Statutory sick pay (SSP) is failing to provide enough support for those who most need financial help when ill and should be increased and made more widely available, MPs say today.
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The report from the Work and Pensions Committee says that a modest increase to SSP in line with Statutory Maternity Pay would strike a reasonable balance between providing extra financial support and not placing excessive extra costs on businesses. It also says that all employees should be eligible for SSP, not just those earning above the lower earnings limit.
Rates of sickness absence and ill health have increased in recent years, with a record 185.6 million working days lost to sickness or injury in 2022. During its inquiry, the Committee heard the current system of SSP was an insufficient safety net for those who relied on it, and no use at all to those who were not eligible.
Despite consultations by previous governments, no permanent changes have been forthcoming. While the Committee understands why the Government decided that the Covid-19 pandemic was the wrong time to introduce changes, due to the immediate additional costs on employers, it finds that this argument is now less valid.
In addition to recommending changes to the SSP rate and eligibility, the report calls on the Government to amend legislation to enable SSP to be paid in combination with usual wages in order to encourage phased returns to work.
On the cost to businesses, the report concludes that the overall impact of SSP reform is difficult to predict, but even if they did not result in lower levels of sickness absence, larger firms would be able to absorb the costs. It says this would not be true of smaller businesses, however, and calls on the Government to consult with small and medium-sized businesses on the design of a small business rebate for SSP.
Finally, the report says that the Government should establish a contributory sick pay scheme for the self-employed to increase support during periods of illness.
Rt Hon Sir Stephen Timms MP, Chair of the Work and Pensions Committee, said: “Statutory sick pay is failing in its primary purpose to act as a safety net for workers who most need financial help during illness.
“With the country continuing to face high rates of sickness absence, the Government can no longer afford to keep kicking the can down the road on reform. The Committee’s proposals strike the right balance between widening and strengthening support and not placing excessive burdens on business.
“A growing number of workers are now classified as self-employed and a new contributory sick pay scheme for self-employed people would be a welcome step towards ensuring they are they are no worse off financially during periods of sickness than employees on SSP.”
A full list of the Committee’s conclusions and recommendations is available on Pages 34–36 of the report.
Commenting on the publication of a Work and Pensions Committee report on whether the government should reform statutory sick pay to provide more financial support to low-paid employees, TUC General Secretary Paul Nowak said: “The Covid-19 pandemic showed that our sick pay system is in desperate need of reform.
“It beggars belief that ministers have done nothing to fix sick pay since.
“It’s a disgrace that so many low-paid and insecure workers up and down the country – most of them women – have to go without financial support when sick.
“The committee is right that ministers urgently need to remove the lower earnings limit and raise the rate of sick pay.
“Wider reform is also needed to remove the three days people must wait before they get any sick pay at all.
“Working people deserve better.
“It’s time for a new deal for workers, like Labour is proposing – which includes stronger sick pay and a ban on zero hours contracts.”
Analysis published by the TUC in January revealed that 1.3 million people do not earn enough to qualify for statutory sick pay – and 70% are women.
And zero-hours contract workers are eight times more likely than those on secure contracts (30.3% compared to 3.6%) to miss out on statutory sick pay because they don’t earn enough to qualify.
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