Majority of employers say UK’s Statutory Sick Pay rate is too low

Almost two thirds of employers say the UK’s Statutory Sick Pay rate is too low

Almost two thirds of employers say the UK’s Statutory Sick Pay rate is too low and should be increased, according to CIPD research

The CIPD urges major reform of Statutory Sick Pay, including a major rise in the rate and changes to widen eligibility

The Statutory Sick Pay (SSP) system is broken and needs urgent reform, the CIPD, the professional body for HR and people development, is warning.

The call to Government is laid out in a new report, ‘What should an effective sick pay system look like?’, which includes a survey of over 1,000 employers.

It finds that nearly two thirds of employers agree that the SSP rate is too low and should be increased. The current UK SSP rate stands at £96.35 per week for up to 28 weeks, which is very low compared with most other European countries. Even the majority of SMEs, which would typically find it harder than larger employers to cover increased SSP costs, are supportive of a rate increase.

The report notes the Covid pandemic has further exposed how financially inadequate SSP is, with many people still working when ill or needing to self-isolate. And with concerns now growing about the potential impact of the Omicron variant, the CIPD says steps must be taken to ensure SSP provides a better financial safety net.

Of the UK’s 32.5 million-strong workforce, 5.6 million people do not currently qualify for SSP, the report finds. This includes the self-employed and those who are unable to access SSP because they don’t meet the lower earnings limit (an employee must have average weekly earnings of at least £120 a week to qualify). Many of the country’s lowest paid and most vulnerable workers – who likely need the most financial support – are therefore excluded from accessing SSP.

The CIPD is calling for the Government to raise the level of SSP to be at least equivalent to someone earning the National Minimum Wage/National Living Wage. For example, for someone aged 23 or over working seven hours per day, their pro-rata daily SSP rate would be £62.37.

The CIPD also recommends widening eligibility for SSP by removing the lower earnings limit, as well as further consultation looking at wider reform of SSP, such as amending the rules to allow for phased returns to work, removing the three qualifying days for payment of SSP, and looking at opportunities to improve income protection for the self-employed.

Alongside its calls to Government, the CIPD is encouraging employers to ensure they have a financial wellbeing strategy that covers elements such as paying a living wage, making sure their workforce is aware of all the benefits currently offered and information about where to get free, independent money and debt advice. In addition, employers should consider the benefits of introducing an occupational sick pay scheme to enhance pay above the statutory minimum for employees who can’t work when sick.

Rachel Suff, senior employment relations adviser at the CIPD, comments: “The UK’s SSP system has been broken for a long time and the pandemic has only highlighted its failure to protect the lowest paid and most vulnerable members of our society. However, despite a number of government consultations proposing reforms to SSP, there are currently no real plans to improve the system.

“SSP deficiencies can have a devastating impact on people’s health and wellbeing, including financial distress. With an ageing workforce and skills shortages, it’s even more important that we have an effective SSP system to help employers attract and retain a diverse workforce.

“Not only does SSP need to provide an effective financial safety net for those unable to work when sick, it needs to better reflect today’s labour market. As well as immediate reform to remove the lower earnings limit, government should consult on how the system could cover those in atypical work including the self-employed. We also need to more flexibility so that it’s easier for people to have a phased and sustainable return to work. This will bolster their chances of an effective full-time return in the long-term.”