Can you reduce contractual sick pay for unvaccinated staff?

As some employers reveal that they have removed contractual sick pay from unvaccinated staff, Joanne Moseley examines the legal risks associated with such a move.

Last week, Ikea announced that it had changed its sick pay scheme to deal with Covid-19 related absences. Staff who are unvaccinated will only receive statutory sick pay (SSP) if they have to self-isolate because they’ve been in close contact with someone with the virus. Ikea will make exceptions for members of staff who haven’t been vaccinated for a good reason which they’ll look at on a case by case basis. Unvaccinated employees will continue to receive full contractual sick pay if have to self-isolate because they have tested positive for the virus.

Next, Morrisons, Ocado and Wessex Water are also thought to have changed their contractual sick pay schemes or are considering doing so.

The current rules require anyone who tests positive for Covid-19 to self-isolate for at least five days. However, the self-isolation close contact rules changed last summer. Anyone who is fully vaccinated (or medically exempt) does not have to self-isolate, but those who are not have to self-isolate for the full 10 days.

If you are thinking about amending the terms of your sick pay policy, there are a number of legal issues you need to consider.

1. What type of sick pay scheme do you have?

Each employee should have a clause included in their contract of employment which explains what terms and conditions apply with regard to sick pay. These often reference other documents (such as a handbook) which set out the details.

If you only pay your staff SSP, you must continue to pay any member of staff who has to self-isolate either because they have Covid-19 or have been in close contact with someone who has, even if they aren’t ill.

However, if you have a contractual sick pay policy, you may be able to treat members of staff who have been vaccinated more generously than those who haven’t. But you’ll need to amend the policy first.

This will amount to a change in an employee’s terms and conditions of employment and you must go through a proper procedure which will take time. This might include the need to collectively consult, either with a trade union or with employee representatives. You won’t normally be able to sidestep this even if your contractual wording says that you “reserve the right to amend [the policy] from time to time”.

If you go ahead and make changes without agreement or you don’t follow a proper procedure, some staff may resign and claim constructive unfair dismissal, assuming they have the two years’ service needed to bring this type of claim. Or, they may work under protest and sue you if you underpay them.

2. What about if our sick pay policy is discretionary?

If you have a discretionary sick pay policy then you will have more scope to make changes. However, you must exercise your discretion in a reasonable and non-discriminatory way to avoid potential employment claims.

You’ll also need to think carefully about the type of changes you want to make. Although there’s some evidence that fully vaccinated and “boosted” people are less likely to contract or transmit the virus, they can still become infected. In our view, it’s not reasonable to distinguish between vaccinated and unvaccinated members of staff who test positive. Most people don’t set out to catch Covid and would expect to be paid the same as anyone else in your organisation if they aren’t able to work.

You will, however, have much more wriggle room to withhold sick pay for those having to self-isolate because they aren’t vaccinated while those rules are in place.

3. Are there any discrimination risks we need to consider?

Yes. If you impose a blanket policy that distinguishes between the vaccination status of your staff, it could indirectly discriminate against some protected groups. For example, there’s some evidence that black and south Asian people are less likely to be vaccinated than white people – particularly in the older age groups.

There’s also still some hesitancy among women worried that the vaccine will limit their ability to get pregnant or cause harm to their babies if they are pregnant, even though these beliefs are at odds with established medical views.

Unvaccinated members of staff may also argue that their concerns about the vaccination programme are protected beliefs under the Equality Act 2010.

“Anti-vaxxers” are not a homogeneous group and the success of individual arguments will depend on their reasons for not being vaccinated and the extent to wish others share those views.

People who subscribe to wild conspiracy theories about Bill Gates and the 5G network are unlikely to be protected. But those who have genuine concerns about the safety of the vaccination programme, or religious reasons for refusing the vaccination, or a fear of needles, might be protected.

We’re not aware of any reported tribunal cases on this point. A tribunal recently concluded that “fear of Covid-19” was not a protected characteristic – but that’s not to say that a fear of vaccination or needles would not be.

Even if your employee clears this hurdle to have their belief recognised under the Equality Act, it does not mean they are home and dry. It is possible to justify indirect discrimination claims. To do this you’ll need to demonstrate that you have a legitimate aim.

