What is the average sickness absence rate in the UK?

The CIPD Health and Wellbeing at Work report (2024) found the average UK employee takes 7.8 days of sickness absence per year, the highest level in over a decade. The ONS Labour Force Survey data broadly corroborates this figure. Mental health conditions are now the leading cause of long-term absence.

What is the average staff turnover rate in the UK?

The CIPD Labour Market Outlook reports an average UK employee turnover rate of approximately 15% (combining voluntary and involuntary). However, this varies significantly by sector — hospitality and retail experience the highest rates, often exceeding 30%.

What employment law changes are coming in 2026?

Key changes in 2026 include the Employment Rights Bill (expected to introduce day-one unfair dismissal rights and zero-hours contract reforms), day-one Statutory Sick Pay from April 2026 with removal of waiting days, employer NI at 15% with a £5,000 secondary threshold, and the Employment Allowance increasing to £10,500.

How much does sickness absence cost UK employers?

The CIPD and Simplyhealth estimate that sickness absence costs UK employers approximately £29 billion annually when accounting for direct costs (sick pay, replacement cover) and indirect costs (lost productivity, management time). For SMEs, this translates to a significant per-employee burden given tighter margins.

Annual Report

The State of UK SME HR 2026

Key statistics, trends, and benchmarks for UK small and medium businesses. Compiled from publicly available data by the FSB, CIPD, ONS, ACAS, and gov.uk.

Workforce Absence Turnover HR Tech Legislation Benchmarks

Section 1

UK Workforce at a Glance

5.5M

SMEs in the UK

FSB Small Business Statistics, 2024

16.7M

People employed by SMEs

FSB — 61% of private sector employment

~11

Average employees per SME

FSB Small Business Statistics

99.9%

Of UK businesses are SMEs

FSB / Companies House

Why this matters

Small and medium enterprises are the backbone of the UK economy. The FSB defines SMEs as businesses with fewer than 250 employees. Despite their dominance in numbers, most HR software and employment research focuses on large enterprises. SMEs face unique challenges: tighter budgets, fewer dedicated HR staff, and disproportionate regulatory burden relative to their size.

Section 2

Absence & Sickness

7.8 days

Average sickness absence per employee per year

CIPD Health & Wellbeing at Work, 2024

£29B

Annual cost of sickness absence to UK employers

CIPD / Simplyhealth

Mental health is the leading cause of long-term absence

CIPD Health & Wellbeing at Work, 2024

200

Typical Bradford Factor trigger point for a formal review

ACAS guidance

The absence picture

Sickness absence has been rising steadily since the pandemic. The CIPD's 2024 Health and Wellbeing at Work survey found an average of 7.8 days lost per employee per year — the highest level in over a decade. Minor illness (cold, flu, stomach bugs) remains the most common cause of short-term absence, while mental health conditions (stress, anxiety, depression) have overtaken musculoskeletal issues as the primary driver of long-term absence. For SMEs without dedicated occupational health resources, early intervention and accurate tracking are critical to controlling costs.

Bradford Factor Calculator SSP Calculator

Section 3

Staff Turnover

~15%

Average UK employee turnover rate

CIPD Labour Market Outlook

6–9 months

Average cost to replace an employee (as proportion of salary)

Oxford Economics / CIPD

37%

Turnover in hospitality — highest of any sector

CIPD Resourcing & Talent Planning Survey

33%

Turnover in retail — second highest sector

CIPD Resourcing & Talent Planning Survey

Why employees leave

The CIPD's Resourcing and Talent Planning surveys consistently identify three primary drivers of voluntary turnover: better pay and benefits elsewhere (cited by approximately 44% of leavers), lack of career development or progression opportunities (32%), and poor management or leadership (27%). For SMEs, where every departure is felt more keenly, investing in management training, clear progression pathways, and competitive benchmarking can significantly reduce attrition.

44%

Leave for better pay

32%

Seek career progression

27%

Cite poor management

Source: CIPD Resourcing and Talent Planning Survey. Percentages are approximate and represent the proportion of respondents citing each factor.

Section 4

HR Software Adoption

60%

Of UK SMEs still use spreadsheets for core HR tasks

CIPD People Profession Survey, industry estimates

15 hrs/wk

Average time SMEs spend on manual HR admin

SD Worx UK SME survey

12%

Annual growth rate of the UK HR software market

Mordor Intelligence, HR Technology Market Report

41%

Adopt HR software primarily for compliance

CIPD People Profession Survey

The digital gap

Despite rapid growth in the HR technology market, a significant proportion of UK SMEs still rely on spreadsheets, paper forms, or fragmented tools for core HR processes. The CIPD's People Profession surveys have consistently highlighted that smaller organisations lag behind in technology adoption. The primary motivators for switching to dedicated HR software are compliance risk (41%), time savings on administrative tasks (38%), and improving the employee experience (21%).

