February 26, 2018

Sick Pay

Most UK employees greatly overestimate how much they would get paid and for how long if they were to fall sick for more than a few days. New research by Direct Line Life Insurance found that just 4% of UK workers know how much statutory sick pay they are entitled to, should they need to draw on it.

Many of the 2000 plus UK workers polled by Direct Line Life Insurance assume that their employer would keep paying them a full salary for three and a half months, should they fall ill. This means that over 2.5 million workers do not realise that they would face a substantial salary drop should they be unable to work due to illness and that the drop could start as soon as the fifth day of sick-related absence.

According to the research, one in six companies (16%) reduce an employee’s wages to statutory sick pay after only four days of sickness-related absence. And 43% reduce an employee’s wages to statutory sick pay after two weeks of sickness-related absence.

And it’s not just pay that is affected by long term sick leave either. Almost a quarter (21%) of companies that pay bonuses to employees do not pay them out to employees who have been off work on long term sick leave. A third of companies will pay bonuses on a pro-rata analysis of days worked and 14% will pay a discretionary reduced rate.

Furthermore, a significant number of organisations (30%) have a qualifying period of between one and two years in order for employees to be eligible for sick pay, according to the research.

What this means is that permanent employment does not provide quite the financial safety blanket than many people believe. Statutory sick pay is significantly lower than the average salary: those who are eligible receive £89.35 a week for up to 28 weeks. That is less than a fifth of the average UK weekly wage of £511, according to figures from the Office for National Statistics.

However, a 2015 survey of occupational sick pay conducted by XpertHR painted a rosier picture of what employers offer employees with regards to sick pay. It found that three quarters of the 539 organisations polled provide occupational sick pay schemes that are more generous than statutory sick pay. Moreover, just under a third of those organisations provide occupational sick pay right from the very first day of employment and two-thirds of them increase occupational sick pay the longer a person has been with the company.

Statutory sick pay

In order to qualify for statutory sick pay, a person has to be:
– classed as an employee and have done some work for their employer
– have been ill for at least four days in a row (including non-working days)
– earn at least £113 a week (before tax)
– tell their employer they are sick before the deadline, or within seven days if there isn’t a deadline

Absence management is an important topic for HR teams. This CIPD factsheet is a useful resource for HR professionals.

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