no cited evidence quantifies this as large enough to reverse the direction. The rate reform is partial — the enacted 80%-of-earnings cap for lower earners is not full NMW alignment as stated, and the Health Foundation and Resolution Foundation both note the UK's SSP remains below OECD norms — but the incremental distributional shift is still clearly progressive. On balance, the evidence points to a genuine, if moderate in absolute terms, narrowing of the income gap during sickness for those at the bottom — justifying a minor 'improves' verdict with moderate confidence, contingent on employer responses not being large enough to erode the gains.

Cost of living — Helps

moderate · moderate confidence

This reform gives sick pay to about 1.3 million low-paid workers who had none before, and removes the three-day wait so people get paid from day one of illness — both changes directly protect the incomes of the lowest earners when they can least afford to lose pay. The main caveat is that the flat rate remains low, and there is a small risk some employers reduce hours or jobs to manage higher costs.

The evidence

Biggest unknown: Whether employers — especially small businesses facing higher SSP costs with no rebate scheme yet in place — respond by cutting hours or jobs for low-paid workers, which could offset the income gains.

Our reading: This policy makes three concrete changes that directly affect the cost-of-living resilience of low-income workers. First, extending eligibility to 1.3 million previously excluded workers — nearly a third of whom live in poverty — means a large group of the most financially vulnerable people now have income protection when sick, where they had none before. Second, removing the three-day waiting period means all workers receive pay from the first day of absence, closing the gap that previously forced low-paid workers to absorb several days of lost income per illness episode. These two changes together represent a clear, immediate improvement to disposable income at the moment of greatest financial vulnerability. The government's own estimate of up to £100 per week better off for the lowest earners is a projected figure, but even a more conservative reading of the structural change — from zero entitlement to some entitlement — is unambiguously positive for this group. The rate itself remains a significant limitation: at 27% of a full-time minimum wage earner's weekly pay, it is low by OECD standards and the Resolution Foundation and Health Foundation both flag it as inadequate. However, the policy's stated aim of aligning with the National Minimum Wage is only partially realised — the enacted reform uses an 80%-of-earnings or flat-rate cap formula, not direct NMW alignment. The main downside risk to the cost-of-living verdict is employer behaviour: higher SSP costs with no rebate scheme in place could lead some small employers to reduce hours or shed low-paid jobs, and the Health Foundation flags a slight increase in job-loss risk. The Resolution Foundation characterises the cost increase as low relative to wage bills, which tempers this concern. On balance, the evidence clearly leans toward improvement for low-income households, with the rate inadequacy and job-loss risk as real but secondary caveats.

Good work & fair pay — Helps

moderate · moderate confidence

This reform extends sick pay to about 1.3 million low-paid workers who had none, removes the three-day wait so people get paid from day one, and could leave the lowest earners up to £100 a week better off when sick. The main caveat is that the rate remains low by international standards, small employers face higher costs with no confirmed rebate scheme yet, and there is a slight risk of job losses for low-paid workers.

The evidence

Biggest unknown: Whether the government delivers meaningful support for small employers' increased SSP costs — without it, hiring risks for low-paid workers could partly offset the gains.

Our reading: The reform makes three concrete, material changes for workers. First, it brings 1.3 million low-paid workers — disproportionately part-time, female, and in poverty — into SSP eligibility for the first time. Second, it removes the three-day wait, meaning workers no longer bear the full cost of short illnesses; this also reduces presenteeism. Third, the government's own estimate suggests the lowest earners could be up to £100 a week better off when sick. All of these directly improve income security and job quality for the most precarious workers, which is the core of O4. The direction is clearly 'improves'. The magnitude is 'moderate' rather than 'major' for two reasons: the rate remains inadequate by international standards (covering only 27% of a full-time minimum wage worker's earnings, down from 43% in 1999), and the stated 'NMW alignment' is not fully delivered — the enacted rate is 80% of earnings capped at a flat rate, not NMW-linked. The Health Foundation and Resolution Foundation both flag that the UK's replacement rate remains well below the OECD average. Employer cost concerns are real but quantified as modest by the Resolution Foundation (a 0.03 percentage-point rise in wage bills). There is a slight risk of job losses for low-paid workers (Health Foundation), and the absence of a small employer rebate scheme creates a delivery risk. A minority view (House of Commons Library, Work and Pensions Committee) also recommended retaining waiting days for cost reasons. On balance the evidence points clearly toward improvement for workers, with meaningful but bounded caveats on the employer side.

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