How much should someone receive when they are off sick from work?
This is the question that ministers were considering over Christmas. And the answer they arrive at will have a huge impact on many households’ budgets (writes TUC’s TIM CLARK).
For the majority of workers today the answer to that question is straightforward: when they are ill they simply receive their normal salary for a period.
Others, particularly many low-paid workers get less-than-generous statutory sick pay (SSP), currently £116.75 a week, if they are ill. But this only kicks in from the fourth day of absence.
More than a million workers wouldn’t receive anything when absent because they earn too little to qualify under current rules. They are often part-time workers and are predominantly women.
This means many workers face hardship if they suffer illness or injury or risk spreading illness in their workplace by attending while sick.
This could change as ministers implement their promise that “no one should be forced to choose between their health and financial hardship”.
Measures in the Employment Rights Bill being considered by MPs will scrap the qualifying earnings test and sick pay will be paid from the first day of absence in future.
The options on the table
But how effective these changes will be rest on the percentage rate to be paid to low earners.
A government consultation on the rate closed earlier this month.
Among the options modelled was an SSP payment as low as 60 per cent of wages.
This would be the entitlement for the lowest paid 2.3 million workers,
Under the current proposals, this could lead to some 1.1 million workers who are currently entitled to full SSP eligible for less under the new system because they currently get full SSP, albeit at less than £117 a week.
The TUC is urging the government to ensure that workers receive the lower of their earnings or statutory sick pay. At the very least they should receive 95 per cent of pay to reflect the payments received by the lowest-earning workers who currently qualify for SSP.
For this is not a cold exercise in abstract numbers. There is a risk that some low earners could miss out the equivalent of a family’s food budget if ministers opt for lower pay-outs.
Scenarios set out below show the potential real-world impact of ministers’ decisions.
Scenario one
Rita works 10 hours a week (two hours a day) in an office canteen on the national minimum wage. Her partner is a sales assistant earning £25,000.
One weekend, Rita sprains her foot and is unable to work that week.
She has no access to occupational sick pay and currently would be unable to claim SSP as she earns under the lower earnings limit of £123 required to qualify. This means that the household income is cut by £114.40 a week.
She struggles to give her three children money for their daily school meals and out-of-school sports activities and has to use money set aside for the next energy bill.
Under the new system, if the rate is set on the basis of the lower amount of earnings or SSP she would receive £114.40.
However, a 60 per cent rate, one of the options modelled by the government in its latest consultation would mean she only receives £68.64. This cut of £45.76 is close to what a family spends on school meals for three children every week.
Scenario two
Sam is a single parent earning the national minimum wage at a food factory – working part time for nine hours Monday to Wednesday and gets paid weekly.
Sam catches a nasty cold and is unable to work Monday to Wednesday. She has no access to occupational sick pay, and, under the current system doesn’t earn enough to qualify for SSP.
She claims Universal Credit and by notifying the DWP about a drop in earnings in the next assessment period could receive a higher universal credit payment. But this wouldn’t be paid out for more than a month, leaving her immediate bills to pay.
But if payouts were the lowest of SSP and actual earnings Sam would have received £102.96 in wages.
A 60 per cent rate would mean getting only £61.78. This £41 drop is more than the typical £35.40 that a family in the lowest income decile spends on groceries and non-alcoholic drinks (families overall spent on average £63.50 a week according to the official figures from 2023).
This means that Sam and her two children would struggle to buy food that week, although they would be better off than currently.
Scenario three
Raj works two jobs. On Monday to Tuesday he works part time at a retail store for three hours a day. He works at a florist on Wednesday and Thursday for two hours.
This is to fit in with caring responsibilities for three children with his wife who works at the local biscuit factory from Monday to Friday (9-5pm). She earns slightly above the national minimum wage, and both Raj’s jobs are on the minimum wage.
Due to a car accident, he is unable to work for three months – this causes immense pressure on the family finances as during this period Raj receives no earnings.
If he received SSP based on his actual earnings this would have been £114.40 a week.
But at a 60 per cent rate he would receive £68.64 a week. This would mean that over the course of 12 weeks he would receive£549.12 less than if he was getting his normal earnings.
This is equivalent to almost two years’ worth of spending on clothes and footwear for a family in the lowest income decile at £5.60 a week.
Conclusion
The coronarvirus outbreak showed the dangers of an inadequate sick pay system.
Lots of frontline workers were forced to choose between falling into poverty because they got no or little sick pay, or continue to work and risk spreading the virus.
Four years on and many workers continue to face similar dilemmas every week.
The government is making the right choice in extending sick pay to all workers, without an income test.
But when ministers announce payouts for low-paid workers in the coming weeks, they should peg them to SSP or wages, whatever is the lower. And no-one should be entitled to less after the changes, than they are now.
Then the next stage will be ensuring that the headline rate of SSP is improved.
