Can employers reduce sick pay for unvaccinated staff?

As Ikea joins the growing list of companies opting not to provide company sick pay to isolating unjabbed workers, People Management looks at the legal risks involved

As Omicron-related absences continue to hinder employers, Swedish furniture retailer Ikea has become the latest big-name employer to cut sick pay for unvaccinated workers.

Following media reports yesterday, the company confirmed that unvaccinated workers without mitigating circumstances who have to self-isolate because they have been in close contact with a positive case would only receive statutory sick pay.

The retailer added that it appreciated there were “many unique circumstances” and that it would consider all incidents “on a case-by-case basis”. Unvaccinated employees who test positive for Covid will still receive full sick pay.

Ikea's decision to change its sick pay policy highlights a shift in the way that many employers are now handling the pandemic, says Philip Richardson, partner and head of employment law at Stephensons.

Richardson predicts that many firms are likely to follow suit as they try to manage the recent surge in cases. “Many have reached a point of intense pressure when it comes to staffing and costs,” he says.

But what are the legalities of such a move? Businesses looking to emulate this policy need to be aware of the risks. Jules Quinn, employment partner at King & Spalding, warns: “Any two-tiered sick pay policy for the unvaccinated is a legal headache.

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“It puts the unvaccinated at a particular disadvantage and the reason for that vaccination status may well be pregnancy, region, a philosophical belief against vaccination, or race – all protected characteristics under the Equality Act,” she says. As such, the obligation is on the employer to objectively justify every individual case where it intends to pay less sick pay to an unvaccinated individual.

Businesses also need to be able to show that such a policy is a proportionate means of achieving a legitimate aim, says Quinn, adding: “Saving costs is not usually a legitimate aim for these big employers.”

Citing health and safety concerns may appear like a more legitimate aim, but that too is not without problems. “Will employees be less likely to disclose their Covid status and take sick leave if they know they are going to forfeit pay?” asks Quinn. “Surely that undermines the legitimate aim.”

Employers looking to make changes to their sick pay terms should also consider existing contractual provisions, says Claire Brook, partner at Aaron and Partners.

She adds that, while it has become increasingly common for firms to exclude things like dangerous sports and elective surgery from enhanced sick pay schemes, HR needs to be prepared for any conflict this might cause. “Such decisions often trigger debates among workers which could require careful handling by HR and managers to avoid clashes,” she says.

In this case, a decision to exclude unvaccinated employees from enhanced sick pay could lead to employees trying to find out which of their colleagues are unvaccinated, or could lead to other “difficult conversations” around whether behaviours such as alcohol consumption or smoking could be reason not to receive company sick pay.

Despite the risks involved, Nick Hurley, partner at Charles Russell Speechlys, says he expects more firms to join Ikea and the other companies that have already adapted their sick pay policies. “Ikea is the latest business to introduce policies surrounding sick pay and unvaccinated employees, but it won’t be the last,” he says.

“With the rest of Europe showing increasing intolerance towards the unvaccinated, it’s likely that these policies will only become more prevalent as employers get bolder in their decision-making.”