(And How to Keep Your Costs Under Control)
If you run a small business in the UK, you’ve probably got a lot on your plate right now. But there’s a change coming on 6th April that’s worth paying attention to.
The rules around Statutory Sick Pay are changing. Properly changing. It’s part of the Employment Rights Act 2025, and it doesn’t matter whether you’ve got 3 employees or 30 – it affects you.
The headline? Sick pay will now kick in from day one of any absence. The three-day waiting period is gone. And 1.3 million workers who weren’t previously eligible will now qualify.
For small businesses, this means one thing: sickness absence is about to get more expensive. And the smartest way to control those costs isn’t just better HR policies – it’s getting your people healthy and back to work faster.
That’s where business health insurance comes in. We’ll get to that. But first, let’s break down what’s actually changing and why it matters for businesses like yours.
What’s Actually Changing with Sick Pay?
The Employment Rights Act 2025 introduces the biggest reforms to the UK’s sick pay system in years. Here’s what’s happening from 6th April 2026:
The Three-Day Waiting Period Is Gone
Currently, employees don’t get SSP for the first three days they’re off sick. Those “waiting days” acted as a natural buffer for employers – short absences didn’t trigger any SSP cost.
From April, SSP is payable from day one. Every single day of absence now carries a direct cost. Even a two-day stomach bug means you’re paying SSP.
The Earnings Threshold Is Being Scrapped
Right now, employees need to earn at least £125 per week to qualify for SSP. That excludes a lot of part-time and lower-paid workers.
From April, the lower earnings limit is removed entirely. Every employee qualifies, regardless of what they earn. The government estimates this will bring 1.3 million additional workers into the SSP system.
A New Calculation for Lower Earners
For employees earning below the flat rate, SSP will be calculated at 80% of their average weekly earnings instead. The flat rate itself rises to £123.25 per week.
So if someone earns £140 a week, their SSP would be £112 (80% of £140) rather than the full flat rate.
Why This Matters for Small Businesses
Let’s be honest: for a business with 500 employees, these changes are a line item. For a business with 5, 10, or 20 people, they could genuinely hurt.
What the Sickness Data Actually Looks Like
Before we get into the SSP changes, it’s worth looking at where things stand with sickness absence right now:
- The average employee now takes 9.4 days off sick per year – up from 5.8 days before the pandemic (and 7.8 days in 2023), according to the CIPD
- Sickness costs small businesses around £547 per employee per year in direct costs alone
- The median cost of employee sickness for UK SMEs is £27,964 per year – equivalent to 1.7% of average turnover
- Mental health is now the leading cause of long-term absence, accounting for 47% of all long-term sickness
- Musculoskeletal problems (backs, knees, joints) are the second biggest driver
- Over 2.8 million people are now economically inactive due to long-term sickness – a record high
The government’s own impact assessment puts the additional cost of these SSP reforms at around £450 million per year across all UK businesses. That works out to roughly £15 extra per employee. Sounds small – until you multiply it by your headcount and add it to the absence costs you’re already carrying.
A Quick Example
You run a small building firm with 12 employees. Average absence is 9.4 days per person. Under the old rules, the first three days of each absence were unpaid. Under the new rules, you’re paying SSP from day one.
That’s potentially 36 extra days of SSP per year you weren’t paying before. At £24.65 per day (the daily SSP rate for a five-day worker), that’s an extra £887 a year. Not catastrophic on its own – but when your margins are tight, it all adds up.
And that’s before you count the real cost: the lost productivity, the overtime for other staff covering, the clients waiting, the projects slipping.
The Real Problem Isn’t Sick Pay – It’s How Long People Are Off
Here’s what most of the articles about SSP changes don’t tell you: the biggest cost to your business isn’t the daily rate of statutory sick pay. It’s how long your employees are absent.
And the length of an absence is almost always determined by how quickly someone can get diagnosed and treated.
