The Employment Rights Bill is currently being revised and a number of core sections are up for consultation. This gives the public, employers, and employees a chance to have a say in the reforms that affect workers’ rights. Adam McCulloch looks at the discussion around statutory sick leave.
Making Work Pay includes the upgrade of the statutory sick leave. The Employment Rights Bill, which was passed in its second reading yesterday, will incorporate the changes that apply to England and Scotland.
The UK’s experience with Covid lockdowns in 2020-2022 was at least partly responsible for the desire to reform SSP. The consultation that closes 4 December 2024 states: “The pandemic revealed just how precarious life and work are for those with acute low incomes.” “No one should have to choose between their health or financial hardship.”
A impact analysis that looked at options to improve access to SSP listed the benefits. The document states that “There are significant non-monetised advantages, such as improved health outcomes and indirect effects on the wider workforce.” It also mentions reduced financial stress among employees who qualify for SSP.
The reform will reduce presenteeism, and prevent the spread of infectious diseases. It will also encourage people to return gradually to work without being penalised for taking more sick leave. Families of workers may benefit from improved health and education outcomes, while businesses could see an increase in productivity.
The SSP rate for 2024-25 is PS116.75 a week. For an individual to be eligible for payments, they must meet the following criteria: be classified as an employee who has worked for their employer for at least a week; earn the minimum weekly earnings (currently PS123); and be sick for a minimum of four consecutive days. SSP payments are not made for the first three days of qualifying sickness (also known as “waiting days”).
Waiting Days to be Scrapped
In the consultation document, it is stated that the Employment Rights Act in the future will eliminate the need to wait days and extend eligibility to those who earn below the lower earning limit. Public, employers, and unions are asked to provide their perspectives on these plans.
The current SSP system is harmful to workers, and self-defeating both for employers and government” – coalition health charities in letter to government
Ministers say that removing waiting days should be a top priority because presenteeism is costing the economy billions each year. The government quotes an Institute for Public Policy Research report that states employees lost 43.6 days of productivity last year – 11 days on average because of presenteeism, but 6.7 due to absenteeism. In 2018, 34.8 were lost.
The presenteeism rate is 3.7 days, while the absenteeism rate is 3.8 days. IPPR states: “These drastic increases have only occurred in the last few years.”
What will replace lower earning limit?
Ministers estimate that the LEL excludes up to 1.3 millions employees from SSP. This has a disproportionate effect on low-paid workers, those who work part-time, or have multiple jobs. The ministers claim that women and youth will benefit most from the removal of the LEL.
SSP would be more generous than the salary of some people earning less than PS116 a week. It would be unfair, so the ministers have recommended that SSP rates are a percentage of salaries. Those earning more than PS116 per week will continue to get a flat rate.
This percentage will be determined by the consultation on statutory sick pay. The document states that it is crucial that the percentage strike the right balance in providing financial security to employees, while still retaining incentives to return to the workplace when appropriate.
The percentage will likely be set between 60% of earnings – the lowest rate government modelling suggests would not leave employees worse off – and 80%, as proposed in the 2019 <a href="https://www.gov.uk/government/consultations/health-is-everyones-business-proposals-to-reduce-ill-health-related-job-loss/outcome/a31ca5a9-b01f-493c-8c63-aae46356dfa3#:~:text=The%20government%20launched%20the%20consultation,closed%20on%207%20October%202019. Consultation on Health is Everyone's Business.
The Ministers have envisioned that, if the SSP percentage rate is set at 80%, a worker earning PS100 a week will receive PS80 in weekly SSP payments, whereas a worker earning PS150 wil be paid 116.75 PS as he flat rate.
Some employees earning just above the LEL could see their SSP weekly entitlement reduced if the percentage rate is set at 60%. They would no longer be eligible for the flat rate. If the percentage rate was set at 60%, for example, an employee who earns PS125 per weekly would receive PS75 in SSP per week, as opposed to PS116.75.
Benefits to the overall health
It may seem harsh to some people who are lower paid, but the compensation will be better if their absence is only a few hours. The 60% proportional rate is calculated to be no worse for employees overall.
The cost of waiting days is estimated to be around PS36 per employee.
The government says that a higher percentage rate is more effective at reducing presenteeism because it would reduce the possibility of people earning over the current LEL “losing out” in comparison to their current rate for sick pay.
The impact assessment recognizes that the increased number of employees who would be eligible for SSP will likely result in higher costs. The assessment notes that because small and micro-businesses (SMBs), are more likely than larger businesses to pay sick leave at SSP rather than above SSP, they will face a higher proportion of cost increases.
The majority of the increase in cost for businesses is due to the removal of waiting days. This would amount to about PS36 per worker. Businesses should also consider the positive effects of the new changes, including “a reduction of sickness absence duration and an increase in employers’ output as the number days worked at maximum productivity increases”. The document states that the indirect effects of sickness absence on business have no direct net impact. However, more broadly, productivity will improve.
Health charities are putting pressure on the government
Citizens Advice, Macmillan Cancer Support and Mind have all called on the government amend the Employment Rights Bill to allow ministers to increase the statutory sick pay. In a letter addressed to Keir starmer, they wrote: “There are a number of medical and academic studies, as well as evidence from UK think tanks and charities that suggest the current SSP is harmful for workers.
This situation could impede the government’s noble mission to boost the NHS and grow the economy.
Starmer himself said at the TUC Conference in 2021, “We have the lowest sick pay rates in Europe.” This is not enough. Labour’s new deal guarantees sick pay and increases it.
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