Self-employed people lack the kind of income protection offered by SSP and government should work to create a contributory sick pay scheme for that market, according to The Work and Pensions Committee’s Report on Statutory Sick Pay (SSP), released by the House of Commons today.
The report said: “The SSP does not provide adequate support for those who most need protecting from financial hardship during periods of sickness absence.”
The inquiry was launched on 9 November 2023 with a call for evidence seeking written submissions on whether SSP needed reforming and if so how it should be reformed.
The report said: “Far too many people lack a financial safety net during periods of ill health as a result of being self-employed.
“We recognise that self-employed people cannot be made eligible for SSP, but we strongly believe that the government must do more to ensure they are no worse off financially during periods of sickness than employees on SSP.
“We therefore conclude that the government should establish a contributory sick pay scheme for self-employed people to provide them with the same level of income protection as would be available under SSP.”
On the issue of further reform of the SSP the report said: “A central part of many of the arguments in favour of reforming SSP is that, despite the direct additional costs to employers, it would ultimately result in a net benefit to business, as it would result in lower levels of sickness absence and presenteeism and incentivise employers to manage sickness in the workplace better.”
Group income protection
On the issue of small businesses, the report said: “We urge the government to consult small and medium-sized businesses on the design of a small business rebate for SSP to be introduced alongside our other proposed reforms.
The report noted: “Group income protection (GIP), though not an alternative to Statutory Sick Pay, can help small businesses to manage the cost of long-term sickness absence and increase the chances of employees making a full return to work.”
The report said: “We welcome the government’s plans to work with employers to raise awareness of the benefits of GIP.
“We still have concerns, however, about the double taxation applied to some GIP 36 Statutory Sick Pay policies.
“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.”
Rebecca Deegan, representing the ABI, said the average GIP policy cost £355 per employee per year and the average claim was over £26,000.20.
But witnesses pointed out that GIP is designed for long-term absences and is not an alternative to SSP in respect of short-term absences.
Peter Hamilton, head of market engagement at Zurich, said: “Absence from work because of sickness is problematic for all involved – for employees, employers, and the economy.
“Research Zurich conducted recently suggested that the cost to the economy from long term absences could double to £66.3bn by 2030.
“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 Statutory Sick Pay.
“I believe we should welcome the findings of the DWP Select Committee on Statutory Sick Pay, just published. They recognise it is too low, and should be increased, they recognise that too many are excluded, and that the net needs to be widened.
“They also note there is a tension between improving benefits and not burdening small businesses with additional, possibly unmanageable, financial outlays.
“There is an argument that Statutory Sick Pay should start from day one, rather than after day three, as now, but the Committee believed there is currently insufficient evidence to be confident as to what behaviours such a change might influence.
“Improved Statutory Sick Pay should also help encourage employers to focus more on creating a healthy workplace.
“Specifically, there is an overt recognition of the positive role that Group Income Protection plays, with one of the recommendations stating: ‘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.’
“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.”