While you may want to reduce your overheads, by limiting the pay unvaccinated members of staff receive when they self-isolate, that can’t be the only reason. You will also need to link the policy to your need for staff to attend work regularly and to avoid staff shortages. You will also have to show that you do not have a less discriminatory way to achieve that objective.

4. What data protection rules do we have to follow if we are going to ask staff about their vaccination status?

This is where it really gets complicated.

A person’s Covid status is special category data, as it is their private health information and has added protection. UK GDPR requires that your use of this data must be lawful, fair and transparent. It should also be limited to that which is relevant and necessary for a specific purpose and comply with GDPR and data protection laws.

The first hoop to jump through is to consider if you have a lawful reason for processing information about the vaccination status of your staff. You will probably be able to rely on legitimate interests in this context. You then need to identify an additional condition for processing.

There are several conditions, but the most relevant, in this context, is the employment condition. This is where processing is necessary for the purposes of carrying out the obligations and exercising specific rights in the field of employment law as authorised by UK law.

The Information Commissioner’s Office (ICO) has published guidance on vaccination and Covid pass checks but hasn’t explicitly stated which condition might apply where an employer is processing information about someone’s vaccination status in order to make decisions about pay.

There is a new Information Commissioner who is believed to be more “business friendly” than the previous one. It is therefore possible that they may take a more ‘pro employer’ approach when determining these sorts of issues.

In our view, the employment condition is problematic. Employers can certainly rely on it to process information for the purposes of paying SSP, but it’s less clear whether it covers administering a contractual sick pay scheme.

Plus, even if you can establish a lawful basis to process vaccination data, you then have to meet all of the other obligations under GDPR. You must make sure that your reasons are clear, necessary, and transparent and you aren’t allowed to use this information for a reason your staff wouldn’t expect or in a way that might result in unfair or unjustified treatment. In other words, your staff must know that you are using this information to determine whether they are eligible to receive contractual sick pay.

You may also need to conduct a data impact assessment.

5. Are there other data protection issues we need to consider?

Yes. You must minimise the data you collect and only record what you actually need. You can’t collect personal data ‘just in case’. So, in the context of someone’s vaccination status, you will only need to capture whether they have been fully vaccinated (probably via recording ‘yes’ or ‘no’) and indicate whether their second vaccination took place at least two weeks before you recorded that information. You don’t need to know what type of vaccine they received, if they’ve had the booster, or the reasons why they chose not to be vaccinated.

Similarly, to avoid the allegation that you have collected the data ‘just in case’, you shouldn’t collect people’s data before you need to. So, you’ll only need to ask about someone’s vaccination status if they are self-isolating and you intend to reduce their sick pay.

As with all personal data you need to make sure that the information is recorded accurately and kept up to date. You shouldn’t keep it for longer than necessary. This will be judged by reference to the reason you collected it in the first place.

6. Can we avoid these data protection difficulties if we make our decisions based on whether someone is self-isolating rather than their vaccination status?

The law currently requires anyone who is unvaccinated who comes into close contact with someone with the virus to self-isolate for 10 days. Anyone who has a medical exemption is treated in the same way as a vaccinated person and they don’t have to self-isolate.

Therefore, if a member of staff telephones to say they can’t come into work because they have to self-isolate for 10 days because they’ve been in close contact with another person with Covid-19, you can assume that they haven’t been vaccinated. You don’t need to record this information and can simply notify payroll that they are only entitled to SSP.

But, if this leads to a conversation about the employee’s vaccination status and you make a record of that conversation (which you probably will), you will need to comply with GDPR. Similarly, if you intend to exercise discretion (like Ikea appears to be doing) you may need to find out why someone hasn’t been vaccinated and that puts you into GDPR territory again.

7. Are there any other risks we need to consider?

Yes. If you reduce the pay of unvaccinated members of staff who are self-isolating because they’ve been in contact with someone with the virus, they may take matters into their hands and come into work anyway (even though this is a criminal offence) or pretend that they are ill.

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One option is to clearly communicate how you expect your staff to behave once they have been identified as a close contact of someone with the virus. Make it clear to your staff that if they come into work after receiving a notice to self-isolate, they are confirming that they are legally exempt from the duty to self-isolate and have taken a test which is negative. And, if they do come into work when they should be self-isolating, you will treat it as a serious disciplinary offence, which may result in their dismissal. Of course, if they are willing to break the law, they’re probably also prepared to ignore your internal procedures.

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