Source · Select Committees · Work and Pensions Committee
Recommendation 2
2
Rejected
Paragraph: 51
Increase Statutory Sick Pay rate in line with flat rate of Statutory Maternity Pay.
Recommendation
The rate of Statutory Sick Pay is too low. Of all the proposals for increasing the SSP rate, we think a rate in line with the flat rate of Statutory Maternity Pay would strike the best balance. It would increase the rate to £172.48 per week (using the 2023–24 rate), or 90% of earnings, whichever was lower. This would be considerably more than the 2023–24 SSP rate of £109.40 but not so much as to place unreasonable additional costs on most employers. The 90% replacement rate for those earning below the flat rate of SMP would ensure, as the current SSP system does, that no one’s SSP payments could exceed their usual earnings. By the start of financial year 2025–26, the Government should increase the rate at which Statutory Sick Pay is paid in line with the flat rate of Statutory Maternity Pay.
Government Response Summary
The government rejected the recommendation to increase the Statutory Sick Pay rate in line with Statutory Maternity Pay, citing the different nature and estimated £500 million annual cost implications for employers, and the lack of reclaim mechanisms, while noting it continues to review the rate annually.
Paragraph Reference:
51
Government Response
Rejected
HM Government
Rejected
As set out in our response to recommendation 1, we are providing wider and better access to Statutory Sick Pay by extending eligibility to those earning below the Lower Earnings Limit and removing the waiting period so that employees can access Statutory Sick Pay from their first day of sickness absence. Statutory Maternity Pay (SMP) is paid for entirely different reasons to SSP and allows for a notice period of at least 15 weeks for the employer before the individual takes leave. Employers are therefore able to better prepare and plan for individuals taking time off work for maternity leave. Employers are also able to claim back up to 92% of employees’ SMP, with some employers able to claim back up to 103% of their SMP payments if their business qualifies for Small Employers’ Relief. In contrast, employers pay the full cost of SSP paid to their employees. DWP modelling3 estimates that a move to a flat rate of SSP in line with SMP would add an additional cost of c.£500 million per year onto business. This is in addition to the estimated costs of removing the waiting period and Lower Earnings Limit, 3 Internal modelling based on DWP Employee Survey 2023 and Family Resources Survey 2022/23. Methodology in line with what is set out in Statutory Sick Pay Regulatory Impact Assessment. bringing the total annual estimated costs of SSP to around £1.6 billion. There is no mechanism for employers to reclaim these costs. Further information on this is provided in in our response to recommendation 6. It should be noted that the reforms to SSP this Government have introduced in the Employment Rights Bill will increase the amount of sick pay employees in total receive by around £400 million a year. The Government continues to review the rate of SSP each year as part of the annual uprating process.