Changes to sick pay to cover part of workers’ salaries from the first day off could end up benefiting British businesses by as much as £2bn, according to analysis commissioned by the UK’s main union body.
The Trades Union Congress (TUC), which is pushing for the government to stick with its plans for workers’ rights, said modelling showed businesses would gain benefits of £2.4bn thanks to productivity boosts, while facing direct costs of £425m to pay for extra sick days.
Sick employees in the UK are currently entitled to statutory sick pay only from their fourth day of illness, including weekends and days on which people do not usually work. The government’s employment rights bill, which is being debated in the House of Lords, proposes to abolish the wait, putting the UK in line with countries such as Germany and Sweden.
Statutory sick pay, paid by employers for up to 28 weeks, is worth £118.75 a week – or £3 an hour – for people too ill to work. People paid less than £125 a week are not eligible at all, meaning as many as 1.3 million people who work do not have any entitlement. The lower limit would be abolished under the proposed changes.
Business lobby groups have argued vociferously against the employment rights bill, which is closely associated with the deputy prime minister, Angela Rayner, and which includes measures such as protection against unfair dismissal from the first day of employment, a ban on fire-and-rehire practices, and a right to flexible working where practical.
The Federation of Small Businesses has said the changes to statutory sick pay “will make employers think twice about their hiring plans”. It is concerned that employees will be quicker to take sick leave, increasing the costs for businesses.
The TUC’s analysis, carried out by the consultancy WPI Economics, indicates that improved sick pay could provide benefits for businesses. It argues, citing a 2018 US study, that easier access to sick pay may, counterintuitively, lead to lower overall sickness absence, because workers would be less likely to spread infectious diseases such as colds and influenza.
It also suggests that earlier sick pay could prevent sick workers from dragging down colleagues’ productivity, improve overall morale and employee retention, and reduce longer absences. However, those proposed benefits have not been subject to large-scale tests in the UK.
Paul Nowak, the TUC’s general secretary, said: “Nobody should be plunged into hardship when they become ill. The government’s sick pay reforms will stop millions from facing a financial cliff edge if they get sick.
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“With sick pay rights from the first day of sickness, workers will know they can take the time they need to recover without needing to rush back to work. That’s good for business and the wider economy too. A healthier, happier workforce is a more productive workforce.”
The UK’s rate of sick pay is far below that of more generous countries such as Sweden, which mandates 80% of salary. The TUC said the UK’s overall rate should also be increased.
