Statutory pay explained: UK employer guide

If you run a business in the UK, there are a few types of paid leave you’re legally expected to offer. Things like time off when someone’s sick, having a baby, or going on holiday. These aren’t perks. They’re called statutory payments, and they’re written into UK employment law.

Statutory pay can get confusing, especially when different types have different rules, rates, and qualifying conditions. It’s easy to trip up if you don’t know what applies and when.

In this guide, we explain what statutory pay is and the types you need to provide. We also discuss eligibility rules and how to stay on top of your legal duties without getting caught out by HM Revenue and Customs (HMRC).

All information is accurate as of April 2025. Statutory payments and rates can change. Always check the latest government guidance before acting.

What is statutory pay in the UK?

Statutory pay is the minimum amount of paid leave you have to give your staff by law. It’s set by the government and applies to most UK employees. If someone meets the qualifying conditions to receive statutory pay, they have a legal right to it.

If an employee’s been working for you long enough and is scheduled to work on the days the leave falls, they might qualify. And if so, you’ve got to pay them the correct statutory rate. These payments sit under certain benefits that every eligible worker can claim from their employer, not the state.

Some businesses offer more generous packages. These are typically known as enhanced or company-specific policies. Instead of just paying the legal minimum, these businesses might top it up or extend the leave allowance. It's a competitive option if you can afford it. But even if you go above and beyond, you still need to make sure you’re ticking all the boxes for statutory pay first. That’s the legal bit you can’t skip.

Types of statutory pay

There are different types of statutory pay depending on the reason for the leave. Each has its own rules, rates, and conditions. Great payroll software can take a lot of the stress out of keeping up with all this. It can track the right rates, apply the right rules, and save you from endless manual calculations. Here’s an overview of the types of statutory pay, including the latest rules and figures for 2025/2026:

Statutory Sick Pay (SSP)

Statutory Sick Pay is what you have to pay eligible employees when they’re too ill to work. But not everyone qualifies, so here’s what to check. To get SSP, your employee must:

• Be classed as an employee (who's already commenced working for you)
• Earn at least £125 per week (before tax)
• Be off sick for four or more days in a row (including non-working days)
• Have told you about their illness within your required notice period

Agency workers can get it too, as long as they meet those conditions. You don’t have to pay Statutory Sick Pay to self-employed contractors or anyone already getting Statutory Maternity Pay.

SSP kicks in on the fourth qualifying day of sickness (the first three are unpaid, unless your company policy says otherwise). You pay it through normal payroll.

The 2025 rate is £118.75 per week. You pay this for up to 28 weeks, unless they recover or leave your business before then. It's important to keep a clear record of every absence. You’ll need to track qualifying days, fit notes (if required), and the reason they were off, just in case HMRC ever asks.

Parental or adoption pay

Whether it’s Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), or Statutory Adoption Pay (SAP), the rules are quite similar. To qualify for any of these payments, your employee must:

• Have at least 26 weeks of continuous employment by the 15th week before the baby is due (or by the week they are matched for adoption)
• Earn at least £125 a week before tax
• Give you the right notice and proof (a MATB1 form for maternity, an SC3 or SC6 form for paternity/adoption, and relevant adoption paperwork for SAP)

Here’s how the payments work:

Statutory Neonatal Care Pay (from April 2025)

From 6 April 2025, employees can claim Statutory Neonatal Care Pay if their baby is admitted to neonatal care within 28 days of birth and stays in hospital for at least 7 consecutive days.

Eligible employees can take up to 12 weeks of paid leave, which is separate from maternity, paternity, and shared parental leave.

To qualify, the employee must:

• Be classed as an employee
• Earn at least £125 per week (before tax)
• Have 26 weeks’ continuous service by the end of the week before the hospital admission

Leave must be used within 68 weeks of the child’s birth and can be taken flexibly in blocks of one week or more.

Extra bits to remember:

• Maternity and adoption leave usually start up to 11 or 14 weeks before the due date or placement date, and that’s when you start the statutory payments. 
• Paternity leave must be taken as one week or two weeks together, no odd days.
• Shared Parental Leave can only happen if the mother or primary adopter cuts short their maternity or adoption leave and pay.
• You pay all these types of statutory pay through normal payroll, deducting tax and National Insurance.
• You can usually reclaim 92% from HMRC. Small employers can usually claim back 108.5% plus a bit extra through Small Employers' Relief.
• Make sure you keep clear records of dates, payments, leave notices, and any forms or certificates. HMRC can ask to see them at any time.

