The Chartered Institute of Personnel and Development (CIPD) is urging government, insurers and employers to consider ways to improve provision of income protection (IP) and other health, wellbeing and financial benefits to support employees.
The HR and people development professional body is also calling on government to reform statutory sick pay and for employers to revamp wellbeing strategies to fix a “broken” Statutory Sick Pay (SSP) system.
The calls feature in the HR and people development professional body’s report, What should an effective sick pay system look like?
Government should “explore the potential for the insurance sector to play a stronger role in protecting incomes”, the CIPD proposed.
[It should] “carry out a further review to explore if the insurance industry could develop group income protection schemes that overcome some of the perceived barriers such as cost, particularly for smaller employers.”
Among its recommendations is a call on government to explore ways to improve income protection for the self-employed when unable to work through illness or injury.
The report also recommends government works with stakeholders to take forward recommendations set out in 2017 Taylor Review of modern working practices, including the potential for a portable benefits platform to provide a safety net.
Increasing SSP
Its release comes barely a month after the Society of Occupational Medicine’s (SOM) CEO Nick Pahl, while speaking at the CIPD’s annual conference, criticised government for failing to tackle SSP reform in its Health is everyone’s business consultation published in the summer.
The CIPD report includes a survey of more than 1,000 employers which found that nearly two thirds (62%) of firms, including most SMEs (57%), agree the SSP rate is too low and should be increased from the current rate of £96.35 per week for up to 28 weeks.
The report also acknowledged the impact the Covid pandemic has had in further exposing how financially inadequate SSP is, with many people still working when ill or needing to self-isolate.
And with concerns now growing about the potential impact of the Omicron variant, the CIPD is calling on government to ensure SSP provides a better financial safety net.
According to the report, many of the country’s lowest paid and most vulnerable workers – who likely need the most financial support – are excluded from accessing SSP as 5.6 million people (17.2%) of the UK’s 32.5 million workforce do not currently qualify for SSP.
This includes the self-employed and those who are unable to access SSP because they do not meet the lower average earnings limit of at least £120 a week to qualify.
Consequently, the CIPD is calling on government to raise the level of SSP to be at least equivalent to someone earning the National Minimum Wage or National Living Wage. For example, for someone aged 23 or over working seven hours per day, their pro-rata daily SSP rate would increase to £62.37.
The professional body is also recommending widening eligibility for SSP by removing the lower earnings limit, as well as further consultation looking at wider reform of SSP, such as amending the rules to allow for phased returns to work, removing the three qualifying days for payment of SSP, and looking at opportunities to improve income protection for the self-employed.
Financial wellbeing strategies
But additionally, the CIPD is encouraging employers to ensure they have a financial wellbeing strategy that covers elements such as paying a living wage, making sure their workforce is aware of all the benefits currently offered and information about where to get free, independent money and debt advice.
Employers are also being urged to consider the benefits of introducing an occupational sick pay scheme to enhance pay above the statutory minimum for employees who cannot work when sick.
Rachel Suff, senior employment relations adviser at the CIPD, said: “The UK’s SSP system has been broken for a long time and the pandemic has only highlighted its failure to protect the lowest paid and most vulnerable members of our society.
“However, despite a number of government consultations proposing reforms to SSP, there are currently no real plans to improve the system.
“SSP deficiencies can have a devastating impact on people’s health and wellbeing, including financial distress. With an ageing workforce and skills shortages, it’s even more important that we have an effective SSP system to help employers attract and retain a diverse workforce.”
Suff added that SSP needs to provide an effective financial safety net for those unable to work when sick and to better reflect today’s labour market.
“As well as immediate reform to remove the lower earnings limit, government should consult on how the system could cover those in atypical work including the self-employed,” she continued.
“We also need more flexibility so that it’s easier for people to have a phased and sustainable return to work. This will bolster their chances of an effective full-time return in the long-term.”