Sick pay reform should encourage people back into work, government claims

A parliamentary committee of MPs has called for a 'long-overdue' boost to statutory sick payA parliamentary committee of MPs has called for a ‘long-overdue’ boost to statutory sick pay (SSP), emphasising the need to strike a delicate balance between workers’ wellbeing and employers’ financial constraints. The Work and Pensions Committee has recommended aligning the SSP rate with the flat rate of Statutory Maternity Pay, a move that they say could significantly improve the financial safety net for workers.

Under the proposed adjustment, SSP would climb from its current weekly level of £109.40 to a more substantial £172.48 per week. Additionally, the MPs advocate for a crucial change: integrating SSP with regular wages. By doing so, they hope to encourage gradual returns to work, supporting employees during their recovery.

The cross-party committee contends that all workers, regardless of income, should be eligible for SSP. Currently, eligibility is limited to those earning above the lower earnings threshold of £123.

In response to the committee’s findings, the government has pledged a 6.7 percent increase, set to take effect next month. However, the MPs acknowledge the challenging context: the lingering effects of the COVID-19 pandemic and the subsequent economic fallout. They recognise that this may not be the optimal time to burden employers further.

In 2022, 185.6 million working days were lost due to sickness or injury—a period coinciding with the escalating cost of living crisis. Businesses, while expressing sympathy for their staff’s health challenges, have consistently raised concerns about rising operational costs, including business rates and minimum wage requirements.

Lobby groups have issued a stark warning: if these additional costs are passed on to consumers, it could exacerbate inflationary pressures, affecting the overall economy.

The move has been broadly welcomed by unions and the CIPD.  Rachel Suff, Senior Policy Adviser at the CIPD said: “The UK’s Statutory Sick Pay system is broken and doesn’t provide effective income protection for workers who are unable to work through sickness or injury. We are fully supportive of the recommendations to expand eligibility to those on the lowest incomes by abolishing the lower earnings limit as well as raise the SSP rate.

“We also welcome the recommendation to make SSP more flexible to support phased returns to work by enabling SSP to be paid on a part-time basis. Given the high numbers of people with long-term health conditions and on long-term sick, this could make a big difference to them returning to work in a more supported and sustainable manner.

“CIPD research shows that the time is right to have a more in-depth review of other aspects of SSP, such as how a new system could better support small businesses as well as the self-employed. Reform of SSP needs to be aligned with other work and health reforms, such as improving access to quality occupational health provision, particularly for small firms.

“This is just one step towards addressing the UK’s challenges around sickness rates and economic inactivity. Both the UK Government and employers must look carefully at the root causes for absence. This means managing the main risks to people’s health from work to prevent stress, as well as early intervention to prevent health issues from escalating where possible.”