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How flexible can Statutory Sick Pay become?

20th Aug 2019
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The government believes that health is everyone’s business and the role that employers play in supporting employees return to work is vital. But how flexible can the current state sick pay scheme be in supporting government aspirations?

Samantha Mann, senior policy and research officer at the CIPP, considers the consultation work that will impact the operation of Statutory Sick Pay.


July 2019 saw the publication of a number of consultations off the back of the Taylor review. The consultations will affect the world of employment, and two of which have the potential to impact the operation and enforcement of the Statutory Sick Pay (SSP) scheme.

Proposals to reduce ill health-related job loss

Reforming SSP forms part of the Health is everyone’s business consultation published in July. This includes proposals to amend the rules to allow for phased returns to work following sickness absence and to widen eligibility for SSP to extend protection to those on the lowest incomes.

The paper includes a wide range of measures to reduce ill health-related job loss and seeks views on how employers can best support disabled people and people with long-term health conditions to stay and thrive in work.

The government proposes to reform SSP so that it is available to all employees who need it, is more flexible and is underpinned by a suitable enforcement framework. Proposed changes 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 earning below the lower earnings limit (LEL).
  • Strengthening compliance and enforcement of SSP to ensure employees are paid what they are due.

Alongside these specific reforms, the consultation also considers how a rebate of SSP for SMEs that demonstrate best practice in supporting employees on sickness absence might be designed. 

The government is also interested in exploring ways to record SSP payments and use this information to provide helpful prompts and advice to employers.

The government is not proposing to make any further changes to the structure of SSP. However, it has considered the extent to which the rate and length of SSP drive employer behaviour and is interested in views on this.

Key features of the proposals

Research has demonstrated that a phased or gradual return to work from longer periods of sickness absence can promote quicker returns to work. However, the current structure of SSP doesn’t allow for such a flexible proposal.

Requiring full days of absence, a period of incapacity to work (PIW) of four continuous calendar days together with a three ‘waiting day’ period, SSP cannot be said to be flexible.

The consultation includes the proposal for SSP regulations to be made that allow for a phased and flexible return to work which allows for the employee to work hours and days that benefit them.

It is proposed to allow a phased period of return following two weeks of absence. It isn’t believed to be beneficial for shorter periods of absence, and it would be for the employer and employee to decide whether a phased return would be needed and how that return should be phased.

The government does not plan to legislate for how such a return is requested or how decisions should be made.

A phased return to work will result in the need to receive a payment that is made up from part SSP and part wage instead of the current system.

Using the example given in the consultation we can see how this might work:

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 £67.3292.

The employee’s total pay for that week would be £157.32.

The consultation also revisits the rules surrounding qualifying days (which are usually but not always, the normal working days) in a bid to help gain a greater understanding of the concept and consider how their removal might simplify the SSP process.

SSP is currently funded in its entirety by the employer. This paper considers how an SSP rebate, if considered, could be designed for SMEs and how could such a process function to best ensure engagement with SME employers. Although there are no immediate plans for change in this space.

The paper also looks to widen eligibility to SSP to employees who earn below the lower earnings limit (LEL).

SSP non-compliance and state enforcement

State enforcement of SSP is also considered in another consultation that was launched in July.

HMRC currently runs a dispute process to ensure that SSP, where due, is paid. Where the employer is found to be non-compliant, they can be fined up to £3,000. However, the current process is not designed to act as a deterrent to the employer but instead exists to help employees to receive their legal entitlement.

Establishing a new single enforcement body for employment rights

This consultation will consider the case for a new single labour market enforcement body and whether such a body could deliver a range of improvements including:

  • Extended state enforcement to include the enforcement of holiday pay for vulnerable workers and regulate umbrella companies operating in the agency worker market.
  • A strong, recognisable single brand to make it easier for individuals to raise a complaint and to tackle cases that might currently be handled by many different organisations.
  • Better support for businesses, which would include coordinated guidance and communications campaigns, together with a more easily navigable and proportionate approach to enforcement.

The consultation paper delivered by BEIS maintains that this is not a cost-reduction exercise. While the government currently spends £33m annually on labour market enforcement, the paper states that resource for enforcement would be maintained but the aim would to use resources more effectively.

In addition to the stated aims of this consultation, key areas of interest relate to the enforcement of SSP, together with greater state involvement in enforcing compliance on the payment of holiday pay (but that’s a whole other article!). But what will this mean for SSP?

The paper doesn’t consider the rules of SSP but instead asks whether a single enforcement body (if established) should take on enforcement of statutory sick pay if the process is strengthened.

At present, HMRC runs the dispute resolution process and whilst this process has a high success rate it relies upon the employee being aware that they are entitled to SSP and knowing that they can go to HMRC to raise a dispute. There is no proactive enforcement.

DWP, whilst considering reforms to SSP, are considering whether a new single enforcement body would be better placed to take on this role.

Have your say

Each consultation will close in October and calls for responses from a range of stakeholders.

The CIPP has surveys running for both the Health is everyone’s business consultation and establishing a single enforcement body and we would welcome your views.

Replies (1)

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By bendybod
21st Aug 2019 12:54

Some change in this area is very necessary. From an adviser point of view, few clients, even now, realise that HMRC no longer subsidise SSP for small employers.
From an employer point of view, having just had someone who has a chronic illness return to work, I know exactly how frustrating from both sides the current system is. The employee's health deteriorated over a period of time from the odd day off here and there to longer and longer periods and eventually a period of continued absence. The periods of sickness meant that it was almost 12 months before their SSP entitlement was exhausted.
When they did go on to ESA, they eventually began a phased return to work. The nature of the chronic condition meant that the increase in hours had to be gradual. For the first couple of increases up to about 12 hours per week, that was fine. After that, the entitlement to ESA stopped, even though there was no way they could increase their hours sufficiently to cover the money that they were losing, despite the financial hardship. I am fortunate that both of us saw the need for a gradual increase regardless, and the employee agreed to it, despite their financial hardship, otherwise the alternative would have been for them to stay on benefits in order to pay the bills and, at the most, stick at 12 hours work. Currently they have increased to 21 hours and are finally at the stage of covering the ESA that they lost.
Surely this type of employee is the ones that we should be encouraging to be as valuable a member of the tax paying system as they are able to be, without placing financial constraints on them that make it better to give up work to survive financially.

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