41%

Compliance

38%

Time saving

21%

Employee experience

Source: CIPD People Profession Survey, industry analysis. Figures represent approximate proportions.

Section 5

2026 Legislative Changes

Employment Rights Bill

Day-one unfair dismissal rights

The Employment Rights Bill proposes removing the current two-year qualifying period for unfair dismissal claims, granting employees protection from day one. It also includes restrictions on “fire and rehire” practices and reforms to zero-hours contracts. The Bill is expected to receive Royal Assent in 2025, with most provisions coming into force in 2026.

Source: UK Parliament, Employment Rights Bill 2024-25

Statutory Sick Pay

Day-one SSP from April 2026

The government has confirmed that SSP will be payable from the first day of sickness, removing the current three “waiting days.” The lower earnings limit (£123/week) will also be abolished, extending SSP to all employees regardless of earnings. The SSP weekly rate for 2025/26 is £118.75.

Source: gov.uk, Autumn Budget 2024 policy paper

National Insurance

Employer NI increase to 15%

From April 2025, the employer NI rate increased from 13.8% to 15%, with the secondary threshold reduced from £9,100 to £5,000 per year. This significantly increases employment costs for SMEs. The government estimates this will raise approximately £25 billion per year.

Source: HMRC, Autumn Budget 2024

Employment Allowance

Employment Allowance rises to £10,500

To partially offset the NI increase, the Employment Allowance has been raised from £5,000 to £10,500 and the previous £100,000 NI bill cap for eligibility has been removed. This means more businesses can claim, but the increase does not fully offset the additional NI cost for most employers with more than a handful of staff.

Source: HMRC, Autumn Budget 2024

Full Employment Law Guide Employer NI Calculator

Section 6

Key Benchmarks by Industry

Industry	Avg. Turnover	Avg. Absence (days/yr)	Typical HR Spend / Employee
Hospitality	37%	5.8	£250–£400
Retail	33%	6.2	£200–£350
Healthcare & Social Care	25%	10.6	£400–£600
Construction	18%	5.4	£150–£300
Professional Services	14%	5.2	£300–£500
Manufacturing	12%	7.4	£200–£400
Technology	18%	4.8	£400–£700
Education	16%	9.2	£350–£500

Sources: CIPD Resourcing and Talent Planning Survey, CIPD Health and Wellbeing at Work Report, ONS Labour Market Statistics, XpertHR Benchmarking. Turnover and absence figures are sector-wide averages; individual organisations may vary significantly. HR spend ranges are estimates based on industry analysis and include software, training, and administrative costs.

Section 7

Methodology & Sources

This report compiles publicly available data from the following sources. Figures are the most recently published at the time of writing (March 2026). Where exact SME-specific data is not available, we have noted this and used the closest available proxy or industry estimate.

CIPD (Chartered Institute of Personnel and Development)

Health and Wellbeing at Work survey (2024), Resourcing and Talent Planning Survey, Labour Market Outlook, People Profession Survey. The CIPD is the professional body for HR in the UK and Ireland.

ONS (Office for National Statistics)

Labour Force Survey, sickness absence data, labour market statistics. ONS is the UK's national statistical authority.

FSB (Federation of Small Businesses)

Small Business Statistics (annual publication). SME counts, employment figures, and sectoral breakdowns.

ACAS (Advisory, Conciliation and Arbitration Service)

Guidance on absence management, Bradford Factor thresholds, and disciplinary procedures.

HMRC / gov.uk

SSP rates, NI thresholds, Employment Allowance, National Minimum Wage rates, Autumn Budget 2024 policy papers.

Oxford Economics

Cost of replacing employees research (commissioned by Unum), widely cited for the 6-9 months salary replacement cost estimate.

Industry reports

Mordor Intelligence HR Technology Market Report (market growth rates), SD Worx UK SME survey (admin time estimates), XpertHR Benchmarking (sector-level HR metrics).

Note: Some figures (particularly around HR software adoption rates and admin time) are estimates based on multiple industry surveys and should be treated as indicative rather than precise. We have prioritised data from the CIPD, ONS, and FSB as the most authoritative UK-specific sources.

Common questions

Frequently Asked Questions

Everything you need to know about Grove HR

According to the Federation of Small Businesses (FSB), there are approximately 5.5 million SMEs in the UK, accounting for 99.9% of all private sector businesses. They employ around 16.7 million people, representing 61% of private sector employment.

Still have questions? Get in touch

See how Grove HR helps UK SMEs

Automated leave tracking, Bradford Factor scoring, UK statutory compliance, and more — built for businesses with 10-250 employees.

Watch Demo View Pricing

From £3 per employee per month. No setup fees. 30-day money-back guarantee.