Right now, the NHS is under enormous pressure:
- 7.25 million cases on the waiting list in England
- Median wait of 13.6 weeks to start treatment – nearly double what it was before COVID
- Around 2.79 million patients have been waiting more than 18 weeks
- MRI scan waits of 8-16 weeks depending on your area
- Only 61.5% of patients are seen within the 18-week target
So when one of your team develops a bad back, a dodgy knee, or a mental health problem, the NHS pathway often looks like this: wait weeks for a GP appointment, wait months for a specialist, wait more weeks for a scan, then wait again for treatment.
Meanwhile, they’re off work. And you’re paying for it.
So Where Does Health Insurance Fit In?
This is the bit that most articles about SSP changes completely miss.
If the real cost of absence is driven by how long people are off – and the length of absence is driven by NHS waiting times – then the most effective thing you can do is get your people seen and treated faster. That’s what private health insurance does.
NHS vs Private: How the Timelines Compare
| Condition | NHS Timeline | Private Timeline | Time Saved |
| Back problem (diagnosis + treatment) | 3-6 months | 2-4 weeks | 2-5 months |
| Knee surgery | 4-6 months | 2-4 weeks | 3-5 months |
| Mental health support | 6-18 weeks | A few days | 1-4 months |
| Hernia repair | 3-4 months | 2-4 weeks | 2-3 months |
| MRI scan | 8-16 weeks | 24-72 hours | 2-4 months |
Based on current NHS waiting time data (January 2026) and typical private healthcare timelines.
Let’s Do the Maths
One of your employees – let’s call her Sarah – earns £35,000 a year. She develops a knee problem that needs investigation and possible surgery.
Without health insurance:
- She waits 12-16 weeks for a specialist appointment and MRI
- Then another 12-20 weeks for surgery
- Total: 6-9 months of reduced capacity or absence
- Your cost: SSP, lost productivity, covering her work, potential client impact
With health insurance:
- She sees a specialist within days
- MRI within 1-2 weeks
- Surgery within 3-4 weeks if needed
- Total: 6-10 weeks including recovery
The difference? 3-6 months of having a key team member back at work. For a small business, that could be the difference between keeping a client and losing one.
What Does It Actually Cost?
Less than most people expect. Business health insurance works out cheaper per head than individual policies because you get group rates. Here’s a rough idea:
| Cover Level | Cost Per Employee/Month | Cost Per Employee/Year |
| Basic (inpatient + day-patient) | £30-£50 | £360-£600 |
| Mid-range (+ outpatient, diagnostics) | £50-£80 | £600-£960 |
| Comprehensive (+ mental health, therapies) | £80-£120 | £960-£1,440 |
Prices vary based on employee ages, location, and cover options. Group rates start from just 2 employees.
For a team of 10 on a mid-range policy, you’re looking at roughly £600-£800 per month. Sounds like a lot – until one employee avoids a four-month NHS wait and is back at their desk in weeks instead of months.
Why This Matters More After April
We’re not saying every small business needs health insurance. But the SSP changes do shift the maths. Here’s what we mean:
- Every day off now costs you. That used to only kick in from day four. Now it’s from day one. Health insurance shortens absences by getting people diagnosed and treated faster, which means less SSP, less disruption, and less pressure on the rest of your team.
- Mental health is the biggest driver of long-term absence – and the hardest to get help for on the NHS. Counselling waits can stretch to 18 weeks. Most private policies offer access within days. When nearly half of all long-term sickness claims involve mental health, that speed makes a real difference.
- It’s a business expense you can claim against Corporation Tax. It does count as a benefit in kind for employees (so they’ll pay income tax on the value), but for most people the tax hit is small compared to actually having private cover.
- Good people notice. Health insurance is consistently one of the most valued employee benefits. Offering it shows you take your team seriously – and in a tight hiring market, it gives people a reason to stay.
- Small teams can’t afford a six-month gap. If your best person is stuck on an NHS waiting list for a knee operation, who’s doing their job? Health insurance is really business continuity in disguise.
What to Look for in a Small Business Policy
If you do decide to look into it, here’s what actually matters:
Fast access to diagnostics. This is the single most important feature. Make sure your policy covers outpatient diagnostics – MRI scans, CT scans, blood tests, specialist consultations. Getting a diagnosis fast is what gets people back to work fast.
