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sick pay

Statutory sick pay reform ‘could boost UK economy by £3.9bn’

The UK economy could get a £3.9bn boost over the next five years if the government reforms the 40-year-old Statutory Sick Pay (SSP) system.

That’s according to a report from employee benefits specialist Unum UK based on research conducted by WPI Economics.

SSP was introduced in the early 1980s but has gone largely unreformed, failing to reflect changes in the way we all live and work, the report says. Workers on SSP currently receive £99.35 a week. Around two million workers – 70% of them women – do not qualify for SSP.

Research data estimates the current system directly costs the Exchequer £850 million annually in lost taxation and increased benefit spending. In the wider economy, ill health that prevented employees from working cost the economy £130 billion a year before the pandemic.

Statutory Sickness Support proposes a fundamental overhaul, moving from a system focused purely on payments, to one that is designed to deliver proactive and effective employee support. 

Statutory Sickness Support would address the current sick pay system by:

  • widening eligibility, so all workers are protected;
  • bringing the rules up to date, to accommodate flexible working;
  • simplifying calculation and administration for employers; and
  • strengthening the safety net to reduce ‘income shocks’ and alleviate poverty.

Unum claims its proposed reforms would boost the average ‘replacement rate’ (the proportion of salary covered by SSP) for workers on SSP from 28% of earnings under the current system to 63%, with the majority of the benefits going to workers earning less than £25,000 a year.

Alongside overhauling sick pay to better protect workers, Statutory Sickness Support can help employers with more guidance on how to prevent and manage employee sickness. Unum is calling on government to:

  • provide targeted guidance and support for employers;
  • introduce a new conditional sick pay rebate for small businesses who do the right thing; and
  • launch a £500 million fund to deliver a ‘shot in the arm’ for SME investment in health at work.

Based on conservative estimates, modelling conducted for Unum by WPI Economics estimates potential benefits of Statutory Sickness Support to the economy of up to £3.9 billion over the next five years, as well as direct savings to the Exchequer up to £1.3 billion.

Unum is calling on policymakers to introduce Statutory Sickness Support as soon as possible to improve the health and productivity of Britain’s workforce.

Paid sick leave most in-demand employee benefit

Paid sick leave tops the list of benefits and incentives that matter most to British employees, according to new research by HR and payroll software provider CIPHR.

Perhaps unsurprisingly, after two years of pandemic-led disruption and rising living costs, among the most popular employee benefits are those which help supplement squeezed incomes, support people’s health, and encourage work-life balance. 

For over two-thirds (67%) of the 1,001 people polled, sick pay is the employee benefit that they value most, followed by flexible working hours (57%) and pension contribution matching (46%) – where employers offer to match employees’ pension payments on top of the minimum auto-enrolment requirements.

Mental health and wellbeing support ranks fourth. Receiving a performance bonus and working a four-day week – enabling employees to earn the same wages for fewer hours – are in fifth and sixth place (selected by 40%, 39% and 37% of people respectively).

Next on the list, in seventh place, is extra holiday allowance, which, interestingly, was preferred by more people than unlimited paid leave (32% vs 18%).

Being able to save money on purchases via an employee discounts scheme (30%), having a flexible working location (27%), and receiving a market-value salary (26%) complete the employees’ top 10.

When it comes to employee benefits, every individual’s requirements and priorities differ, of course. And the order of importance varies depending on who is being asked. For workers over 45 years old, for example, getting their pension contributions matched (to help them build a bigger pension pot faster) appears to be more beneficial than being able to work flexible hours (59% vs 45%). For those under 45 years old, who are further away from retirement, it’s the opposite – with more people in this age group ranking flexible working hours higher than pension contribution matching (57% vs 42%).

There are also a few differences between what male and female survey respondents want from their employers’ benefits packages. Statistically, women place more importance on receiving help towards childcare assistance than a market-value salary (27% vs 21%). More men, on average, favour being awarded a performance bonus over being paid a market-value salary (45% vs 34%).

