The Government has claimed that 1.3 million workers across the UK will see an improvement in living standards due to long-awaited changes to statutory sick pay.
Labour announced ahead of the election that it planned to reform sick pay as part of its “Plan to Make Work Pay,” many aspects of which are being made law through the Employment Rights Bill.
Setting out its plan in spring 2024, Labour said that it would ensure the system “provides fair earnings replacement for people earning below the current rate of statutory sick pay”.
Currently, workers are entitled to £116.75 a week for up to 28 weeks if they are too ill to work, which will rise to £118.75 a week from April 2025.
However, these payments only begin after the third consecutive day of sickness, and those earning below £123 a week on average are not entitled to sick pay.
The Government has pledged to “strengthen” sick pay by removing the three-day waiting period before it begins and scrapping the minimum earning limit to ensure low-paid or part-time workers can claim it.
The Employment Rights Bill, once passed, will require employers to pay either the standard weekly sick pay rate or a set percentage of the employee’s wages, whichever is lower.
When the legislation was published, however, the Government did not specify what proportion of an employee’s wages employers would be required to pay. The Department for Work and Pensions (DWP) launched a consultation in November to establish what this percentage should be.
Ahead of the legislation returning to the Commons, the Government has now confirmed the outcome of that consultation and how much sick pay millions of low-paid workers can expect.
The Employment Rights Bill includes measures allowing workers to claim sick pay from their first day of absence, as well as removing the £123 lower earning limit.
The DWP has now confirmed that, following its consultation, the rate of statutory sick pay will be set at the lower of either £118.75 or 80 per cent of the employee’s wages. These changes will be included in amendments to the legislation when it returns to the Commons in the coming weeks.
The Government has claimed that this reform will mean that 1.3 million workers will be better off due to increased earnings during periods of illness.
For example, a part-time worker doing 10 hours a week at an hourly rate of £12.21—the national minimum wage for over 21s from April 2025—would earn £122.10 a week.
Under current rules, this employee would not be entitled to statutory sick pay. However, following the planned reforms, they would be entitled to receive £97.68 a week from their employer for the duration of their sickness.
Employees will also benefit financially from the removal of the three-day waiting period for sick pay claims.
If a full-time employee earning £488.40 a week was off sick for two weeks, they would only be entitled to £166.25 a week from April 2025.
Once the waiting period is removed, however, they will be entitled to £237.50 for that 10-day period, an increase of £71.25.
Why is the Government reforming sick pay?
Announcing the changes to sick pay, Work and Pensions Secretary Liz Kendall said sick workers had too often had to choose “between staying at home and losing a day’s pay or soldiering on at their own risk just to make ends meet”.
She continued: “No one should ever have to choose between their health and earning a living, which is why we are making this landmark change. The new rate is good for workers and fair on businesses as part our plan to boost rights and Make Work Pay, while delivering our Plan for Change.”
The Government has said that it reached the decision to ensure low-paid workers get 80 per cent of their wage during sickness following a six-week consultation, which received over 1,700 responses.
It claimed that the chosen rate struck “the right balance between providing financial security for employees who fall ill, and the cost to businesses – all while retaining the incentives for people to return to work”.
There have been concerns that low rates of sick pay can disincentivise people from working, as it is sometimes more viable for them to quit and seek other forms of support, such as benefits, if they are not entitled to sick pay.
The DWP said the new sick pay regime, which is likely to be introduced sometime in 2026, would “keep more people off welfare, as they won’t need to quit their jobs to get better”.
Ministers also want to strengthen sick pay to help boost growth, with the DWP pointing out that the World Bank has stated the UK needs “improvements in productivity” if it wants to see economic growth.
The UK has experienced significantly slower productivity growth than comparable countries in the 17 years since the 2008 financial crisis, which can impact the resilience of the UK economy.
“Today’s changes will boost productivity in the workforce to help drive growth and usher in a decade of national renewal,” the DWP release announcing the changes said.
There are several benefits that people with long-term or chronic illnesses are entitled to, including universal credit, personal independence payments (PIP) and disability living allowance (DLA).
PIP is a benefit which is gradually replacing DLA, and both aim at helping people with extra living costs if they have a long-term physical or mental health condition or disability and have difficulty doing everyday tasks or getting around. Only people aged under 16 can currently make new claims for DLA.
According to recent DWP statistics, 3.5 million people were claiming PIP in 2024, a rise of 400,000 (13 per cent) between August 2023 and August of last year. An additional 1.3m people were claiming disability living allowance, claims for which rose by 51,000 over the same period.
The latest welfare figures also show an increase in those claiming out-of-work benefits without any obligation to look for employment – with 3.1m not required to take steps to move into the job market.
A total of 7.5m people were on universal credit in January 2025, up from 6.4m the previous year. The majority of these are either required to look for work or are already in some form of employment. Some 37 per cent were in employment in December 2024.
However, the Government said the proportion of people in the “no work requirements” conditionality regime now stands at 42 per cent and continues to increase.
Those who are not expected to work are exempted due to a health issue or caring responsibility.
How is the Government trying to get more long-term sick into work?
Ministers have pledged to overhaul the sickness and disability benefit system in a bid to get more economically inactive people into the workforce while also reducing the cost to the Treasury.
Further details of these reforms are set to be published in the spring, but the DWP has said they will focus on ensuring people can “get the support they need to move into employment”.
The Government is understood to be considering a tiered payment model for PIP as part of wider disability benefit reforms.
This system would categorise claimants based on the severity of their condition, ensuring payments reflect the level of support needed for personal care, medical equipment, home adaptations, and other disability-related costs.
Another option under consideration is replacing the PIP system with one-off cash payments for specific needs instead of regular monthly benefits.
The Conservative government first proposed the idea, and Labour has not fully ruled out replacing cash payments with vouchers or grants for equipment and services.
Ministers are also expected to review the eligibility criteria for PIP as part of the upcoming reforms to reduce the pool of people eligible for the benefit.
The changes could mean that some people face more frequent reassessments, while others, particularly those with long-term or severe conditions, may undergo assessments less often or not at all.
Recent consultation documents suggest that the Government aims to extend the qualifying period for PIP to better understand the impact of long-term conditions and allow them to identify short-term illnesses from which someone can make a “full recovery”.
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