Two-thirds of employers back statutory sick pay increase, CIPD report finds

Experts lament ‘broken’ system and call for removal of lower earnings limit

The statutory sick pay (SSP) system is “broken and needs urgent reform”, the CIPD has warned after it found the majority of employers think the rate is too low. 

In a survey of 1,045 senior HR professionals and decision-makers, the organisation revealed that nearly two-thirds (62 per cent) of employers agree that the SSP rate is too low and should be increased.

Even the majority (57 per cent) of SMEs, which would typically find it harder than larger employers to cover increased SSP costs, are supportive of a rate increase.

The current UK SSP rate is £96.35 per week for up to 28 weeks, which the CIPD notes is very low compared to most other European countries.

As well as this, because SSP is only available to individuals earning at least £120 a week, and is not available to those who are self-employed, the CIPD warned that 17.2 per cent of the UK’s workforce – around 5.6 million people – do not currently qualify for the benefit. This is based on analysis of Labour Force Survey data from the Office for National Statistics.

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 HR body warned.

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“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,” said Rachel Suff, senior employment relations adviser at the CIPD.

Suff added that, 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,” she said, highlighting that, with an ageing workforce and skills shortages, it was “even more important” that there was an effective SSP system to help employers attract and retain a diverse workforce.   

As a result of its findings, 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 or the national living wage. It also recommended widening eligibility for SSP by removing the lower earnings limit, as well as consultation on wider reform, such as a phased return to work, making the benefit available from the first day off sick (currently eligible individuals only receive SSP on their third day off work), and income protection for the self-employed. 

It also encouraged employers to have a financial wellbeing strategy that covers elements such as paying a living wage, awareness of the benefits currently offered and information about 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. 

Commenting on the CIPD’s report, Louise Aston, wellbeing director at Business in the Community, said that the current sick pay system “risks plunging people into poverty or pushing employees out of work altogether”.  

To avoid this, she agreed with the CIPD’s suggestion that employers introduce flexible phased returns, adding that regulators could reform how they define SSP qualifying days and expand eligibility to extend protection to those on the lowest incomes.

​​Mike Brewer, chief economist at the Resolution Foundation, also welcomed the calls for  a “much-needed” reform of statutory sick pay, specifically the removal of the lower earnings limit. He also called for workers on sick pay to receive at least the value of the Real Living Wage as set by the Living Wage Foundation – which is higher than the statutory national living wage.

“Statutory sick pay… misses out two million of our lowest-paid workers – something which is of particular concern given the ongoing Covid-19 pandemic and the rising number of cases of the new Omicron variant,” he told People Management, adding that evidence suggests low or non-existent sick pay prevents workers from self-isolating when it is required.

Brewer highlighted that only one in eight workers in England are covered by the government’s £500 Test and Trace Support Payment, and explained that accessible short-term support this winter for all workers is an immediate priority.

“On a more long-term basis, we must reform statutory sick pay to ensure that all those who need it are covered, and to ensure that the amount people receive while on it is adequate to their needs,” he said. 

A government spokesperson told People Management there is a “comprehensive package of financial support in place for workers who need to self-isolate to help stop the spread of coronavirus” which includes a £500 payment for those on the lowest incomes who have been contacted by NHS Test and Trace.

“Many employers pay more than the minimum level of statutory sick pay and employers with up to 250 staff can be reimbursed the cost of up to a fortnight’s statutory sick pay,” they added.