Government Delivers Landmark Reforms to Boost Economy and Support Workers

Major changes are underway as part of the government's top priority in the Plan for Change—strengthening the economy and putting more money in the pockets of hardworking people.

This announcement follows the World Bank’s warning that “without improvements in productivity, there is no economic growth.” In response, the government is committed to Making Work Pay, ensuring lower-income workers no longer have to choose between their health and their jobs.

These reforms will strengthen workers’ rights, foster a healthier and more productive workforce, and drive economic growth—a key focus of the Plan for Change.

Key Changes to Statutory Sick Pay (SSP):

• Up to 1.3 million low-wage workers who fall ill will now receive either 80% of their average weekly earnings or the new SSP rate of ￡118.75 per week (from April)—whichever is lower.
• Some of the lowest earners will be up to ￡100 better off per week under the new system.
• This safety net will allow workers to recover without financial hardship, helping them stay in work rather than being forced to quit.

These changes strike the right balance—offering financial security for employees while keeping costs manageable for businesses—ensuring that work always pays.

A Plan for Growth

The UK has faced a severe slowdown in productivity in recent years, more so than other nations. This is unacceptable. The Plan for Change will help turn this around by boosting workplace productivity, driving economic renewal, and securing long-term growth.

Government and Union Leaders Speak Out

Deputy Prime Minister Angela Rayner MP: "What we put into our workforce, we get back and more. That’s why we’re making Statutory Sick Pay a right for every worker—so no one has to choose between their health and their job. This is a pro-worker, pro-business government in action—boosting productivity while ensuring people don’t have to choose between health and wealth."

Secretary of State for Work and Pensions Liz Kendall MP: "For too long, sick workers have had to decide between staying home and losing pay or pushing through illness just to make ends meet. No one should have to make that choice. This reform is good for workers, fair for businesses, and a major step forward in Making Work Pay."

Additional Employment Reforms

Alongside today’s announcement, the government has also published its response to the Statutory Sick Pay consultation, as well as key amendments to the Employment Rights Bill—tackling unfair workplace practices like fire and rehire and zero-hour contracts.

Further reforms include:

• Sick pay from day one of illness, removing the Lower Earnings Limit to expand eligibility.
• Stronger protections for workers facing insecure employment.

Trade Unions Welcome the Reforms

TUC General Secretary Paul Nowak: "No one should be plunged into hardship just because they get sick. These reforms will stop millions from facing a financial cliff edge. Making sick pay available to all workers from day one is a vital step forward—giving families peace of mind and the time they need to recover. We see this as the start of broader sick pay reform and will continue pushing for further improvements."

With over 1,700 responses informing these decisions, today’s changes mark a significant step toward a fairer, healthier, and more productive workforce.