Holiday Pay (Statutory Annual Leave)

In the UK, almost all workers legally have a right to 5.6 weeks of paid annual leave each year. For someone working a standard five-day week, this equates to 28 days of holiday. You can choose to include bank holidays as part of this entitlement.​

Part-time workers also have a right to 5.6 weeks of holiday, but because they work fewer days a week, the total number of days off is lower. To work it out:

Days worked per week × 5.6 = Annual leave in days

For example, if an employee works 3 days a week:​

3 × 5.6 = 16.8 days of annual leave per year.

For workers with irregular hours or those who work only part of the year (like term-time workers), you would calculate their holiday entitlement based on the hours they work. As of April 2024, it accrues at a rate of 12.07% of the hours worked.

For instance, if an employee works 100 hours over a period, they accrue:​

100 × 12.07% = 12.07 hours of holiday.

As of April 2024, employers can use rolled-up holiday pay for workers with irregular hours or those who work part of the year. This means including an additional amount in each pay packet to cover holiday pay, rather than paying it when the employee goes on holiday.

Statutory Annual Leave pay should match what an employee's normal pay. If they work fixed hours and get the same pay every week, it’s simple. You pay their usual weekly rate when they take time off.

If their pay or hours change (for example, because of overtime, bonuses, or commission), you have to dig a bit deeper. Annual leave pay needs to reflect those extra earnings too.

Here’s how it works:

• Look at the previous 52 weeks where the employee got paid (ignore any weeks they were unpaid).
• Add up their total pay across those weeks, including:
• Guaranteed overtime
• Commission
• Regular bonuses (like monthly or quarterly bonuses they normally get)
• Divide the total by 52 to get their average weekly pay.

That’s the amount you should pay them for each week of holiday they take.

If you don't have 52 paid weeks to look back on (for example, if they’ve only worked for you for 30 weeks), just use however many paid weeks you have.

The importance of getting statutory pay right

Sorting statutory payments properly isn't just a nice gesture. It's a legal obligation. And it protects your business from all sorts of grief down the track. Here’s why it matters:

It’s a legal requirement

If an employee qualifies, you have to pay them the right statutory payments. No wiggle room. The law says so.

If you don't pay what you owe, you could face a claim, a fine, or an investigation from HMRC.
Sick leave, maternity leave, paternity leave, and annual leave pay aren't optional. You have to meet the minimum legal standards, even if you offer extra perks on top.

It protects your business from HMRC fines

Mess up your statutory payments and HMRC could come knocking. Underpaying staff, failing to deduct the right tax, or forgetting to report payments properly can all lead to fines. For example, if you don't pay an employee their correct Statutory Sick Pay, and it comes to light during an inspection, you could be fined up to £300 for each incorrect payment. Plus an extra £60 a day if you keep getting it wrong.

Getting it right from day one is much cheaper and easier than trying to fix problems after an audit or inspection.

It builds trust with your employees

When you pay statutory payments correctly and on time, it sends a strong message. It tells your team that you know the rules and that you respect their rights. If you make mistakes or drag your feet over things like sick pay or maternity pay, it can seriously damage morale.

Being reliable with statutory payments can help you build trust and loyalty with your employees and avoid a revolving door of unhappy staff.

It keeps you ready for inspections or audits

HMRC can inspect your payroll records at any time. If they spot gaps, errors, or missing statutory payments, you could be in for a rough time. Having clean, accurate payroll records shows you take your employer duties seriously. It also makes it easier to handle spot checks minus the panic.

How to manage statutory pay correctly

Here are some tips to help you manage statutory pay properly:

Communicate clearly with employees about entitlements

Your team should know exactly what they have a right to and when. If someone’s off sick, pregnant, adopting, or thinking about Shared Parental Leave, make it easy for them to understand what support they’ll get.

It’s a good idea to build this into your onboarding process, too. Let new starters know about how claiming statutory payments works. That way, no one’s left wondering if and when they ever need to use it. It’s usually much easier to deal with questions early on than to fix misunderstandings later.

