Statutory sick pay reform could boost the economy

Research has been conducted into reforming the UK’s 40-year-old statutory sick pay system with a claim that it could save the Exchequer £1.3billion.


Under the current system, workers on statutory sick pay (SSP) receive £99.35 a week. Around two million do not qualify for SSP because their earnings fall below the statutory requirements for SSP (£118 a week). The proposals put forward in a Statutory Sickness Support report suggest a holistic system that supports both employee and employee during periods of ill health.


The proposals look to:

  • Widen eligibility, so all workers are protected
  • Bring the rules up to date, to accommodate flexible working
  • Simplify calculation and administration for employers
  • Strengthen the safety net to reduce ‘income shocks’ and alleviate poverty.


The reforms would also boost the average “replacement rate” (the part of the worker’s salary covered by SSP) from 28% to 63%. This would particularly benefit workers on lower salaries, offering them greater security and benefit, should they fall ill.


The report asks that the Government does more to support employers with guidance on how to manage ill health and sickness, including providing targeted guidance, introducing a conditional sick pay rebate for small businesses, and launching a £500 million fund to deliver a “shot in the arm” for SME investment in health at work. It is suggested that the outcome would be reduced sickness absence. According to the estimates used, ill health-related worklessness costs the economy £29billion in foregone tax and NI contributions and the proposed reforms could unlock billions in tax receipts and increased economic output.


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