How do UK sick pay changes affect international employers?

Your company is headquartered in Singapore, but you've got eight employees working from London. On 6 April 2026, UK statutory sick pay rules changed significantly. Does that affect you?

Yes. UK employment law applies based on where your employees work, not where your company is registered. If you employ anyone in the UK through any structure, whether that's your own entity, an Employer of Record, or even contractors who might be misclassified, the April 2026 SSP reforms create new obligations and cost exposure you need to understand.

Teamed is the trusted global employment expert for companies who need the right structure for where they are, and trusted advice for where they're going. This guide explains exactly what the SSP changes mean for international employers and what you should do about them.

What changes on payroll Monday morning

If the work happens in London, the UK rules show up on your payslip run. Your Delaware incorporation won't change that.

From 6 April 2026, SSP is payable from the first day of sickness absence, eliminating the previous three waiting days.

The Lower Earnings Limit is gone. Your part-timers and low-hour roles now qualify for SSP when they didn't before.

Lower earners get 80% of their Average Weekly Earnings instead of the flat rate. Your payroll system needs to handle this calculation.

UK SSP can be paid for up to 28 weeks per period of sickness, creating a predictable cap even when entitlement triggers earlier.

This hits your payroll bill directly. No government reimbursement. If you use an EOR, they may pass it through on your invoice.

The Fair Work Agency handles enforcement. They look at where the work happens, not where you're based.

What changed on 6 April 2026?

Three changes hit on 6 April 2026: no waiting days, no earnings limit, new calculation for lower earners.

The first change eliminates waiting days entirely. Previously, employees had to be off sick for four consecutive days before SSP kicked in, with the first three days unpaid. Now SSP is payable from the first qualifying day of sickness. For international employers, this means any short-term absence now triggers a payment obligation where none existed before.

The second change removes the Lower Earnings Limit. Before April 2026, employees earning below £123 per week weren't entitled to SSP at all. That threshold is gone. Every employee on your UK payroll now qualifies, regardless of their earnings level, expanding eligibility to 1.3 million employees who were previously excluded. If you have part-time UK staff who previously fell below the LEL, they're now covered.

The third change introduces a new calculation method for lower earners. Employees earning below the flat SSP rate now receive 80% of their Average Weekly Earnings instead. This requires more complex payroll calculations than the previous flat-rate approach.

Do UK sick pay rules apply if my company isn't based in the UK?

UK employment law protections, including statutory sick pay rules, apply based on where the worker is employed and works. Your company's country of incorporation is irrelevant to this determination.

If you have employees working in the UK, UK statutory obligations attach to that employment relationship. A German company with five people in Manchester has the same SSP obligations as a UK company with five people in Manchester. The Fair Work Agency, which enforces employment rights, doesn't care where your headquarters are located.

This principle catches many international employers off guard. They assume that because they're not a UK company, UK employment law doesn't apply to them. That assumption is wrong and creates significant compliance risk.

How do SSP obligations differ by employment structure?

Your obligations under the new SSP rules depend entirely on how you've structured your UK employment. There are three common scenarios for international employers, and each carries different responsibilities and risks.

Scenario one: You have a UK entity and run payroll in-house

If you've established a UK subsidiary or branch and operate your own PAYE scheme, you are the legal employer. SSP obligations fall directly on your UK entity. You must ensure your payroll system can calculate statutory entitlement under the new rules, apply evidence requirements like fit notes where relevant, and document absence decisions for auditability.

UK employers must operate PAYE and submit payroll information to HMRC under Real Time Information rules. Penalties for late RTI submissions can be charged monthly, and repeated late filing creates accumulating compliance costs that are easy to overlook with small UK teams.

UK entity makes sense when you've got 10+ people, permanent presence plans, finance wants direct control, or you're setting up recurring UK benefits.

Scenario two: You use an EOR to employ UK staff

An Employer of Record becomes the legal employer for your UK workers, running local payroll, statutory deductions, and employment compliance while you direct day-to-day work. Under this structure, the EOR holds legal responsibility for SSP payments.

Using an EOR for UK hires shifts legal employer responsibility for statutory payments and payroll compliance to the EOR. However, you still carry operational and reputational risk if employee experience or statutory handling fails. If your EOR mishandles an SSP claim, your employee suffers the consequences and your company's reputation takes the hit.

EOR pricing for the UK is commonly structured as a recurring monthly fee per employee plus pass-through statutory costs. Teamed advises clients to confirm whether SSP is treated as pass-through or included in the fee to avoid invoice surprises when the new rules increase SSP frequency.

EOR works when you need speed, don't want UK entity overhead yet, and can accept the trade-off of indirect control for compliance simplicity.

Scenario three: You use contractors in the UK

Here's where many international employers get caught out. If you're engaging people in the UK as contractors but the relationship looks more like employment, you face misclassification risk. A reclassified worker can claim worker rights including paid holiday and statutory payments, in addition to tax authority actions.

Contractor-to-employee reclassification in the UK can create backdated liabilities covering taxes and National Insurance contributions. Teamed's compliance team advises modelling downside exposure over multiple prior tax years rather than a single quarter.

The April 2026 SSP changes increase the stakes of misclassification. Previously, if a contractor was reclassified, SSP exposure only applied after three waiting days and only if they earned above the LEL. Now, day-one entitlement and universal eligibility mean any misclassified contractor could trigger immediate SSP obligations for any sickness absence.

Contractors work when you need genuine independence: project-based work, clear deliverables, they control how and when they work, and can send someone else if needed.

What's the cost impact for a small UK team?

Here's a back-of-napkin calculation: US company, ten London employees at £45,000 each. What do the new rules cost?

Under the old rules, a two-day illness triggered no SSP payment because of the three waiting days. Under the new rules, that same two-day absence now costs approximately £49 in SSP (two days at the weekly rate of £123.25, pro-rated).

That sounds small. But multiply it across ten employees, each taking an average of 4.4 sick days per year, and you're looking at roughly £1,600 in additional annual SSP costs that didn't exist before April 2026.

The bigger impact comes from employees who previously earned below the Lower Earnings Limit. If you have part-time UK staff, they're now entitled to SSP where they weren't before. A part-time employee earning £100 per week who takes a week off sick now receives £80 in SSP (80% of AWE), whereas previously they received nothing.

For CFOs at international companies, the key insight is this: UK statutory payments aren't "handled in benefits." SSP is a payroll statutory item that must be processed through the legal employer's payroll. Even a five-person UK team can trigger employer obligations across PAYE, NICs, and statutory payments, and Teamed advises budgeting compliance overhead as a recurring operating cost rather than a one-time setup cost.

What enforcement risks do international employers face?

The Fair Work Agency enforces employment rights in the UK, including SSP compliance. Penalties apply to the legal employer, which means your UK entity if you have one, or your EOR if you're using that structure.

But enforcement risk isn't just about fines. HMRC can investigate payroll compliance, and weak recordkeeping increases risk during reviews or employment disputes. UK employers must retain payroll and statutory payment records for compliance purposes.

If you use an EOR, legal liability sits with them. But reputational risk sits with you. An employee who doesn't receive their statutory sick pay will blame your company, not your EOR. They'll tell their colleagues. They might post about it online. The employment relationship is with you in practice, even if the legal relationship is with the EOR.

For international employers, the practical enforcement risk is often less about government action and more about employee relations. Getting SSP wrong damages trust and retention in ways that compound over time.

What should international employers do now?

After watching too many SSP surprises land on finance desks, here's what I'd check this week.

First, confirm your employment structure in the UK. Do you have a UK entity? Are you using an EOR? Are any of your UK workers engaged as contractors? You can't assess your SSP obligations without clarity on who the legal employer is.

Second, review your EOR contract if you're using one. Confirm whether SSP is treated as a pass-through cost or included in your monthly fee. Ask specifically how the April 2026 changes affect your invoicing. If your EOR can't give you a clear answer, that's a red flag about their compliance capability.

Third, audit your contractor relationships. If you have anyone in the UK engaged as a contractor who works regular hours, uses your equipment, or can't substitute someone else to do the work, you may have misclassification exposure. The new SSP rules increase the cost of getting this wrong.

Fourth, update your cost models. If you're budgeting for UK employment costs, factor in the incremental SSP exposure from day-one entitlement and expanded eligibility. This is particularly important if you have part-time UK staff who previously earned below the LEL.

Fifth, ensure your payroll processes can handle the new calculations. If you run UK payroll in-house, your system needs to calculate SSP from day one and apply the 80% AWE calculation for lower earners. If your EOR handles this, confirm they've updated their systems.

When does the right UK employment structure change?

When rules change like this, it's worth asking whether your current structure still makes sense. Sometimes regulatory shifts tip the scales toward establishing your own entity.

For international employers with small UK teams, an EOR often makes sense because it absorbs compliance complexity including SSP administration. But as your UK headcount grows, the economics shift. Based on Teamed's advisory work with over 1,000 companies, the entity threshold for UK operations is typically 10+ employees if your team operates in English.

The SSP changes don't fundamentally alter this threshold, but they do add another compliance requirement that your EOR must handle correctly. If your current EOR struggled with UK statutory payments before April 2026, the new rules will only make things worse.

When the UK stops being an experiment and starts being a real presence, it's time to reassess. The right structure at 3 people rarely works at 30.

Getting UK employment right from the start

The April 2026 SSP reforms aren't dramatic in isolation. Day-one entitlement and expanded eligibility are incremental changes, not wholesale restructuring of UK employment law. But for international employers who assumed UK statutory obligations didn't apply to them, or who haven't thought carefully about their UK employment structure, these changes are a wake-up call.

UK employment law applies to UK employment, full stop. Your headquarters location is irrelevant. Whether you're using a UK entity, an EOR, or contractors, you need to understand your obligations and ensure someone is handling them correctly.

If you're unsure whether your UK employment setup covers the new SSP rules, or whether your current structure is still the right one for your situation, book your Situation Room. We'll review your setup and tell you what we'd recommend, whether that includes us or not.