Louisa Withers | 29 Jul 2020

Sick pay provision improves under impact of pandemic

Picture of a hot drink and box of tissues on a desk

The current global health crisis has led a number of organisations to review and revise their sick pay policies, resulting in improved provisions in many cases, particularly those covering lower-paid workers, according to our recent sick pay study.


Earlier this year the Government’s Statutory Sick Pay (SSP) rules were amended, removing waiting days for absences related to coronavirus to help limit spread of the virus. All other absences or illnesses remain covered by the three-day waiting period before SSP applies. IDR’s recent sick pay study investigated the extent and nature of company sick pay provisions, along with whether and how sick pay policies have changed recently now that sick pay has risen up the benefits agenda.


The study shows that a number of employers have opted to review and amend their sick pay policies in light of coronavirus, with more choosing to improve sick pay provisions above and beyond the statutory terms than reducing sick pay.  The study received responses from 72 organisations employing over 310,000 staff across the economy, primarily in the private sector. While only a minority, 12 or 17%, recently changed sick pay provision, the majority of these (8) have improved provisions.


Improving sick pay provision

One housing association told us that it has improved sick pay for hourly-paid employees from SSP to three months’ full pay, in line with terms and conditions for salaried staff. Many of the hourly-paid staff are key workers and this made the business realise they should be given the same benefits. Similarly, a social care business increased occupational sick pay from five days’ full pay to seven days’ full pay. Again, this was as a direct result of the coronavirus. Meanwhile in private services, a financial services firm told us its policy is now to pay the first 10 days of any Covid-19 sickness at full pay.


SSP viewed as too low

Some of the recent changes are likely to be influenced by the level of SSP – currently £95.85 per week – which many employers view as too low. Almost three-quarters report feeling that SSP is too low, while the remainder say it is ‘about right’. Interestingly no employer in our sample thinks the level of SSP is too high.

SSP is worth around a third of average weekly earnings and equates to just £2.59 per hour for a 37-hour week. Many expert commentators regard the current weekly rate for SSP, of £95.85, as too low to support even modest living standards. Some employers (12) specifically mention other statutory minimum rates, such as the National Minimum Wage/National Living Wage, the Lower Earnings Limit for National Insurance contributions, and average weekly earnings as all being higher than weekly SSP, prompting some respondents to express concern that SSP is not necessarily set at the right level for sick or injured employees.


Three employers refer directly to the current health crisis and suggest that employers should be supportive in allowing staff to self-isolate or be off sick and that having enhanced sick pay in place can protect the wellbeing of employees.


Some of those that state SSP is 'about right' also report having occupational sick pay policies in place, which are more generous than statutory provisions, and only fall back on SSP in cases of too frequent absences.


Reducing sick pay provision

Some employers, albeit a smaller number, have reduced sick pay provision, driven by the need to reduce costs as business has been affected adversely by the slowdown. A residential care home has removed occupational sick pay from employment contracts to reduce costs as, it says, ‘commissioners do not want to pass on increased costs in residents’ fees.’ A housing association reports that occupational sick pay has been reduced from a maximum of six months’ full pay to three months’ sick pay as it was ‘too generous’ and, according to the body, out of line with the market.