Mental health cover. Check the limits. Some policies offer generous psychiatric and therapy cover; others are more limited. Given that mental health is the top driver of long-term absence, this is worth investing in.
Musculoskeletal cover. Physiotherapy, orthopaedic consultations, and musculoskeletal diagnostics. Back problems and joint issues are the second biggest cause of long-term absence – and the ones most likely to sideline a tradesperson, warehouse worker, or anyone with a physical job.
Virtual GP access. Most policies now include 24/7 GP video consultations at no extra cost. This alone can save your employees weeks of waiting for a GP appointment – and it means minor issues get dealt with before they become major ones.
Flexible excess options. Higher excess = lower premiums. For a small business watching its budget, a £250 or £500 excess per claim can bring costs down significantly.
Which Insurers Are Worth Looking At?
All the big names do small business policies, usually from as few as two employees. Quick overview:
- Bupa – the biggest hospital network in the UK. Strong diagnostics cover. Good for businesses that want wide choice.
- Vitality – rewards healthy behaviour with discounts and perks. Popular with younger, active teams.
- Aviva – often the most competitive on price. Good family add-on options if employees want to include partners and children.
- AXA Health – solid all-round cover with strong mental health options.
- WPA – not-for-profit insurer with a reputation for good value and excellent customer service.
- The Exeter – often best value for smaller or younger teams.
The right insurer depends on your team’s ages, your budget, and what cover matters most. A broker can compare them all side by side and find the best fit.
What Should You Actually Do Before April?
April 6th isn’t far off. Here’s a sensible checklist:
- Update your sickness absence policy. Remove references to three-day waiting periods and lower earnings thresholds. Make sure it reflects the new day-one SSP rules.
- Review your payroll system. Make sure it can handle the new SSP calculations, especially the 80% rate for lower earners.
- Train your managers. They need to understand the new rules and how to manage absence effectively under the new system.
- Budget for higher absence costs. Even a modest increase in SSP liability should be accounted for in your financial planning.
- Get a health insurance quote. Seriously. If you’ve been thinking about it, this is the moment. The maths has just shifted in favour of prevention. Spending £40-£80 per employee per month to get people back to work weeks or months faster is a sound investment – especially now that every single day off costs you more.
The Bottom Line
The SSP changes landing in April aren’t going to sink your business. But they do change the calculation.
Sickness absence is about to cost you more from day one. And with NHS waits where they are, people aren’t getting better any quicker.
Health insurance won’t fix everything. But it gets your people seen sooner, treated sooner, and back at work sooner. When every absent day now hits your bottom line from the moment it starts, that matters.
Worth getting a quote, at least. You might be surprised what it actually costs.
Want to Know What It Would Actually Cost?
We help small businesses find the right health cover every day. We’ll compare the major insurers, explain everything properly, and find something that works for your team and your budget.
Most people are surprised at how affordable it is once they see a real quote.
No pressure. No jargon. Just straight advice.
Call: 020 3039 3959
Email: [email protected]
Website: healthplan.co.uk
Sources
Employment Rights Act 2025 (legislation.gov.uk); Acas Employment Rights Act 2025 Guidance; GOV.UK Plan to Make Work Pay Timeline Update (February 2026); GOV.UK SSP Factsheet; BMA NHS Backlog Data Analysis (January 2026); NHS England RTT Waiting Times (January 2026); CIPD/Simplyhealth Health and Wellbeing at Work Report; Moorepay Absenteeism Cost Analysis; Unum/YouGov SME Sickness Cost Survey (2025); IPPR – The Cost of Ill Health to UK Business (2023); ONS Sickness Absence in the UK Labour Market (2024); Civil Service Sickness Absence Report (2025); Nuffield Trust Diagnostic Waiting Times.
This is general information only – your actual costs will depend on your circumstances. Healthplan is a trading style of Sante Partners Ltd, authorised and regulated by the Financial Conduct Authority (FRN 914023).