Sick Pay Reforms Could Save UK Businesses Millions

Proposed changes to statutory sick pay in the UK could create financial benefits of up to £2 billion for businesses, according to new analysis from the Trades Union Congress (TUC). The suggested reforms would eliminate the current three-day waiting period, enabling workers to receive sick pay from their first day of illness.

The UK’s existing rules only entitle employees to statutory sick pay after their fourth consecutive day of absence, leaving many workers without financial support during their initial days of illness. Statutory sick pay currently provides £118.75 per week for up to 28 weeks, but those earning less than £125 per week are not eligible. The proposed updates also aim to remove this lower earnings threshold, which currently excludes around 1.3 million workers.

While small business lobby groups have criticised the proposed reforms, expressing concerns over increased costs and potential misuse by employees, the TUC has argued that these changes could enhance productivity and improve workforce morale. Research by consultancy WPI Economics, commissioned by the TUC, suggests that covering salaries from the first day of illness would help prevent the spread of infectious diseases in workplaces, reducing overall absenteeism.

The report highlights that many countries, such as Germany and Sweden, already provide more generous sick pay systems. In Sweden, for instance, workers are entitled to 80% of their salary from the beginning of their illness. By aligning the UK with these international standards, businesses could benefit from reduced long-term absences, thanks to quicker recovery times and better working conditions.

While critics argue the reforms could increase costs, the analysis estimates that businesses would spend an additional £425 million on sick pay under the proposed system. However, the productivity boost and reduced absenteeism could generate benefits worth roughly £2.4 billion, significantly outweighing these costs.

The reforms are part of a broader employment rights bill currently being debated in the House of Lords. These measures include protections against unfair dismissal from the first day of employment, a ban on fire-and-rehire practices, and a right to flexible working where feasible. TUC General Secretary Paul Nowak has emphasised that such changes are vital for supporting both workers and the economy, stating that a healthier and happier workforce ultimately creates a more productive business environment.

The reforms have sparked debate across the business community, but evidence suggests that investing in workers’ health and wellbeing could ultimately lead to long-term gains for companies, alongside a higher standard of living for employees.