Statutory Sick Pay, Is It in Need of a Cure?

Article by Olivia Wilson

What is Statutory Sick Pay (SSP)?

Statutory Sick Pay (SSP) is the minimum amount of money an employer must pay an employee when they have been off sick for at least 4 days in a row and earn at least £123 a week. It is currently set at £99.35 a week, after a £3 raise in April of this year, it begins from the fourth day of sickness absence and can be paid for up to 28 weeks. It is worth noting that this is only for those who are classified as an employee, rather than a worker.

Unfortunately, the £3 increase is pittance in comparison to the urgent reform that is needed to solve what the Chartered Institute of Personnel and Development (CIPD) has described as a ‘broken system’. The low weekly allowance has been called into question alongside the lower earnings limit, which excludes a substantial proportion of employees from being able to claim. There is also a deeper-rooted motif of needing to alter the perspective on SSP from simply being part of a broader welfare safety net of benefits, to what it really is, a legal right.

Issues with the current system

Put simply, £99.35 a week is not enough to pay bills and support yourself if unable to work due to sickness. This is viewed particularly in context with rising energy bills, fuel costs and more generally the cost of living. This payment of under £100 represents an 80% pay cut for the average employee and the Trades Union Congress has warned it is set “below survival rate”.

This leads to several consequences. Firstly, and rather significantly, often employees feel that taking SSP is just not an option. It is not difficult to see why the low level and harsh eligibility for SSP would disincentivise people to take sick days. Yet attending work unwell not only jeopardises that worker’s productivity and capability but also their colleagues’. Society needs to learn from the Covid-19 pandemic, there should be no pressure for employees to attend work while ill.

Currently the lower earnings limit excludes nearly 2 million employees from being able to claim SSP, a substantial crack in the current system. Logically, this is felt most by casual workers and those on insecure contracts. It is also disproportionately affecting women. The Women’s Budget Group is a non-profit organisation that monitors the effect of policies on women and men. They found women are less likely to qualify for SSP due to low or intermittent pay, zero-hour contracts due to caring responsibilities. This was particularly noted in a report on Coronavirus and the gendered economic impact by the Women and Equalities Committee. This disproportionate impact on women only exacerbates the economic inequality that still exists. Removing the lower earnings limit would be one small step in the right direction to correct this.

Benefits of higher SSP

Raising SSP and widening eligibility not only benefits those employees that it protects, but businesses may also reap rewards. In one study looking at the United States, Bayes Business School found that organisations offering generous sick pay grew productivity by 7% and profitability by 2%. Higher sick pay would also incentivise employers to reduce absences for this reason, creating a healthier environment.

Further, a survey of 1,045 senior human resources professionals and decision makers revealed two thirds of employers agree SSP is too low. Therefore, there is a consensus that SSP needs to be raised, both by those desperately in need but also those employers who recognise the deficiencies.

There are of course arguments that employers can go beyond their legal obligation and set a higher standard of sick pay if they wish to, under occupational sick pay schemes. Often employers will choose to do this, as it boosts their reputation as a desirable place to work, securing both recruitment and retention. This leads some to believe that the administration of sick pay should be left in the hands of those individuals and businesses rather than being a matter for government.

Conclusion

The CIPD has called the Government to raise the amount of SSP to match the National Minimum Wage, as well as widening eligibility by removing the lower earnings limit and omitting the need to be off work for three consecutive days before it begins to pay. While these remain crucial, other areas of more significant reform can also be identified. These include the need for SSP to recognise and reflect the ever-changing employment landscape, covering those currently in nonconforming work. As well as greater flexibility for phased returns to work after a period of sickness.

The current system is deficient in providing the required protection for employees, and this has been brought to the government’s attention in several consultations. However, SSP has not been a policy priority – therefore, no real reform has been implemented. This is likely to reflect attitudes towards it as a benefit rather than a right, which ought to be changed.