Navigating the new sick leave landscape: Legal and practical implications

Sickness absence in the UK has reached a 15-year high, with employees now taking an average of 9.4 days off per year. The CIPD’s September 2025 Health and Wellbeing at Work report paints a picture of increasing complexity in employee health, driven by mental ill health, stress, and chronic conditions. At the same time, the Employment Rights Bill will overhaul Statutory Sick Pay (SSP) — removing the three-day waiting period and the earnings threshold.

While these changes aim to support workers and improve public health, they also present significant challenges for employers, particularly in tracking absence, managing legal risk, and absorbing rising costs.

The changing nature of sick leave

The CIPD report reveals that sickness absence is no longer dominated by short-term, more easily defined illnesses. Instead, employers are seeing:

• Mental ill health as the leading cause of long-term absence (41%) and the second most common cause of short-term absence (29%).
• Stress-related absence driven by heavy workloads, poor management relationships, and burnout.
• Caring responsibilities, bereavement, and chronic conditions increasingly cited as reasons for time off.

This shift means that absence is often intertwined with protected characteristics under the Equality Act 2010 — such as disability, pregnancy, age, and sex — making absence management a potential discrimination minefield for employers. For example, an employee with anxiety may qualify as disabled under the Act and a refusal to make reasonable adjustments to absence policies (such as trigger points for formal action) could lead to claims of disability discrimination. 

What's changing under the Employment Rights Bill?

Under the Bill:

• SSP will be payable from day one of illness, removing the current 3-day waiting period.
• The Lower Earnings Limit of £123 per week will be scrapped, making SSP available to all workers, including those on low hours or zero-hour contracts.
• Workers will receive either 80% of their average weekly earnings or the rate of Statutory Sick Pay (£118.75 from April 2025), whichever is lower.

The challenges for employers

1. Tracking short-term absence:

With SSP triggered from day one, employers must monitor even brief absences. This is particularly challenging when employees work irregular hours or remotely, or when absences are linked to fluctuating conditions like anxiety or chronic pain.

2. Legal risk and employee claims:

The conditions driving sickness absence levels, combined with the changes in the Employment Rights Bill, increase the risk of: 

• Disability discrimination if absence is linked to a long-term condition and reasonable adjustments aren’t made.
• Indirect sex or age discrimination if policies disproportionately affect individuals with a particular protected characteristic e.g. around menopause or caring responsibilities. Employers can defend a claim of indirect discrimination, however, if they can show that their policy is a proportionate means of achieving a legitimate aim. Examples might include maintaining operational efficiency or ensuring quality control, where the benefits of the same outweigh the discriminatory impact. 
• Constructive unfair dismissal if employees feel unsupported or unfairly penalised for taking sick leave. This was highlighted in Wainwright v Cennox plc, where an employee on sick leave was replaced in her role and misled about the permanence of the change. The Tribunal found this could amount to a breach of trust and confidence, supporting a claim for constructive dismissal.

With Employment Tribunal time limits set to increase from three to six months under the Bill, employers may face a higher volume of claims.  

3. Financial impact:

While the individual cost per employee may seem modest, the cumulative financial impact can be significant — particularly for employers with large workforces, high turnover, or a high proportion of part-time or low-paid staff.

While the SSP reforms introduce new costs and complexities, the CIPD report suggests that investing in employee wellbeing delivers measurable returns. One way employers can do this is by considering the introduction of a company sick pay scheme. The report highlights the link between financial security during illness and improved outcomes such as faster recovery, reduced presenteeism, and stronger employee engagement. Some key considerations for employers introducing such a scheme include eligibility (will it apply to all staff?), duration and rate for qualifying employees and overall cost.

How employers can prepare: practical steps

The Employment Rights Bill will require employers to rethink how they manage sick leave — not just operationally, but legally and financially. Here are key steps to consider:

• Update absence policies and systems – review sick pay policies to reflect the new rules and ensure systems can log and monitor one-day absences accurately.
• Assess legal risks – with more absences linked to mental health and chronic conditions, employers must ensure policies allow for reasonable adjustments, avoid rigid thresholds that could lead to discrimination claims and train managers to handle sensitive absence conversations appropriately. 
• Plan for increased costs – forecast the financial impact, especially in sectors with high turnover or low pay and budget for potential legal costs if absence management leads to disputes. 
• Communicate clearly – update contracts and handbooks and reinforce expectations around reporting absence and returning to work so employees understand how the changes affect them. 

The Employment Rights Bill introduces a more inclusive and supportive SSP regime — but also a more complex one. As sickness absence becomes increasingly linked to mental health, chronic conditions, and protected characteristics, employers must tread carefully.

By investing in training, technology, and inclusive policies, businesses can not only comply with the new rules but also foster a healthier, more resilient workforce.