Written evidence from the Chartered Institute of Personnel and Development (CIPD) SSP0034
About CIPD
The CIPD is the professional body for HR and people development. The not-for-profit organisation champions better work and working lives and has been setting the benchmark for excellence in people and organisation development for more than 100 years.
It has 160,000 members across all sectors and sizes of organisation and provides thought leadership through independent research on the world of work, and offers professional training and accreditation for those working in HR and learning and development.
Public policy at the CIPD draws on our extensive research and thought leadership, practical advice and guidance, along with the experience and expertise of our diverse membership, to inform and shape debate, government policy and legislation for the benefit of employees and employers. It also seeks to promote and improve best practice in people management and development and to represent the interests of our members.
Executive summary
The CIPD’s 2021 Policy Paper ‘What should an effective sick pay system look like?’ examines the SSP public policy reforms that the CIPD believes are needed and makes recommendations to outline how public policy and employer practice should work together to support people’s health and employment outcomes:
Consultation questions
1. Is the current level of Statutory Sick Pay at £109.40 per week sufficient?
No. Statutory Sick Pay (SSP) needs to be financially adequate and closer to the equivalent of someone earning the National Minimum Wage/National Living Wage. Further consultation is also needed to explore whether the SSP rates should be linked to earnings level.
The UK SSP rate is the second lowest sickness benefit replacement benefit level compared to other European states pre-pandemic. The Government’s Health is everyone’s business consultation acknowledged the low rate and noted ‘a fall in earnings when receiving SSP may pose a significant risk to an individual’s financial security and ability to recover from serious illness’. And yet, as this call for evidence makes clear, no reforms were made following the consultation.
Many individuals with a health condition or disability potentially face financial hardship because the current flat rate of SSP is so much lower than many people’s earnings, especially if they don’t receive enhanced income via Occupational Sick Pay. This could encourage some people to come back to work much earlier than they are ready to, possibly making their condition worse whilst not adding value to the organisation in terms of their productivity.
CIPD research in 2020 showed that a quarter (23%) of workers who would receive either SSP or no pay in the event of sickness absence due to Coronavirus would struggle to pay bills or buy food within just one week, rising to a third (33%) for a two-week period of sickness absence. According to a Fabian Society report, SSP replaced less than 20% of average earnings and UK employees lose £4bn a year due to not receiving their full pay while off sick.
CIPD research shows that the majority of UK employers agree that the current SSP rate is too low and should be increased (see fig 5). Raising the level of SSP could also act as a stronger incentive for more employers to put in place effective return-to-work strategies. Conversely, the current inadequate SSP rate is likely to be contributing to the worrying levels of unhealthy ‘presenteeism’ (working when ill) in many organisations. Our 2023 research of health and wellbeing practices in organisations shows high levels of presenteeism among employees.
2. Many European countries have a higher rate of Statutory Sick Pay but a shorter duration of support when compared to the UK. Would this be a preferable alternative?
Possibly - paying a higher amount of SSP, potentially for a shorter period of time, could reflect a more effective approach to encourage a quicker and more sustainable return-to-work.
However, there needs to be a full consultation on the most effective approach for duration of SSP as any proposals to reform the SSP system need to engender the right behaviour on the part of employers and individuals. For example, a EU-OSHA 2016 study makes clear that paid sick leave policies have to be part of a much wider and integrated policy framework to effectively support effective rehabilitation and return-to-work. While supporting effective rehabilitation and return-to-work, reforms should also aim to improve attitudes to health and wellbeing in order to support people’s health and employment outcomes.
Financial incentives can motivate action by employers – for example, by increasing their responsibility for compensation of sickness absence. In some countries, employers have to pay for sickness absence compensation for a relatively long time (up to two years in the Netherlands), giving them ‘a strong and immediate incentive to put in place effective return-to-work procedures.’ In other countries, this obligation is shorter in time but is accompanied by other responsibilities, from making workplace adaptations to preparing an individual work plan.
3. Statutory Sick Pay is currently paid from the fourth qualifying day of sickness absence. Should this three-day wait period be changed or removed?
Yes, we recommend permanent removal of the three qualifying days for payment of SSP.
The CIPD response to the government’s Health is everyone’s business consultation highlighted strong support for its intention to reform SSP to make it more flexible and payable on a part-time basis. In our survey of 1,051 HR professionals, three in four HR professionals (75%) supported this change. The government’s own response highlights the benefits of phased returns, shown to be ‘particularly effective in supporting individuals with musculoskeletal and mental health conditions’, and that respondents were ‘broadly supportive’ of phased returns to work. And yet no reform was made in this area.
4. How effective is the role of the employer in administering Statutory Sick Pay? How could it be improved, including in terms of how employees are supported?
As the government acknowledges in its consultation response the volume of calls by individuals to HMRC seeking redress on SSP may not reflect the number of employees not receiving their entitlement and the HMRC disputes process is not designed as a deterrent. The majority of non-compliance in this area is hidden, and, because the current enforcement regime relies primarily on individuals asserting these rights and seeking redress, non-compliance only comes to light when there’s a complaint.