Keep accurate records of leave and pay

If HMRC ever comes knocking, your paperwork will need to be spot on. You should record when someone’s leave starts and ends, what statutory payments they received, and how you worked out their average pay.

Keep copies of things like MATB1 forms, fit notes, adoption matching certificates, and Shared Parental Leave notices. For example, if an employee takes sick leave, note down their qualifying days, the dates they were off, and any medical certificates. This helps you prove you paid them the right average pay for Statutory Sick Pay if HMRC asks later.

Use payroll software to calculate statutory rates automatically

Payroll software is your best friend when it comes to keeping up with statutory payments. It can work out the correct amounts for you and deduct National Insurance and tax properly. Some payroll software can also track the various types of leave for you. This means you don't have to manually check every number.

For example, instead of pulling out a calculator every time someone goes on leave, good payroll software will automatically figure out the correct amount based on their earnings, the latest government rates, and their time off. It makes sure you’re paying the correct amount and handling statutory payments properly from start to finish.

Stay up to date with annual rate changes

Statutory payments aren't set in stone. Rates usually change every April, and you’ll need to apply the new ones as soon as they come into effect. If you miss a change, you could end up underpaying staff without even realising it.

The general rule is that you should check the new rates at least once a year, preferably in March, ready for the April changes. Let's say you carry on using the 2024 Statutory Sick Pay rate into the 2025 tax year. This would likely mean that you accidentally underpay every employee who falls ill after 6 April. And that could land you in trouble with both your staff and HMRC.

Make UK statutory pay simple with Rippling

Keeping up with statutory payments doesn’t have to be a faff. Rippling makes it simple.

Rippling's payroll software calculates statutory pay for you. You don’t have to chase rate changes every April either. The system updates everything automatically. This means you can have peace of mind knowing you’re always paying the correct amount.

Employees can even request their leave directly through the platform's employee self-service portal. Managers can then review and approve it in just a few clicks. No paperwork, no running after people, and no wondering who’s off when.

Because Rippling connects HR, Payroll, IT, and Spend all in one platform (and all built on a single source of truth), everything flows seamlessly between systems. For instance, when someone’s leave status changes, their pay adjusts automatically too. And all without you needing to lift a finger.

The result? No more worrying about missing a new statutory rate, no more manual calculations, and no more scrambling when HMRC decides to check in. Just clean, compliant payroll and leave management from one tidy, user-friendly place.

Statutory pay UK FAQs

What is statutory guarantee pay in the UK?

Statutory guarantee Pay (SGP) is the minimum payment an employer must provide to an eligible employee during a lay-off or short-time working period when no work is available. To qualify, the individual must be an 'employed earner'. This means they work under a contract of employment and are subject to PAYE tax and National Insurance deductions.

Eligibility criteria include:

• Continuous employment with the same employer for at least one month.
• Availability for work during the lay-off period.
• Not refusing any reasonable alternative work offered.
• Not being laid off due to industrial action.

As of April 2025, the maximum SGP is £39 per day. It's payable for up to five days in any three-month period, totaling £195. If an employee usually earns less than £39 a day, they receive their normal daily rate instead. Part-time workers' entitlement is calculated proportionally based on their usual working hours.

Can employees get more than statutory pay?

Yes, employers can offer enhanced pay packages that exceed statutory payments. For instance, an employer might provide full pay during sick leave or extend maternity leave beyond the statutory minimum.

Employees on fixed-term contracts have a right to the same statutory payments as permanent employees, provided they meet the eligibility criteria. Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, fixed-term employees should not be treated less favourably than comparable permanent employees. This is unless the employer can objectively justify the difference.

What happens if I get statutory pay calculations wrong?

Incorrectly calculating statutory payments can lead to several issues for employers:

• Legal consequences: Failing to pay the correct statutory amounts can result in claims for unlawful deduction of wages. Employees may take their case to an employment tribunal.
• HMRC penalties: Inaccurate reporting or underpayment of statutory payments can trigger investigations and potential fines from HMRC.
• Employee relations: Mistakes in pay can damage trust and morale among staff. This can potentially lead to higher turnover and reputational harm.

This blog is based on information available to Rippling as of May 13, 2025.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.