How flexible can Statutory Sick Pay become?

20 August 2019

The government believes that health is everyone’s business and the role that employers play in supporting employees return to work is vital. But how flexible can the current state sick pay scheme be in supporting government aspirations?


Samantha Mann, senior policy and research officer at the CIPP, considers the consultation work that will impact the operation of Statutory Sick Pay.




July 2019 saw the publication of a number of consultations that will impact the world of employment, two of which have the potential to impact the operation and enforcement of the Statutory Sick Pay (SSP) scheme.


Health is everyone’s business – proposals to reduce ill health-related job loss


Reforming SSP forms part of the consultation that was published in July and it includes proposals to amend the rules of SSP to allow for phased returns to work following sickness absence and to widen eligibility for SSP to extend protection to those on the lowest incomes.


The paper includes a wide range of measures to reduce ill health-related job loss and seeks views on how employers can best support disabled people and people with long-term health conditions to stay and thrive, in work.


The government proposes to reform SSP so that it is available to all employees who need it, is more flexible and is underpinned by a suitable enforcement framework. Proposed changes include:


  • Amending the rules of SSP to allow for phased returns to work following sickness absence.
  • Widening eligibility for SSP to extend protection to those earning below the LEL.
  • Strengthening compliance and enforcement of SSP to ensure employees are paid what they are due.


Alongside these specific reforms, this consultation also considers how a rebate of SSP for SMEs that demonstrate best practice in supporting employees on sickness absence might be designed. 


The government is also interested in exploring ways to record SSP payments and use this information to provide helpful prompts and advice to employers.


The government is not proposing to make any further changes to the structure of SSP however, it has considered the extent to which the rate and length of SSP drives employer behaviour and is interested in views on this.


Key Features of the proposals for reform of SSP


Research has demonstrated that a phased or gradual return to work from longer periods of sickness absence can promote quicker returns to work, however the current structure of SSP doesn’t allow for such a flexible proposal.


Requiring full days of absence, a Period of Incapacity to Work (PIW) of four continuous calendar days together with a three ‘waiting day’ period – SSP cannot be said to be flexible.


The consultation includes the proposal for SSP regulations to be made that allow for a phased and flexible return to work which allows for the employee to work hours and days that benefit them.


It is proposed to allow a phased period of return following two weeks of absence, it isn’t believed to be beneficial for shorter periods of absence, and it would be for the employer and employee to decide whether a phased return would be needed and how that return should be phased.


Government doesn’t plan to legislate for how such a return is requested or how decisions should be made.


A phased return to work will result in the need to receive a payment that is made up from part SSP and part wage instead of the current system.


Using the example given in the consultation we can see how this might work:


An employee works a 35-hour week earning £9 an hour (a total of £315 per week).


The employee agrees to return from sickness absence by working 2 hours a day for 5 days in the first week.


Their earnings would be: (2 hours x £9) x 5 days = £90 (less than one week of SSP).


For the other 25 hours of their usual 35-hour working week, they would be unable to work due to sickness.


The rule changes would allow them to be paid SSP for those 25 hours, which would amount to £67.3292.


The employee’s total pay for that week would be £157.32.


The consultation also revisits the rules surrounding qualifying days (which are usually but not always, the normal working days) in a bid to help gain a greater understanding of the concept and consider how their removal might simplify the SSP process.


SSP is currently funded in its entirety by the employer, this paper considers how an SSP rebate, if considered, could be designed for SMEs and how could such a process function to best ensure engagement with SME employers. Although there are no immediate plans for change in this space.


Coming out of the Taylor review, this paper also looks to widen eligibility to SSP to employees who earn below the Lower Earnings Limit (LEL).


SSP non-compliance and state enforcement


HMRC currently runs a dispute process to ensure that SSP, where due, is paid, and where the employer is found to be non-compliant, they can be fined up to £3,000. However, the current process is not designed to act as a deterrent to the employer but instead it exists to help employees to receive their legal entitlement.


State enforcement of SSP is also considered in another consultation that too was launched in July.


Establishing a new Single Enforcement Body for employment rights


This consultation will consider the case for a new single labour market enforcement body and whether such a body could deliver a range of improvements including:


  • extended state enforcement to include enforcement of holiday pay for vulnerable workers and regulate umbrella companies operating in the agency worker market
  • a strong, recognisable single brand to make it easier for individuals to raise a complaint and to tackle cases that might currently be handled by many different organisations
  • better support for businesses which would include coordinated guidance and communications campaigns, together with a more easily navigable and proportionate approach to enforcement.

The consultation paper delivered by BEIS maintains that this is not to be an exercise to reduce costs, currently running to the tune of £33 million annually, indeed resource for enforcement would be maintained, but the aim would to use resources more effectively.
In addition to the stated aims of this consultation, key areas of interest for us relate to the enforcement of SSP (together with greater state involvement in enforcing compliance on the payment of Holiday Pay but that’s a whole other article) – but what will this mean for SSP?
The paper doesn’t consider the rules of SSP but instead asks whether a single enforcement body (if established) should take on enforcement of statutory sick pay if the process is strengthened.
At present, HMRC runs the dispute resolution process and whilst this process, has a high success rate it relies upon the employee being aware that they are entitled to SSP and knowing that they can go to HMRC to raise a dispute. There is no proactive enforcement.
DWP, whilst considering reforms to SSP, are considering whether a new single enforcement body would be better placed to take on this role.


Have your say


Each consultation will close in October and calls for responses from a range of stakeholders – the CIPP has surveys running for both the Health is everyone’s business consultation and establishing a Single Enforcement Body and we would welcome your views.



This article was originally written for Accounting web.