Work & Pensions Committee propose major SSP reform

Today, The Work & Pensions Committee has published its report on Statutory Sick Pay (SSP) reform for the UK Government to re-consider.

Related topics:  SSP,  group risk
Tabitha Lambie | Editor, Protection Reporter
28th March 2024
Group Protection
"We also conclude that all employees, not just those earning above the LEL, should be entitled to SSP."
- Work & Pensions Committee

Chaired by Rt Hon Sir Steven Timms MP, the Work & Pensions Committee began by highlighting that the UK is experiencing “relatively high rates of sickness absence and ill-health, including high rates of mental health problems among young people.” As such, there is growing concern about economic inactivity across the country.

While the majority of employees benefit from Occupational Sick Pay (OSP), which is voluntarily provided by employers, a significant minority rely solely on Statutory Sick Pay (SSP) or fail to meet the requirements of either form of financial aid.  

“The cost of paying SSP is borne entirely by employers, but to qualify a worker must be classed as an employee and earn above the Lower Earnings Limit (LEL). Even then, SSP is not paid for the first three days of sickness absence.”

In 2019, the Government proposed in its consultation paper, ‘Health is everyone’s business’ that the LEL should be removed, and employees should be permitted to receive a combination of SSP and their wages to facilitate phased return-to-work. It described SSP as “not reflecting modern working practices.”

However, with the Pandemic taking hold in 2021, the Government decided to postpone these reforms as it would have placed too much immediate additional cost on businesses, many of which were already struggling to survive.

Subsequently, the Work & Pensions Committee launched an inquiry in 2023, to explore whether the time had arrived to reconsider these reforms. This concluded with the determination that “SSP doesn’t provide adequate support for those who most need protecting from financial hardship during periods of sickness absence.”

The inquiry raised major concerns about the SSP rate and LEL. “We find the former is too low and suggest that a modest increase to the SSP rate in line with Statutory Maternity Pay would strike a reasonable balance between providing additional financial support to sick employees and not placing excessive extra costs on businesses,” said the committee.

Although the impact of the three-day waiting period for SSP was discussed, the committee believes that removing it would have “the most unpredictable consequences of all the proposed reforms, since it could result in significant behavioural change by employees.” As such, the Government has been advised to retain this waiting period.

“Given how many employers permit phased returns where they can, as part of their own OSP arrangements, we can only assume they find them a useful tool in supporting employees back to work.”

The committee has also encouraged the Government to amend legislation to enable SSP to be paid alongside usual wages as suggested in 2019 – this has the potential to allow people with long-term health conditions to reduce their hours periodically in order to manage their health & wellbeing.

For small or medium-sized enterprises (SMEs), the committee believes a rebate of SSP costs is an “essential component” which could in itself help to reduce rates of health-related absence if made conditional on businesses demonstrating better absenteeism management. Accordingly, the committee urges those in power to consult SMEs on the design of a rebate to be introduced alongside other proposed reforms.

“We recognise that self-employed people cannot be made eligible for SSP, but we strongly believe that the Government must do more to ensure they’re no worse off financially during periods of sickness than employees on SSP.”

Ergo, the Government has been asked to establish a contributory sick pay scheme for self-employed individuals, to provide them with the same level of income protection as would be available under SSP.

Katharine Moxham, Spokesperson for Group Risk Development (GRiD), has said these reforms would create a “stronger safety net for employees, underpinned by more comprehensive financial support from employers and a clearer pathway back to work.”

“Increased SSP liability would strengthen the workplace link and encourage employers to invest in workplace health, as well as improve safety nets and deliver fiscal benefits to the Exchequer, by helping people to remain in productive employment.”

She believes the Government should further consider how SMEs can be supported (e.g. conditional rebate if they can demonstrate sufficient employee support is in place), so they aren’t overly burdened by rising SSP contributions.

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