Around 1.3 million people on low wages are set to receive guaranteed sick pay for the first time in an effort to improve health and living standards, as announced by the government.
Individuals earning less than £123 a week on average will be eligible for sick pay equivalent to 80% of their weekly salary or the new rate of statutory sick pay (SSP), which is scheduled to increase to £118.75 per week in April.
Employers will be required to pay the lower of the two amounts following discussions with business leaders, who are already dealing with upcoming increases in minimum wage and employer national insurance contributions announced in October’s budget.
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The new sick pay policy is anticipated to take effect next year, with the significant difference that it will start from the first day of sickness rather than after three consecutive days.
The government argues that this measure will reduce the number of people on benefits and leave some individuals up to £100 better off per week as they will be able to stay employed.
Work and Pensions Secretary Liz Kendall stated: “For too long, sick workers have had to choose between taking a day off and losing pay, or continuing to work at their own risk just to make ends meet.
“No one should ever have to sacrifice their health for the sake of earning a living, which is why we are implementing this significant change.
“The new rate benefits workers and is fair to businesses as part of our strategy to enhance rights and ensure fair pay, while implementing our plan for change.”
Unions had proposed an even higher figure.
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The British Chambers of Commerce praised the outcome of the discussions, but stated that its members will still face additional costs due to the policy change, in addition to the budget measures set to come into effect in April.
Jane Gratton, deputy director of public policy at the British Chambers of Commerce, remarked: “Employers often struggle to find cover for shifts at short notice, leading to disruptions for customers.
“The government’s impact assessment did not provide compelling evidence on the issue of day-one rights, so there may be unforeseen consequences.”
The announcement coincided with MPs discussing the broader Employment Rights Bill amid reports that the government might retract its commitment to the ‘right to switch off’ outside of working hours.
The Sunday Times reported that a series of amendments are likely to be proposed by ministers as part of government efforts to maintain good relations with businesses following a backlash to the budget.
Business groups have argued that the £25bn annual impact of the employment tax measures will lead to job losses, minimal pay increases, and reduced investment, all of which will impact the government’s growth plan.
Rachel Suff, wellbeing adviser at the HR body CIPD, commented on the additional sick pay plans: “Implementing elements of the Employment Rights Bill gradually and providing adequate support and guidance for employers will be crucial in ensuring that these measures benefit both employers and employees.”