Tag: statutory sick pay

MPs call for statutory sick pay reform to address inadequate financial support for workers most in need

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.

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. 

One in 12 key workers do not qualify for statutory sick pay

  • A third of key workers (33%) say they do not get full sick pay
  • A quarter of key workers (24%) say they get only £96pw statutory sick pay
  • Extending sick pay protection to all workers would cost the same as just 1% of the test and trace budget

New analysis published by the TUC shows that one in 12 key workers (788,000 people) do not qualify for statutory sick pay (SSP) – despite many of them being at greater risk from Covid-19 due to the frontline nature of their job.

The analysis uses the same definition of key worker as government. It finds that those excluded from SSP include more than a quarter of cleaners (27%) and retail workers (26%); nearly one in 10 teaching assistants (9%); and over one in 20 care workers (6%).

Additional figures from polling for the TUC by BritainThinks show that, for those who self-identify as key workers in the context of the Covid pandemic, a third (33%) report getting less than full sick pay (below their usual rate of pay); and a quarter (24%) report getting only the minimal protection of SSP at just £96 per week.

The TUC is calling for sick pay to be reformed so that:

  • The lower earnings limit rule is removed, allowing the lowest paid workers to qualify for statutory sick pay for the first time
  • The rate of SSP is raised to at least the level of the real living wage (£330 per week).

Research commissioned by the TUC from the Fabian Society shows that the cost of raising SSP to the equivalent of the real Living Wage for employers without an occupational sick pay scheme would be around £110 per employee per year – or just over £2 a week.

The research also shows that removing the lower earnings limit, which prevents those on low earnings from accessing statutory sick pay, would cost employers a maximum of £150m a year. And it would cost the government less than one per cent of the test and trace scheme to support employers with this cost.

TUC General Secretary Frances O’Grady said: “Nobody should have to choose between going into work if they’re sick or should be self-isolating, or doing the right thing by staying home, but facing hardship as a result. But that’s the choice facing many key workers who kept the country going during the pandemic.

“Our key workers deserve the dignity, security and safety of proper sick pay and a decent pay rise too. They have earned it, often in frontline jobs with much greater risk of infection than those who could work from home.

“The cost of fixing the UK’s broken sick pay system is small compared to other public health measures like test and trace. Ministers must urgently make every worker eligible for statutory sick pay. And it should be worth at least as much as the real Living Wage.”

The Fabian Society report Statutory Sick Pay: Options for reform is available here:

 https://www.tuc.org.uk/sites/default/files/SSPreport.pdf

Government should use Job Retention Scheme to encourage self isolation, says new report

The Government should use the Job Retention Scheme (JRS) to encourage more workers to self-isolate at home – a key part of the strategy to fight Covid-19 that the current sick pay regime is failing to support – according to new research published by the Resolution Foundation.

The report – Time Out – explores the eligibility, generosity and efficacy of the UK’s statutory sick pay regime and Test and Trace payments during the Covid-19 crisis, and considers the case for reform.

It concludes that with self-isolating continuing to play a crucial role in fighting Covid-19 throughout 2021 as the vaccine is rolled-out, and with the Head of Test and Trace Dido Harding admitting that financial difficulty means some people are refusing to self-isolate, the current system needs to be replaced with a more effective regime.

The report notes that the main support available for employees asked to self-isolate at home is Statutory Sick Pay (SSP). But at just £96 a week, SSP offers the lowest level of Government support provided across any advanced economy during the pandemic. SSP replaces less than a quarter of a typical employee’s previous earnings, compared to an OECD average replacement rate of 60 per cent.

Furthermore, two million employees earning less than £120 a week are not eligible for SSP – a barrier that excludes one-in-four part-time workers, and one-in-seven workers in retail, hospitality and leisure – leaving them with no income at all if they self-isolate at home.

The UK Government has implicitly acknowledged the limitations of SSP by introducing £500 Test and Trace Support Payments (TTSP) for individuals entitled to benefits.

However, the report finds that these more generous payments are not reaching enough people, with only one-in-eight workers entitled to them. For example, data supplied by local authorities across West Yorkshire – an area which has had one of the highest infection rates in the UK over recent months – showed that just 1,783 payments have been made between 12 October and 25 November.

With financial support for self-isolating at home playing a critical role in helping to bring Covid infections down, the report calls for a more effective, generous and easy to deliver support regime to be put in place – using the JRS, Self-Employment Income Support Scheme (SEISS) and Employment and Support Allowance (ESA).

The Foundation proposes the following support:

  • Employees to be paid via the JRS. Extending the JRS to include self-isolation payments would ensure workers retained 80 per cent of their previous earnings. The Foundation estimates this would cost £426 million a month (up from around £112 million which is spent on SSP) if 643,000 employees used the scheme.
  • Self-employed workers to be paid pro-rata via the SEISS. Grants of up £830 should be awarded to self-employed workers who need to self-isolate for ten days, if they haven’t already claimed.
  • Self-employed workers not entitled to SEISS to be paid via enhanced ESA. The many self-employed workers not eligible for the SEISS are entitled to ESA. This payment should be uprated by £20 to £96 a week – in line with the uprating of Universal Credit – while people are asked to self-isolate.

The Foundation adds that while the following package of measures would help to get Covid infections down, the failure of the UK’s sick pay regime should not be forgotten once the pandemic has passed. Permanent reforms to both its eligibility, generosity and operation will be needed, it says.

Maja Gustafsson, Researcher at the Resolution Foundation, said: “Getting people to self-isolate at home is one of the important tools we have in combatting Covid-19. But asking workers to do that often involves a major financial sacrifice – and the UK’s sick pay regime has been woefully inadequate in providing the necessary support. Many more Covid infections will have taken place as a result.

“Coronavirus vaccines will take many months to roll out, so more workers will need to self-isolate at home to contain the spread of the virus next year. Given the failure of the current sick pay regime, the Government must turn now to the far more successful job support schemes to provide workers and firms with the financial support they need to do the right thing.”

Time-outDownload

TUC general secretary Frances O’Grady commented: “The lack of decent sick pay has been a gaping hole in the government’s Covid strategy. Asking workers to self-isolate on £96 a week is not viable – especially when many don’t have savings to fall back on.”

She warned: “This problem needs fixing urgently. Until people are given sick pay they can survive on they will be forced to choose between following the health advice and paying their bills. Nobody should be plunged into financial hardship for doing the right thing.

“Sick pay should be raised to at least the rate of the real living wage and everyone should be entitled to it. It’s not right that two million workers are excluded from it because they do not earn enough.”

TUC polling published in September revealed that more than 4 in 10 workers would be plunged into financial hardship if forced to self-isolate for two weeks on SSP.