More than a quarter of FCSA Members have seen at least a quarter of their workforce use day one sick pay rights, according to a new FCSA Member survey. Some Members report a rise in sick pay claims of up to 50% since the right took effect in April 2026. The change is good news for temporary workers. The cost of it, largely, is landing on the umbrella company that employs them.
What Are Day One Sick Pay Rights?
Before April 2026, statutory sick pay (SSP) carried two barriers: a three-day waiting period before payments started, and a lower earnings limit below which a worker qualified for nothing at all. The Employment Rights Act 2025 removed both. A worker who falls ill can now claim SSP from the first day of absence, and entitlement no longer depends on clearing a minimum weekly earnings threshold.
For contractors and temporary workers employed through an umbrella company, this closes a gap that had existed for years: short-notice or short-term assignments often meant workers were signed off sick before SSP even started, or paid too little to qualify at all. The policy intent is straightforward worker protection, and FCSA supports it as such.
What the FCSA Survey Found
FCSA put the question to its Membership directly: has the change altered how much of the workforce is claiming sick pay? More than a quarter of respondents said at least 25% of their workforce had started using the day one right. A smaller group of Members went further, reporting increases in sick pay claims of up to 50% since April 2026.
These figures are self-reported by FCSA Members rather than drawn from a national data set, but the consistency of the pattern across respondents points to a genuine shift in claims behaviour rather than a handful of outliers.
Why the Cost Falls on Umbrella Companies
An umbrella company is the employer of record for the contractors it processes. That status carries obligations that do not disappear when a worker is off sick: statutory sick pay itself, at £123.25 per week for up to 28 weeks in 2026-27, continuing pension contributions under auto-enrolment, and holiday pay that keeps accruing through the absence.
Recruitment agencies placing the worker, and the end-clients paying for the assignment, do not carry these costs directly. The assignment rate agreed between agency and client is set around hours actually worked; it rarely flexes to cover an umbrella’s employer liabilities when a worker is absent. That leaves the umbrella absorbing sick pay, pension and holiday costs out of a margin that was never priced to carry them.
The wider the day one right’s reach, the more this dynamic bites. An umbrella running thin margins on high placement volumes has little room to absorb a sustained rise in absence, particularly where a handful of workers account for a disproportionate share of claims.
What This Means for Agencies and End-Clients
Agencies and end-clients relying on umbrella models should recognise that day one rights change the underlying cost base of every assignment, not just the compliance paperwork. A margin structure that worked in March 2026 may not hold up once absence costs are running at the levels FCSA Members are now reporting.
This is not a reason to push back on the right itself. It is a reason to have an honest conversation with umbrella partners about whether current rates reflect the obligations they are now carrying. A compliant umbrella meets these costs in full; realistic pricing is what allows it to keep doing so without eroding the margin that funds proper employment. Working with an FCSA Member gives agencies and end-clients confidence that the umbrella they use has been independently assessed against the FCSA Codes, including how it manages statutory employment costs.
FCSA’s Position
Day one sick pay rights are the right policy for the workers they protect. But a policy that shifts cost onto one part of the supply chain without adjusting how that supply chain prices its risk creates strain that is best addressed openly. Agencies and end-clients should treat the cost of employment protections as part of the commercial conversation with their umbrella partners, not an afterthought.
Businesses choosing an umbrella company should check it against the FCSA Members register to confirm it has been independently assessed against these standards.
