The UK government's plan to grant Statutory Sick Pay from the very first day of illness is set to take effect, with significant implications for how businesses hire and manage staff. While the policy's aim of protecting workers is widely supported, evidence suggests it is already prompting a strategic shift in employment practices across the country.
The Core of the Reform: From Day Four to Day One
Scheduled for introduction, the reform represents a major change from the current system where Statutory Sick Pay becomes payable only from the fourth day of absence. The new rules will move this obligation to the first day. Furthermore, the removal of the Lower Earnings Limit will extend eligibility to millions of lower-paid and part-time workers, closing a notable gap in the safety net.
George Reed, founder of HR firm Oberon Solutions, notes that while few employers dispute the worthy objectives of earlier support, the change is more than a technical tweak. It signals a meaningful redistribution of employment risk, compelling businesses to reassess their approach from the moment they consider taking on a new permanent employee.
Business Adaptation and the Shift in Hiring Calculus
Employers are rational actors, making decisions based on cost, productivity, and risk. Introducing a financial and administrative burden for sickness absence from day one, before an employee's productivity is proven, alters the fundamental hiring calculus. Businesses are responding in several observable ways:
- Extended probation periods to allow more time to assess reliability and fit.
- Slower, more cautious decision-making on permanent recruitment.
- Increased investment in absence management systems and compliance infrastructure, diverting resources, especially in SMEs, from growth to administration.
This is not about evading responsibility but managing the cumulative impact of multiple employment reforms, including enhanced family leave and tighter redundancy protections, which together raise the inherent risk of permanent hires.
The Rise of Flexible Workforce Models
One clear consequence is the likely acceleration towards flexible workforce models. As the cost and risk of permanent employment rise from the outset, organisations are expected to turn more frequently to temporary, interim, and contract arrangements to meet demand and access skills without long-term exposure.
This shift poses a potential divergence between policy intent and real-world impact. The risk, Reed argues, is not necessarily fewer jobs, but different types of jobs. Smaller employers, vital for job creation, feel this pressure most acutely due to limited capacity to absorb cost shocks.
For the reforms to succeed in improving worker security without stifling opportunity, implementation is key. Clear guidance and targeted support for smaller businesses will be essential. A review after the first year to measure effects on hiring, absence, and labour market flexibility will be crucial to ensure the balance between protection and practicality is correct.
Ultimately, effective employment policy must account for how businesses behave. Day one sick pay will change the dynamics of hiring from day zero. The challenge for policymakers is to ensure the outcomes truly match the intent.
