Around 1.3 million people on low wages are to secure guaranteed sick pay for the first time in a bid to boost health and living standards, the government has announced.
Those earning less than £123 a week on average will be entitled to a sick pay equivalent of 80% of their weekly salary or the new rate of statutory sick pay (SSP) – due to rise to £118.75 per week in April.
Employers will have to pay whatever the lowest sum is under a compromise achieved following discussions with business leaders – already reeling from a looming hike to minimum wage and employer national insurance contributions announced in October’s budget.
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The new sick pay policy is expected to take effect next year but, crucially, it will apply from the first day of sickness rather than after the third consecutive day.
The government argues that the measure will keep more people off benefits and leave some up to £100 better off per week because they will remain in employment.
Work and Pensions Secretary Liz Kendall said: “For too long, sick workers have had to decide between staying at home and losing a day’s pay, or soldiering on at their own risk just to make ends meet.
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“No one should ever have to choose between their health and earning a living, which is why we are making this landmark change.
“The new rate is good for workers and fair on businesses as part of our plan to boost rights and make work pay, while delivering our plan for change.”
Unions had argued for an even higher figure.
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The British Chambers of Commerce welcomed the outcome of the talks but said its members were still set to face further additional costs arising from the policy shift – on top of the budget measures due to take effect this April.
Jane Gratton, its deputy director of public policy, said: “Employers often struggle to find shift cover at short notice, leading to disruption for customers.
“The government’s impact assessment did not produce compelling evidence on the day-one rights issue, so there may yet be unforeseen consequences.”
The announcement was made as MPs debate the wider employment rights Bill amid reports the government could drop its commitment to a ‘right to switch off’ outside of working hours.
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The Sunday Times also reported at the weekend that a series of amendments was likely to be tabled by ministers as part of government efforts to keep business sweet following a brutal backlash to the budget.
Business groups have argued that the £25bn annual hit from the employment tax measures will result in job cuts, poor pay awards and weaker investment – hitting the government’s growth agenda.
Rachel Suff, wellbeing adviser at the HR body CIPD, said of the additional sick pay plans: “Phasing in elements of the Employment Rights Bill and ensuring sufficient support and guidance for employers will be vital to making sure these measures work for employers and employees.”
