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Ministers scrap sick pay changes. By Dan Martin

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19th Jun 2006
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Plans to overturn sick pay regulations by requiring employers to provide benefits to staff from the first day of their illness have been scrapped by the government.

Work and pensions secretary John Hutton revealed on Monday that proposals to simplify sick pay rules will be dropped because they would be too expensive to employers.

Employers are currently obliged to pay workers after three days of absence due to sickness.

Speaking at a conference in Birmingham, Hutton said: "Our intention was to simplify the process of administering the scheme while maintaining that crucial balance between helping to keep costs down and retaining protection for the most vulnerable employees.

"Employers felt that the simplicity they would gain from these changes was not sufficient to outweigh the loss of flexibility that waiting days gave them."

John Hutton, work and pensions secretary

"Employers felt that the simplicity they would gain from these changes was not sufficient to outweigh the loss of flexibility that waiting days gave them ' so we have decided not to proceed with these proposals at this point and instead to continue working with employers' and employees' representatives to consider alternative approaches to simplification."

Hutton added that the government will look for new ways to achieve its aim of cutting the number of people claiming incapacity benefits by one million over the next ten years.

The sick pay changes had formed the backbone of the government's green paper on welfare reform published in January and were aimed at reducing the number of people who fall out of the labour market due to illness and then remain on state benefits struggling to find another job.

The Forum of Private Business (FPB) welcomed the u-turn saying the proposals had been poorly thought out from the start.

"While in a large organisation sickness levels can be predictable, that's not true for small firms where it can vary greatly," said FPB chief executive Nick Goulding.

"Small businesses are already overburdened by regulations and uncertain of their employer's rights, introducing another change would have added to the confusion."

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