A solution to the Sick Pay conundrum?

There’s been much in the press over the last few months about the fact that the UK’s Statutory Sick Pay (SSP) scheme – of around £95 per week – is one of the lowest in the developed world, and as a result acts as a disincentive for individuals to self-isolate during the current pandemic. More recently, there have been suggestions that the Government is considering paying a £500 grant to individuals to encourage them to self-isolate when required to do so (although latest reports claim the government has decided against this approach).

In addition, SSP is only payable to employees – not the self-employed or contractors – and only if they earn more than £120 per week. As a result, the lowest paid are also excluded.

Some of the concern about a change to the rules is from the Treasury around costs. But it needs to be remembered that:

  • Employers currently bear the cost of SSP (there are some temporary exceptions for Covid)
  • The minimum earnings figure dates back to when employers could claim some of the cost of SSP back. This was abolished several years ago and consequently is a meaningless anachronism.
  • There are several other cumbersome and pointless rules around SSP that again, date back to the days it was subsidised by central government. (if you are interested, google concepts such as “waiting days” and “linked periods”)

So, here’s a suggestion of how the government could improve SSP generally, encourage people to self-isolate and limit the long-term costs (though there would be a short term increase).

1. Set the SSP rate to £327 (a 37.5 hour week at the current minimum wage of £8.72 per hour), or 80% of weekly wages if normal salary is less than £327 – 80% being the furlough rate the government seem happy to pay. This could rise annually in line with minimum wage rates or simply be reviewed periodically.

2. Employers still pay the £95 per week contribution, which would rise on an annual basis as it currently does.

3. The scheme would cover all employees, regardless of earnings – no minimum level – and people classed as “workers”.

4. If costs were an issue, the length of time SSP would be paid could be reduced from the current 28 weeks to say 20 weeks.

5. The self-employed would be able to claim an equivalent payment from the DWP/HMRC based on evidence of their earnings.

6. The same rules on evidence (self-certificate for up to 7 days, doctor’s note thereafter) would still apply.

People earning £400 per week or more would obviously see a fall when off sick, but considerably less than currently. And it needs to be remembered that many employers offer more generous sick pay schemes anyway, which would not be affected.

Am interested to know any potential downsides that employers, HR professionals or policy makers can spot – either as short-term response to Covid or as a longer-term solution (I accept that I’ve picked £327 as an illustration and the rate could be higher – or lower).