Changes to sick pay will help people stay in work and grow economy
More than one million working people across the UK will see a rise in living standards thanks to improvements to Statutory Sick Pay, ministers have announced today.
- Landmark changes are all part of the government’s number one priority in the Plan for Change to grow the economy and put more money into working people’s pockets
- Announcement comes as the World Bank notes that ‘without improvements in productivity, there is no economic growth’
- The government has pledged to deliver on its promise to Make Work Pay with lower income workers no longer having to choose between their health or their jobs
This comes as the government delivers on the plan to boost workers’ rights and create a healthier, more productive workforce, which will be at the forefront of efforts to grow the economy – the priority of our Plan for Change.
The changes will mean up to 1.3 million people on low wages who find themselves ill will either receive 80% of their average weekly earnings or the rate of Statutory Sick Pay which will be £118.75 per week from April – whichever is lowest.
The move means some of the lowest earners will be up to £100 better off per week, compared to the current system. This safety net will enable people to have the time off they need to recover, so they can get better and remain in work rather than risk quitting altogether.
Under the government’s Plan for Change, this new fairer rate strikes the right balance between providing financial security for employees who fall ill, and the cost to businesses – all while retaining the incentives for people to return to work.
The UK has seen a slow-down in productivity in recent years that has been more severe than other nations, which is not acceptable. The World Bank has been clear that “without improvements in productivity, there is no economic growth”.
Today’s changes will boost productivity in the workforce to help drive growth and usher in a decade of national renewal.
The Deputy Prime Minister, Angela Rayner MP said:
What we put into our workforce, we get back and more.
That’s why we’re making Statutory Sick Pay a right for every worker for the first time so people can stay in work rather than risk dropping out.
This is a pro-worker, pro-business government in action – boosting productivity, while ensuring people don’t have to choose between health and wealth, helping deliver our Plan for Change.
Secretary of State for Work and Pensions, Liz Kendall MP said:
For too long, sick workers have had to decide between staying at home and losing a day’s pay or soldiering on at their own risk just to make ends meet.
No one should ever have to choose between their health and earning a living, which is why we are making this landmark change.
The new rate is good for workers and fair on businesses as part our plan to boost rights and Make Work Pay, while delivering our Plan for Change.
The government’s response to its Statutory Sick Pay consultation has also been published today alongside other responses and amendments to the Employment Rights Bill, including on tackling fire and rehire and zero-hour contracts to tackle insecure work.
This latest move follows the commitment to ensure the right to sick pay from the first day of illness, and to make more people eligible by removing the need to earn Lower Earnings Limit.
Over 1,700 responses to a six-week consultation helped inform the decision on the new rate, taking in to account the views of businesses, charities, trade unions and workers.
TUC General Secretary, Paul Nowak, added:
Nobody should be plunged into hardship when they become ill.
These reforms will stop millions from facing a financial cliff edge if they get sick.
Making statutory sick pay available to all workers - and from day one - shows why the government’s Employment Rights Bill is so important.
With sick pay rights from the first day of sickness, you will know that your family is protected. And you can take the time you need to recover.
We hope this is the start of a programme of sick pay reform and will continue to make the case for higher future sick pay rates.
Further information:
- The Lower Earnings Limit (currently £123 per week) is the amount of earnings that allow an employee to qualify for Statutory Sick Pay.
- The DWP published a consultation in October 2024 seeking views on what the new percentage rate that will be paid up to the flat rate of Statutory Sick Pay should be. The consultation ran until December 2024 and received 1,797 responses: Making Work Pay: Strengthening Statutory Sick Pay - GOV.UK
- The Government’s response to this consultation and the new percentage rate of Statutory Sick Pay was published this week: Government response: Making Work Pay: Strengthening Statutory Sick Pay - GOV.UK
- While Statutory Sick Pay is devolved to Northern Ireland, a Legislative Consent Motion will be sought from the Northern Ireland Assembly to mirror these changes.
- The Government has also published consultation responses covering collective redundancy (fire and rehire), the creation of a modern framework for industrial relations, the application of zero-hour contracts and tackling non-compliance in the umbrella company market: Government Response to the consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire
- The Employment Rights Bill was introduced in the House of Commons in October 2024. It is currently awaiting Report Stage.
- The World Bank notes that ‘without improvements in productivity, there is no economic growth.’
- The UK has seen a productivity slowdown that is more pronounced than other advanced economies over the past few years: an increasingly insecure and fragmented labour market can undermine conditions for growth and investment.