MPs call for better sick pay to boost Britain's workforce

In its 44-page report, published on Thursday (March 28), the Work and Pensions select committee urged the government to do more to stop people relying long-term sick benefits instead of getting back into the workplace. 

The committee said the UK was "experiencing relatively high rates of sickness absence and ill health, including high rates of mental health problems among young people, and there is growing concern about levels of ill health-related economic inactivity".

While noting measures put in place by chancellor Jeremy Hunt about reducing rates of ill health and getting older workers back into the workplace, the committee said that a review of statutory sick pay was urgently needed.

It said reforming SSP was part of the solution to help people remain financially resilient while getting rehabilitated back into the workplace.

Inadequate support

Most workers benefit from occupational sick pay provided voluntarily by employers as part of the workplace benefits, but a significant minority rely only on Statutory Sick Pay, which is less generous than OSP. 

Some are not entitled even to SSP. The cost of paying SSP is borne entirely by employers, but to qualify a worker must be classed as an employee and earn above the lower earnings limit.

Even then, SSP is not paid for the first three days of sickness absence.

The committee report, which is now in its fourth stage, said: "We conclude that SSP does not provide adequate support for those who most need protecting from financial hardship during periods of sickness absence.

"In particular, we raise concerns about the SSP rate and the LEL.

Improved SSP should also help encourage employers to focus more on creating a healthy workplace.Peter Hamilton, Zurich

"We find that the former is too low and suggest that a modest increase to the SSP rate in line with statutory maternity pay would strike a reasonable balance between providing additional financial support to sick workers and not placing excessive extra costs on businesses.

"We also conclude that all employees, not just those earning above the LEL, should be entitled to SSP."

The committee also noted there is a tension between improving benefits and not burdening small businesses with additional, possibly unmanageable, financial outlays. 

The committee also considered whether SSP should start from day one, rather than after day three as it is as now, but said there was insufficient evidence to be confident as to what behaviours such a change might influence.

Welcome report

The report was welcomed by insurer Zurich, which recently launched its campaign to help Britain's employers rehabilitate colleagues back into the workplace after a period of ill health. 

Peter Hamilton, head of market engagement for Zurich, said absence from work because of sickness is problematic for all involved – for employees, employers, and the economy.

He pointed to research from Zurich, which suggested that the cost to the economy from long-term absences could double to £66.3bn by 2030.

Hamilton, who is also the government's disability and access ambassador for the insurance sector, said: "There’s no one measure that will solve this in isolation. Preventative health at work, and vocational rehabilitation - too often overlooked - will play an important part, but so too will SSP.

"We should welcome the findings of the DWP's select committee on SSP. It recognises this is too low, and should be increased, they recognise that too many are excluded, and that the net needs to be widened."

Hamilton added: "We should be pleased with the explicit recognition of the importance rehabilitation plays, and how a phased return to work can be important for a successful outcome.

"Improved SSP should also help encourage employers to focus more on creating a healthy workplace."

We should be pleased with the explicit recognition of the importance rehabilitation plays.Peter Hamilton, Zurich

He also welcomed the acknowledgement of the "positive role that Group Income Protection plays".

One of committee's recommendations stated: "The government should set out in response to this report exactly what it has done, and plans to do, to promote group income protection among smaller businesses, including any proposals to incentivise take-up.

"It should also set out what plans it has to rectify the anomaly of salary sacrifice arrangements being subject to double taxation."

Hamilton added: "That this has come out so clearly is testament to the hard work that bodies such as the ABI and GRID have put in to articulate the rationale and the benefits."

simoney.kyriakou@ft.com