At present, employees must earn the equivalent of 14 hours on minimum wage (£118) to qualify for statutory sick pay (SSP).

However, this could soon change, as the government is now proposing to lower the eligibility threshold.

If agreed upon, this will see statutory sick pay entitlement extended to two million low-paid workers who earn less than the current qualifying amount.

Aims

The proposal to revise sick pay eligibility criteria forms part of the government’s reform strategy, which is aimed at enhancing the support available to employees with health conditions.

According to a joint report by the Department of Work and Pensions (DWP) and Department of Health and Social Care (DHSC), each year, approximately 100,000 people fall out of work completely following a period of sickness absence. In fact, of those who are absent for a year or more due to illness, 44% don’t return to the workplace. Naturally, this has significant consequences for the UK economy, as well as a real impact on the lives of the individuals who feel inadequately supported to return to the workplace.

As such, the government will be considering a series of proposals that aim to eliminate any barriers to people with disabilities and long-term conditions returning to work when they are ready. Plans include:

  • Reconsidering the criteria for statutory sick pay entitlement;
  • Making more help available to those returning to work following sick leave;
  • Allowing employees to receive statutory sick pay during phased returns to work; and
  • Providing funding for small businesses in the form of a sick pay rebate.

These measures will be supported by the introduction of statutory guidance to enable employers to take “early, proportionate and reasonable steps to support an employee to return to work, before dismissing them on health grounds”.

As well as helping disabled people and those with health conditions to “thrive, not just survive”, the proposals are also aimed at boosting economic performance by helping employers retain talent, develop their workforce and keep productivity high.

In fact, Matthew Fell, the CBI’s Chief UK Policy Director, said: “Managing sickness absence effectively and reducing it through proactive health and wellbeing initiatives and policies makes good business sense. Where this helps disabled people to contribute their best at work it can also be an important part of employers’ diversity and inclusion efforts.”

"Managing sickness absence effectively and reducing it through proactive health and wellbeing initiatives and policies makes good business sense. Where this helps disabled people to contribute their best at work it can also be an important part of employers’ diversity and inclusion efforts."

Matthew Fell, Chief UK Policy Director, CBI

SSP: How does it work?

As it stands, to qualify for statutory sick pay, workers must:

  • Be classed as an employee (agency workers are also entitled to SSP);
  • Earn at least £118 per week (this threshold is reviewed every tax year); and
  • Have been ill for at least four consecutive days (including non-working days).

If they meet these criteria, employees are eligible to receive £94.25 per week; however, employers may have their own sick pay scheme which pays more.

Employees can claim SSP for a maximum of 28 weeks.

Risks

Despite many welcoming the proposals, concern has been raised that lowering the threshold for statutory sick pay may actually act as a disincentive to returning to work.

The DWP has stressed that during the consultation, the government will need to carefully consider the level of statutory sick pay employees are entitled to, and how long for, in order for plans to make economic sense.

A spokesperson for the DWP warned: “If someone currently earning below the lower earnings limit were given the full rate of SSP, it is likely that this would be above what their weekly wage is. If they can get the same amount or more from staying off work, then this removes the incentive for employees to return to work. It is a balance between supporting this group when they are off work sick while also providing an incentive for them to return to work”.

“Gig” workers

The UK’s so-called “gig economy” – a labour market where short-term contracts or freelance work is becoming more common than permanent employment – is often at the centre of employment disputes.

Due to their self-employed status, gig economy workers, of which there are around 1.1 million in the UK, are not entitled to holiday pay or statutory sick pay. This is because they don’t make the same level of national insurance contributions that employees do, or pay income tax and national insurance at a rate of up to 12% like agency or zero-hour contract workers.

In the last 12 months, several organisations, including Uber and Deliveroo, have been subject to inquiries, media scrutiny and legal action over concerns that staff were being incorrectly labelled as self-employed in order to diminish their legal rights.

It is not yet clear how the plans surrounding sick pay would affect workers on freelance or short-term contracts; however, the DWP has emphasised that its aim was not to “undermine the flexibility in the UK labour market”.

"Too many still face challenges returning to work after sick leave. We need to remove the barriers that stop people with disabilities or health conditions from reaching their full potential – these steps will help us achieve that."

Matt Hancock, Health and Social Care Secretary

Further considerations

At the consultation, the government will also be considering a change the legal guidance around how early an employer can intervene during a staff member’s sickness absence. While it is important that employees should not feel harassed by frequent calls or visits, it is hoped that by checking in with employees sooner, modifications may be put in place to facilitate a phased return to work.

In addition, the government will also be debating whether more flexible sick pay is required to tackle the widespread problem of poor mental health at work. According to The Money and Mental Health Policy Institute, tweaks to the benefits system, more flexible sick pay and phased returns to work would ensure employees with mental health conditions are better supported, help them to avoid “massive amounts of debt”, and reduce the £8 billion lost in sickness absence.

Speaking on the proposals, Health and Social Care Secretary Matt Hancock said: “Too many still face challenges returning to work after sick leave. We need to remove the barriers that stop people with disabilities or health conditions from reaching their full potential – these steps will help us achieve that.”

He explained: “Businesses will also benefit from being able to retain talent and build workplaces that support the physical and mental health needs of their employees.”

James Tamm

Director of Legal Services

Expert Comment

With a stalling economy and uncertainty around Brexit, this news of a potential increase in eligibility for statutory sick pay may not be universally welcomed by employers. The DWP make an excellent point that the rate received for low paid workers must not exceed what they would earn if fit enough to attend work. In practice, this could perhaps mean more than one rate of SSP depending on the employee’s salary.

Given the consultation on the proposals is open until 7 October 2019, it is likely that any definitive changes are still quite a way off. However, if you have any queries regarding statutory sick pay or pay in general, speak to our Employment Law specialists for expert advice and guidance.

Director of Legal Services

James Tamm

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