The House of Commons Work and Pensions Committee (Committee) has called for a substantial overhaul of the statutory sick pay (SSP) framework ahead of the 2025-26 financial year in a new report. The current framework for SSP, the Committee explains, is inadequate and fails to perform its primary function which is to provide a basic level of income protection for those who need it. As such, the report makes a series of recommendations.
While 2019 saw the government consult on SSP reform, in 2021 it decided not to proceed with any changes stating that the COVID-19 pandemic meant it was not the right time. It acknowledged, however, in its response to the consultation that the current system of being able to pay employees at a level much lower than their usual earnings when they are on sickness absence may undermine an employer’s commitment to rehabilitate employees.
This issue also arose in the Committee’s report, which found that the current rate of SSP is too low and recommended a “modest increase” to bring it in line with the flat rate of statutory maternity pay. Alongside this, it recommends that the lower earnings limit threshold should be removed to widen the scope of eligibility for SSP.
In the light of evidence that a phased return to work is effective in enabling employees to return to the workplace, the Committee also recommends amending the legislation to enable SSP to be paid in combination with normal wages. This would make phased returns more attractive to both employers and employees, and also allow those with fluctuating health conditions to flex their hours periodically to better manage their condition.
Despite considering the abolition of the three-day waiting period, the Committee did not recommend changing or removing such period. It felt the consequences of this would be unpredictable and so instead simply recommended keeping this under review.
For small businesses, the Committee recognised that some form of rebate would be an essential part of SSP reform. It recommended that the government should consult on the design of any proposed rebate but suggested it could be conditional on businesses improving sickness absence management to align with the recently announced changes to occupational health services. Further, the Committee recommended the government promote group income protection among these small businesses. Lastly, the Committee strongly suggested that more must be done to support those who are self-employed and so not eligible for SSP. To do this, it recommends establishing a contributory sick pay scheme for self-employed individuals to provide them with the same level of income protection as is provided by SSP.