5. Is Statutory Sick Pay well implemented and enforced at the moment? How can this be improved?
We need much more effective enforcement of SSP balanced with the need to not penalise employers who have made genuine mistakes as part of a proportionate approach
We believe there’s a strong case for much more proactive, risk-based state enforcement. Such an approach could help to overcome the barriers that vulnerable workers experience in enforcing their rights, such as fear of reprisals in the workplace. Stronger state-led enforcement of SSP, with proactive and targeted inspections in higher-risk sectors, would also hopefully raise awareness and encourage compliance more widely. In the view of the CIPD, the UK currently has one of the worst resourced labour inspectorates in Europe. There’s a need to significantly boost the number of inspectors and increase the number of proactive inspections of workplaces if the new body is to be more effective than existing enforcement mechanisms.
More punitive action for non-compliance needs to be balanced by much more high-profile information, guidance and advice to build awareness of individuals’ rights to SSP. Government, working with organisations such as Acas, Citizens Advice, trade unions and professional bodies, should run a high-profile ‘know your rights’ campaign (similar to the successful one run to promote pensions auto-enrolment), which would set out information people should know in relation to the core employment rights, including SSP.
6. How could a phased return to work and Statutory Sick Pay work better together?
The CIPD does not believe that the current SSP system is working to prompt employers to support an effective return to work; that is, one that is sustainable and puts in place the right support at the right time to help an employee who may not be 100% fit but who may be fit for some work.
A key barrier is the current rigidity of the SSP system and its lack of flexibility to support people with long-term fluctuating symptoms associated with either a disability or chronic health condition. Reform is needed so that SSP can be paid on a part-time basis to encourage a phased return to work where appropriate.
However, we need reform in other areas to reinforce the effective use of phased return to work to aid employees’ rehabilitation. This includes more effective implementation of the ‘may be fit for some work’ category in the fit note, so that more GPs and those allied healthcare professionals who can sign fit notes understand the nature of the patient’s job role and work duties, and how helpful adjustments can be implemented.
7. Should Statutory Sick Pay be extended to include those earning below the lower earnings limit? If so, what would be a fair balance between support for employees and avoiding the risk of creating a disincentive to return to work?
Yes. Eligibility for SSP should be extended to protect workers on the lowest incomes, including those earning below the ‘Lower Earnings Limit’ (LEL). The pandemic brought the inadequacy of the current SSP system in protecting the lowest-paid and most vulnerable, including many part-time workers, into sharp relief and there has been no discernable change since. In 2020, around six million UK workers didn’t qualify for SSP (around 4.75 million because they’re self-employed and 1.7 million because they didn’t meet the earnings threshold.
8. What would be the best way for the Government to support SMEs who may lack resources to invest in best practice measures to help staff return to work?
The Government’s consultation on reducing ill-health related job loss contained some proposals for SMEs concerning their SSP obligations, including a proposed design of SSP rebate for SMEs. The consultation response says that reception of this was mixed, with ‘concern from respondents [was] that this sort of conditionality could lead to perverse incentives for employers to bring employees back to work before they were ready. Respondents felt that linking a rebate to a code of practice or other guidelines would result in a ‘tick box’ exercise and lead employers to adopt the minimum standards required to qualify for a rebate rather than innovating to reduce sickness absence.’
We can appreciate this view and the difficulty in designing a rebate scheme that incentivises appropriate behaviour from SMEs. But there is scope to improve the support available to SMEs, particularly very small employers. For example, the Government’s consultation explored ways for it to record SSP payments and use this information to provide helpful prompts and advice to employers, which could be useful to smaller employers with little or no HR or occupational health capability. This could still be worth exploring, as well as a wider consideration of what other reforms could support SMEs, including how people management capability in smaller firms could be strengthened to improve absence management practices where needed.
The phased introduction of auto-enrolment duties for occupational pensions in the UK is a good example of how new SSP obligations could be introduced, with an initial low level of minimum contribution by employers, extending from large to small employers over time, and then ramping up contributions, with supporting advice and products as part of the staged roll out.
9. Should Statutory Sick Pay be available to people who are self-employed? How might this work?
There needs to be a much better safety net for the self-employed and their ability to access income replacement when unable to work due to sickness or injury.
Again, this gap was brought into sharp relief during the pandemic. For example, a 2020 OECD study on paid sick leave to protect income, health and jobs through the COVID-19 crisis highlighted the self-employed as a major group who often have no or only limited access to sickness benefits in most countries. Some countries allow self-employed workers to enrol in sickness benefit schemes on a voluntary basis but they typically have very low coverage. For example, about 2% of eligible self-employed workers are enrolled in the Netherlands with around 8% enrolled in Austria. The pandemic prompted many countries to expand access to sickness benefits for self-employed workers. Almost all of these extensions, however, were time-bound and limited to COVID-19 sickness or quarantine.
In the UK, self-employment represents a growing and significant proportion of the labour market but it’s a broad category and includes many different types of work and it would not be helpful to treat all self-employed people the same. We need to explore how policy interventions could be tailored to those who require support, such as whether portable benefits platforms support the self-employed.
Building on the review by Julie Deane OBE, the Taylor review suggested ‘Workertech models’ and portable benefits platforms, tied to the individual rather than a specific company, as a way for self-employed people to gain access to non-statutory benefits and protections such as in case of illness or injury.
Subsequently, the government’s 2018 response agreed to ‘work with partners to create a Catalyst to stimulate the development of a range of WorkerTech models and platforms in the UK’, whereby technology could enable self-employed, including gig economy, people to access protections and benefits such as sick pay on an individualised basis. However, it’s unclear whether further progress has been made in developing a fairer framework to support the income security of the self-employed.
10. Are there any examples of international best practice in relation to Statutory Sick Pay that the UK can learn from?
Yes – for example, see responses to Q2 and Q9.
January 2024