Consultation on ill-health at work includes radical changes to increase SSP costs for employers

The Government has launched the long-awaited consultation on proposals to reduce ill-health related job losses.

The proposals are far reaching and include the following:

  • a right to request work(place) modifications for employees not covered under the duty to make reasonable adjustments established in the Equality Act 2010
  • strengthening statutory guidance for employers to encourage early intervention to support a sick employee to return to work
  • reforming Statutory Sick Pay to allow for greater flexibility in returning to work following sickness absence
  • Reporting absence data through RTI (1).

Given the right to request work(place) modifications and reforms to Statutory Sick Pay are the more complex of the three, let’s take a look at these in more detail.

A new right to request

To limit the impact on employers ‘(given the estimate that 1.4 million people of working age experience a long-term sickness absence every year), eligibility for a right to request could be limited to those who have experienced a long-term sickness absence of 4 or more weeks’ (1).

Alternatively, ‘this could be extended to include those with 4 or more weeks of absence (rather than a single spell of long-term sickness absence), whilst other options include; widening eligibility to employees returning to work from a period of sickness absence of any length or, to any employee who can make the case for a work(place) modification on health grounds’ (1).

A Code of Practice could be established (similar to that for flexible working requests) to provide additional detail and guidance on business reasons that could be appropriate for refusal.

Reforming Statutory Sick Pay (SSP)

The estimated cost of SSP annually to employers is £1.5 billion (2). Proposed changes to reform SSP include:

  • amending the rules of SSP to allow for phased returns to work following sickness absence
  • widening eligibility for SSP to extend protection to those on the lowest incomes
  • amending the rules around qualifying days
  • introducing (or rather re-introducing as we only scrapped the percentage threshold scheme for rebated SSP in 2014!) recovery of SSP in some circumstances
  • strengthening compliance and enforcement of SSP to ensure employees are paid what they are due

This innocuous phrase maybe one of the most far reaching in the consultation: ‘explore ways to record SSP payments and use this information to provide helpful prompts and advice to employers’ as it indicates that employers may be asked to supply absence data via RTI – many employers, particularly SMEs have very limited absence data captured at all, let alone in payroll systems (1).

Phased returns to work

Under this change:

  • an employee would be able to receive part wage and part SSP (pro rata), instead of the binary approach at present – see an example below
  • the rules would allow such flexibility after 2 or more weeks of absence, as a phased return is less likely to be necessary following a shorter absence
  • it would be for an employer and employee to decide whether a phased return to work is appropriate after a period of sickness absence, and how to phase the return.

An employee works a 35-hour week earning £9 an hour (a total of £315 per week). The employee agrees to return from sickness absence by working 2 hours a day for 5 days in the first week. Their earnings would be: (2 hours x £9) x 5 days = £90 (less than one week of SSP). For the other 25 hours of their usual 35-hour working week, they would be unable to work due to sickness. The rule changes would allow them to be paid SSP for those 25 hours, which would amount to £67.32. The employee’s total pay for that week would be £157.32.

Where a ‘full day of sickness is taken during a phased return to work’, this would count towards the 28-week maximum, whereas part-days of sickness absence ‘would not count’ towards the 28-week entitlement – only ‘applying during a phased return to work’(1). The proposal only offers ‘flexibility in returns to work, and not at the start of a sickness absence’ (1).

What is glossed over in the consultation is that SSP is simply a floor to occupational sick pay: national minimum sick pay. It is fully funded by employers, so requiring a higher level of national minimum  sick pay will increase employer costs and could actually make them less likely to get the employee back in to the workplace!

The consultation considers the following ‘simplification’ of the rules around qualifying days.

  • every day of the week could be considered a qualifying day, rather than an employee’s contracted working days, or the qualifying days agreed with their employer (except those days where no employees are required to work)
  • waiting days could be calculated using the number of days a week that an employee normally works, rather than the specific days of the week that an employee works – where the number of days worked varies each week, an average could be taken for the last 8 weeks of work
  • for example, if an employee normally works 3 days a week, and has been sick for 4 or more consecutive days (PIW) in that week, the employee could be paidSSP from the following week, as this would count as the fourth qualifying day of absence (1).

Here’s how the new rules could work:

An employee works 3 days a week. Their contract states that they can work any pattern, any 3 days from Monday to Sunday. Any day of the week can count as a day of incapacity to work. On Monday, the employee notifies the employer that they are unwell. They are still unwell on Monday the following week. As they have been unwell for at least 4 working days (3 days in the first week, and one day in the second), their employer will pay SSP from the second Monday at £94.25 for the week (1).

Widening eligibility

Workers on lower incomes ‘could be missing out on the protection of SSP if they earn below the LEL’ (1). As recommended by the Taylor Review, extending SSP to those on these lower incomes would ‘extend protection to around 2 million employees, including over 1 million who work less than 16 hours per week’ (1). They note however that as SSP would be higher than their full time pay, it would be ‘inappropriate to pay the full SSP rate’ (1). As such, the government proposes that those earning below the LEL would be paid a proportion of their wage as SSP, set at 80% (1). Those earning above the LEL would continue to receive a flat rate, and a calculator would be made available to aid employers and employees in accurately calculating payments (1).

Sources

(1) Consultation document

(2) Black & Frost. Health at work – an independent review of sickness absence, 2011