UK Statutory Sick Pay ‘Too Low’ & Needs Urgent Reform, Warns CIPD

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

The Statutory Sick Pay (SSP) system is broken and needs urgent reform warned the CIPD, the professional body for HR and people development. It is calling for major reform of Statutory Sick Pay; including a major rise in the rate and changes to widen eligibility 

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 found that nearly two thirds (62%) 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 (57%).   

The report noted that 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 said steps must be taken to ensure SSP provides a better financial safety net. 

MOST VULNERABLE EXCLUDED FROM SUPPORT

Of the UK’s 32.5 million-strong workforce, 5.6 million people (17.2%) do not currently qualify for SSP, the report found. This includes the self-employed and those who are unable to access SSP because they don’t meet the lower earnings limit; because 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 – most likely to need the most financial support – are excluded from accessing SSP.  

The CIPD is therefore calling for the Government to raise the level of SSP to be at least equivalent to someone earning the National Minimum/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. 

It also recommends widening eligibility for SSP by removing the lower earnings limit; as well as further consultation looking at wider reform of SSP. Recommendations include 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. 

FINANCIAL WELLBEING STRATEGY

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. 

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

HEALTH & WELLBEING IMPACT

 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,” added Suff. “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.”  

The CIPD’s report and full recommendations are available here.

The UK’s CIPD also recently called for enhanced protection of employment rights for the most vulnerable in the labour market. Click here to read more.