Sick Pay Reforms

A key element of the Government's Green Paper on Welfare Reform was a complete overhaul of the complex sick pay rules.

The proposed changes were part of a drive to cut the number of people on incapacity benefit from 2.7 million to 1.7 million within 10 years. One proposal was to cut the current three day waiting period and provide sick pay from day one. This idea attracted heavy criticism from the CBI.

A CBI survey found that half of employers do not provide sick pay during the first few days of illness and consider this an important tool in combating absenteeism. Ninety per cent of people who take sick leave are off work for only one day at a time.

To this end, following CBI lobbying the Department for Work and Pensions has decided not to proceed with proposals to reform SSP. In particular it will not proceed with proposals to scrap the current three waiting days before SSP is payable. The CBI argue that the proposals would have achieved very little in terms of simplification, while significantly increasing absenteeism and related costs for
employers.

The Government has now gone back to the drawing board in order to design a sick pay system that helps both employers manage sickness absence and prevents employees from falling into long periods of inactivity or unemployment due to illness.