Here’s a rundown of the top 15 benefits and perks for all employees:

  1. Paid sick leave (67%)
  2. Flexible working hours (57%)
  3. Pension contribution matching (46%)
  4. Mental health and wellbeing support (40%)
  5. Performance bonus (39%)
  6. Four-day work week on full-time pay (37%)
  7. Extra holiday allowance (32%)
  8. Employee discounts scheme (30%)
  9. Flexible working location (27%)
  10. Market-value salary (26%)
  11. Childcare assistance (23%)
  12. Health insurance or cash-back plans (21%)
  13. Extra paid day off for birthdays (21%)
  1. Extended paid parental leave (20%)
  2. Death benefits (18%)
  3. Unlimited paid leave (18%)

The full list – featuring the top 25 most important benefits and incentives to employees – is available to view at https://www.ciphr.com/survey-infographic-the-benefits-incentives-employees-value-most.

Should employers cut sick pay for unvaccinated staff?

Companies including IKEA and Wessex Water are reportedly cutting sick pay for unvaccinated employees who are self-isolating; instead of receiving full pay, they will now only be eligible for SSP.

Under current Government guidance, people in England who have received at least 2 doses of the Covid vaccine are not required to self-isolate, however, unvaccinated people contacted through the test-and-trace system must still do so by law. Other UK nations have similar rules.

We spoke to Kate Palmer, HR Advice and Consultancy Director at Peninsula UK, about the implications of this for employers and this is what she said:

“Employers across the country are experiencing difficulties with staffing levels due to self-isolation absences. As such, many are having to take steps to mitigate the impact this is having on their business and its performance, including introducing measures to discourage the absences in the first place.

“Employers are under no obligation to maintain full pay for periods of self-isolation (unless contracts provide this); they only have to meet SSP requirements for eligible employees.

“Reducing sick pay may make employees be more careful with their actions and behaviours outside of the workplace, including going to large events or not adhering to mask wearing and social distancing guidance. This in turn will help reduce the likelihood of them being in close contact with a Covid-positive person and having to isolate.

“With that being said, employers should be careful that introducing these rules don’t treat employees unfavourably, particularly those with underlying health issues.

“Employees who are medically exempt from getting the Covid jab, or those with reasonable other grounds for not being vaccinated (e.g., staff who are pregnant or have concerns about getting it due to reasons relating to their race or religion), may raise claims of discrimination if they are put at a detriment because of following Government isolation guidance. A detriment in this situation includes loss of pay.

“IKEA, and all other business who wish to adopt a similar approach, must first consider the wider impact this may have on staff and put in place adjustments where needed, to avoid any potential risk of claims.”

The UK is the 3rd Worst Country in Europe for Sick Pay

With over 83,000 Google searches a month for the term ‘statutory sick pay’, a new report by The Compensation Experts has ranked European Nations on how well they compensate their citizens in times of ill health.

Iceland leads the way in Europe for their workers’ sick pay package. Employees across the Nordic nation are entitled to an impressive 100% of their wage for a minimum of two days for every month they’ve been in employment.

Trailing closely, fellow Northern European nations Norway and Denmark also offer great sick pay entitlement; each provides nationals with 100% of their salary, with the Norwegian government covering a worker for up to a year, and Danes covered for up to 22 weeks within a nine-month period.

The top ten European countries for sick pay can be seen below:

RankingCountryMinimum % of wage that can be paid during sick leaveMaximum period allowed off as statutory sick pay
1Iceland100%2 days for each week worked
2Norway100%52 weeks
3Luxembourg100%89 weeks
4Denmark100%30 days + 22 weeks
5Austria50%78 weeks
6Germany70%84 weeks
7Finland70%44 weeks
8Switzerland80%103 weeks
9Monaco€146.67 per day / 90% salaryDetermined by employee contract
10Montenegro70%65 days*

Malta might be known for stunning views and sun, but it’s been revealed as the worst country in Europe for sick pay, only paying employees €420.30 per month.

Ireland and the United Kingdom follow closely behind – with Ireland’s sick pay being determined by employee contract type and the UK paying only £96.35 per week, for up to 28 weeks.

The ten worst countries for sick pay in Europe can be seen below:

Ranking (1 being the worst)CountryMinimum % of wage that can be paid during sick leaveMaximum period allowed off as statutory sick pay
1Malta€420.30 per month.22 weeks
2IrelandNo legal minimum sick payDetermined by employee contract
3United Kingdom£96.35 per week28 weeks
4Ukraine50%5 days*
5Slovakia25%53 weeks
6France50%26 weeks
7Italy50%26 weeks
8Greece50%Length of employment dependent
9Andorra53%156 weeks
10Russia50%Determined by a doctor

For full information please visit: https://the-compensation-experts.co.uk/european-sick-pay/