Smaller businesses and TUC unite for call to reform sick pay rules

The TUC and Federation of Small Businesses have jointly called on the UK chancellor to make the employer sick pay rebate permanent and support employers with its associated costs.

In a letter, the union and business bodies urge Rishi Sunak to “create an effective sick pay system to underpin the economic recovery, ensure that all workers that need access to sick pay would receive it regardless of earnings, and make sure that all employers would be able to afford it.”

The letter pointed out that because statutory sick pay was only available to employees earning £120 per week or more, about two million low-paid workers, mostly women, were left without any sick pay at all.

As the worst of the pandemic recedes, the TUC and FSB told the chancellor there was “a new awareness of the need for people to protect their health at work, and to avoid the spread of respiratory viruses in the workplace”.

At the end of last year, the chancellor announced a rebate for small employers on sick pay. The groups are calling for this rebate to be both made permanent and adjusted to cover all sickness absence, alongside the removal of the lower earnings limit.

Ministers turned down proposals to remove the lower earnings limit in summer 2021,  arguing it was “not the right time” because the furlough scheme, £20 Universal Credit uplift and temporary employer rebate were all in place. Only the temporary rebate remains in place.

The FSB calculates that the average cost of sickness absence to small employers stood at just over £3,500 last year. The figure covers additional cost implications of having staff away from the workplace, including paying for cover and overtime. There are just under 1.4 million employers with fewer than 50 employees across the UK, according to government figures, putting the estimated cost of SSP to the smallest businesses at just under of £5bn.

TUC general secretary Frances O’Grady added that the rate of SSP was too low and needed increasing to “real” living wage levels. She said: “No one should be forced to choose between doing the right thing and self-isolating or putting food on the table. But millions of low-paid workers have faced this impossible choice. Two years into the pandemic, it’s time ministers stopped turning a blind eye to this obvious problem and fixed our broken sick pay system.

“Delivering sick pay for all would be an important first step. But with statutory sick pay at a measly £96 a week, we need ministers to increase it to real Living wage too.”

For the FSB, vice chair Martin McTague said small businesses were struggling to find the money for sick pay costs and that this was the worst possible time to remove the rebate. He said: “Last year, the chancellor responded to our calls for help with a reintroduction of the small employer sick pay rebate until the end of March.

“However, with inflation driving up business costs, and forthcoming NICs hikes increasing the tax burden on them to a level not seen since the 1950s – there could not be a worse time to remove the rebate.

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“The government should do the right thing and make the small employer rebate a permanent feature of how we manage workplace sickness, and protect small firms which help those with health challenges into work.”

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