Employers back higher sick pay

Two-thirds of UK employers [62%] say there should be an increase in the statutory rate of sick pay to help fix an “ailing and financially inadequate” system, according to the Chartered Institute of Personnel and Development (CIPD).

The CIPD’s new report, ‘What should an effective sick pay system look like?’, which includes a survey of over 1,000 employers, finds even the majority of SMEs, which would typically find it harder than larger employers to cover increased statutory sick pay [SSP] costs, are supportive of a rate increase (57%).

The CIPD says the pandemic has underscored the need for higher rates of SSP and calls on the government to act as concern grows about a potential fourth wave of the pandemic. It wants the statutory level of sick pay to be at least equivalent to the national minimum wage which would mean that, for someone aged 23 or over working seven hours a day, their pro rata daily statutory sick pay rate would be £62.37. The current rate is £96.35 per week for up to 28 weeks, which is lower than most other European countries.

The CIPD wants the government to consult on proposals for wider reform, including abolishing the three-day waiting time, broadening access to SSP by abolishing the lower earnings limit, amending the rules to allow for phased returns to work and looking at opportunities to improve income protection for the self-employed.

The CIPD is also encouraging employers to ensure they have a financial wellbeing strategy that covers elements such as paying a living wage, making sure their workforce is aware of all the benefits currently offered and information about where to get free, independent money and debt advice. In addition, it says employers should consider the benefits of introducing an occupational sick pay scheme to enhance pay above the statutory minimum for employees who can’t work when sick.

Rachel Suff, the CIPD’s senior employment relations adviser, said: “The UK’s system has been broken for a long time and the pandemic has only highlighted its failure. Statutory sick pay deficiencies can have a devastating impact on people’s health and wellbeing, including financial distress.”

The news comes as data from GoodShape, which manages workplace absences, shows poor mental health was the leading cause of British workers taking time off work for illness in 2021. It estimates that mental health absences have driven UK employers’ sick leave costs up 31% from before the pandemic, costing an estimated £43bn ($57m). It says mental ill-health was responsible for 19% of all lost working time in the UK up to November 28th, a share that is slightly more than time lost due to confirmed cases of Covid-19.

Meanwhile, the Institute for Employment Studies says that this month’s UK labour figures, which show unemployment down to 4.2%,  suggest that rather than boosting unemployment figures, the end of furlough increased the number of people who are economically inactive, having dropped out of the labour market – particularly older workers. It says there are now a million fewer people in the labour market than there would have been on pre-crisis trends, 530,000 of them older workers.  Amid a recruitment crisis and falling workers from abroad due to Brexit, it calls on the government to plan for more support to help people get back into work as well as to protect those jobs that may be at risk in a Plan C lockdown.

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