Lack of sick pay leaves UK workers on financial cliff edge

06 December 2017

Most employees are aware that should they get ill and be unable to work, the financial implications could be catastrophic. Despite this knowledge, employees simply do not know how to change their situation, and all too often believe a modest amount of savings will ‘get them through’.

The reality is much different. By the time mortgages, Council Tax and four-weekly shops are taken into account, employee savings are unlikely to stretch further than a month or two at best.

The latest report from BHSF, A high wire with no safety net, found that UK employees are at risk of a severe financial shock in the event of ill health, with many being unable to pay their household bills for more than six to eight weeks.

The perilous state of many employees’ finances was further highlighted by 37 percent admitting that they could not pay their bills in the event of ill health, and 28 percent saying that they would have to resort to using credit cards for unexpected bills.

The dire situation is exacerbated further by the fact that two thirds of the entire UK workforce have no sick pay provision beyond the statutory minimum.

“Employers must take a proactive approach to the financial wellbeing of employees, says Brian Hall, managing director of BHSF Employee Benefits. “The combination of a lack of savings allied to zero sick-pay provision, other than the statutory minimum of £89.35 per week, leaves many employees walking a high wire with no safety net. By the time mortgages and bills are taken into consideration the vast majority of the UK’s workforce will find themselves in dire financial straits in a very short period of time. Many will be forced back to work when they are not fit to return.”

The report also demonstrates that many employees are overly-optimistic about their ability to withstand a financial shock, with many believing they could last for up to six months. This is despite high levels of unsecured debt, such as credit cards, averaging circa £1,910, and inadequate savings.

“What’s worrying is that employees appear to be in a state of denial over how precarious their financial situation is.” said Mr Hall.

“In reality, all it takes is one short bout of ill-health to leave two thirds of the entire UK workforce in serious financial straits which could take many years to recover from.”

Details were also highlighted about the mental impact of financial stress, with half of the UK’s working population admitting that they have lost sleep due to financial worries – with a third revealing that financial stress is impacting on their job performance. Worse still, 13 percent confessed that financial stress is a constant problem.

Mr Hall added: “Employers can do more to help employees become financially resilient by organising sick pay insurance schemes, which can provide a safety net at low cost to the employee and no cost to the employer. At present, the report suggests that just 30 percent of employees benefit from an employer-organised scheme.”

Today’s employers are well-placed to ensure members of the workforce have adequate sick pay cover; however, many are not aware of the simple, low-cost solutions that exist in the marketplace. BHSF’s Pay4Sure, a sickness and injury benefit offers a perfect solution, paying employees who are off for more than four weeks an income for up to six months.

Pay4Sure offers three levels of cover so it can be tailored to the needs of each individual worker. The policy is taken out by the employer, and employees opt in, with the employee-funded monthly premium conveniently payable through payroll deduction.

Mr Hall concludes: “While individuals may return to full health and fitness relatively quickly, the negative impact on their financial wellbeing can take months or even years to recover from. If employees truly are the most valuable asset, it is incumbent upon employers to be brave and to help educate their workforce about financial issues such as sick pay. All too often the subject is swept under the carpet or not adequately addressed, with a highly negative impact on employee wellbeing and mental health.”

The A high wire with no safety net report, which surveyed 1,000 employees, is available to download at: