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COVID-19 and sick pay: how should HR respond?

The COVID-19 pandemic has highlighted the UK’s meagre approach to statutory sick pay (SSP). Even with a vaccine on the horizon, we will continue to need workers to stay home and isolate in order to prevent the spread of the virus.

With both sides of the House of Commons calling for the government to increase SSP to prevent low income workers from facing the choice between economic hardship and compliance with self-isolation rules, we examine how employers may wish to approach sick pay in the months ahead.

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Independent think-tank the Resolution Foundation recently produced a report concerning how SSP ought to be reformed in order to support the COVID-19 recovery phase.

With the UK having the lowest mandatory sick pay of any advanced economy, the report found that the government could risk undermining its new vaccination programme.

SSP is just £95.85 per week, and workers earning less than £120 per week do not receive any support. Frances O’Grady of the TUC said that this does not go far enough, arguing asking workers to self-isolate on £96 a week was not viable.

The UK’s low rate of SSP means that time off work is a luxury many cannot afford which is having an impact on the efficacy of track and trace measures.

In addition, the government’s Test and Trace Support Payment of £500 was found by the report to be narrowly targeted and overly complex, only extending to one in eight workers.

Department of Health & Social Care data from 2019 found that only 26% of UK employees rely on SSP, due to the fact many people benefit from more generous company sick pay schemes.

Those working in blue-collar service industries are less likely to have the benefit of a generous company pay scheme and the very nature of their jobs means that in order to earn a living they will need to interact with others, thereby risking contracting or spreading the virus.

We can appreciate that during these times the government has limited resources, however, the money that has already been invested in track and trace as well as the vaccination programme would be wasted if undermined by the inability of many to self-isolate.

Perhaps the government could focus its resources on increasing SSP for industry specific areas where it is most needed, such as care homes. The ONS found care homes that paid sick pay were significantly less likely to have COVID-19 cases among residents.

In the absence of a governmental increase in SSP, some employers may decide to take on the mantle of providing more generous sick pay to protect their workforce. For example, in the US, large employers such as McDonalds and Walmart have introduced temporary coronavirus sick pay policies.

In the UK, there is a new exemption allowing employers to reclaim up to two weeks’ SSP from the government if their employee is off work due to coronavirus.

However, employers cannot ordinarily reclaim SSP and there is a financial burden in introducing more generous sick pay policies during a time of economic uncertainty.

Some employers may fear that if company sick pay is extended on more generous terms this will encourage people to take sick leave when they may not have done so in the past.

In addition, mounting evidence relating to “long COVID” suggests workers may be rendered unable to work for periods of time far in excess of two weeks. The OECD notes: “the financial cost of providing paid sick leave to quarantined workers is small in comparison to the cost of them not isolating and spreading the virus further.”

If an employer decides to make changes to its company sick pay scheme it must determine at the outset if it would like these measures to be temporary or permanent. There is a risk that if an employer later tries to unwind its improved company sick pay scheme that employees will claim that they have deprived them of their contractual entitlements.

Indeed, the experience of the pandemic may well result in a culture shift with employees demanding more favourable sick pay benefits and potentially other healthcare benefits.

The way in which such measures are introduced will require careful wording and communication. We would encourage employers to seek legal advice as early as possible.

Natasha Koshnitsky (pictured above) is a senior associate and Eleanor Lynch a trainee in the Employment team at Kingsley Napley