A New Era for Sick Pay: Boosting Health and Livelihoods for Low-Wage Workers

The UK government has unveiled a groundbreaking new policy aimed at improving the health and living standards of low-wage workers. Starting next year, around 1.3 million individuals earning less than £123 per week will be entitled to guaranteed sick pay from the first day they fall ill. This landmark change is designed to support those who previously faced the difficult choice between losing pay or risking their health by continuing to work while unwell.

Financial Safety Net for Vulnerable Workers

Under the new scheme, eligible workers will receive sick pay equivalent to 80% of their weekly salary or the new statutory sick pay (SSP) rate, whichever is lower. The SSP is set to increase to £118.75 per week in April. This approach ensures that workers receive a fair level of financial support while businesses are protected from excessive costs. Employers will pay the lower of the two amounts, striking a balance between worker welfare and business sustainability. It’s a compromise reached after discussions with business leaders, who are already bracing for increases in the minimum wage and employer national insurance contributions announced in the October budget.

A Government Commitment to Health and Employment

The government is confident that this policy will keep more people in employment and off benefits. By providing financial support from day one, workers will no longer face the stark choice between their health and their income. Work and Pensions Secretary Liz Kendall emphasized the importance of this change, stating that no one should ever have to decide between staying home to recover or continuing to work to make ends meet. This move is part of a broader strategy to enhance employment rights and ensure that work pays.

Mixed Reactions from Unions and Business Groups

While unions have welcomed the increased support for sick workers, some have argued for a higher rate of pay. Meanwhile, business groups have expressed concerns about the additional costs this policy will incur, particularly in light of other financial pressures such as the upcoming hikes in minimum wage and national insurance contributions. The British Chambers of Commerce acknowledged the compromise but warned that the changes could lead to disruption, particularly in sectors where finding short-term shift cover is already challenging. Jane Gratton, deputy director of public policy at the British Chambers of Commerce, noted that the government’s impact assessment did not provide strong evidence for extending sick pay to the first day of illness, suggesting that there may be unforeseen consequences.

Broader Implications for Employment Rights

The announcement comes as MPs debate the wider Employment Rights Bill, which aims to strengthen workers’ rights in various areas. However, there are reports that the government may drop its commitment to a ‘right to switch off’ outside of working hours, a measure that would have protected employees from being required to work or respond to messages during their personal time. This potential U-turn has sparked concerns that the government may be scaling back its ambitions for employment reform in response to pushback from businesses. Meanwhile, business groups have warned that the cumulative impact of recent tax and wage increases could lead to job cuts, reduced pay rises, and weaker investment, undermining the government’s growth agenda.

Ensuring a Smooth Transition

As the new sick pay policy prepares to take effect, the focus will shift to ensuring a smooth implementation process. Rachel Suff, a wellbeing adviser at the CIPD, stressed the importance of phasing in elements of the Employment Rights Bill and providing adequate support and guidance for employers. She emphasized that these measures must work for both businesses and employees if they are to be successful. With the government seeking to balance the needs of workers and employers, the coming months will be crucial in determining whether this landmark policy achieves its ambitious goals.