Employment Rights Bill

Baroness Smith of Llanfaes Excerpts

Committee stage
Tuesday 13th May 2025 Lords Chamber

These new additional entitlements are not being kind to people. They are not being kind to a generation of young people who are watching economic inactivity in their homes. Of course, there will be people who need to be specifically categorised with physical ailments and, of course, there are people who are really very sick, but, with a 50% mental health sickness rate, I urge the Government to reflect again on these clauses.

[Baroness Smith of Llanfaes (PC)]

My Lords, I support Amendment 72 from the noble Baroness, Lady Lister, which I and the noble Baroness, Lady O’Grady, have signed. This amendment would require a review of the rate of statutory sick pay ahead of His Majesty’s Government’s 2025 Autumn Budget. It requires the Secretary of State to determine, following that review, whether the rate should be changed and to publish a Written Statement setting out the reasons for that determination.

It is important to remind ourselves what this amendment entails. As noble Lords are aware, statutory sick pay is a government scheme requiring employers to provide most employees in the UK who are absent from work due to sickness with a minimum level of pay during that period of absence. Statutory sick pay —SSP—is £118.75 per week, following an increase last month, which an eligible employee can receive for the days that they are ill and not working, except for the first three days of that sick leave. To be eligible, one must be classed as an employee and have done some work for the employer, earn at least an average of £125—previously £123—per week, and have been ill for more than three days in a row. It is only on that fourth day that they receive SSP.

The scheme as it stands is ineffective and causes hardship. As we have heard from the noble Baroness, Lady O’Grady, according to the TUC, 28% of employees receive only basic SSP when ill, meaning that they are reliant on this very small weekly amount during that period of illness. The TUC adds that

“there are 1.1 million workers earning below £123 per week who are not eligible for SSP”,

with most of those workers being women.

Considering also the penalty of a three-day delay until an eligible employee can claim SSP, it is clear that reforming SSP is both necessary and overdue. I therefore welcome the provisions under the Employment Rights Bill that will see SSP payable from the first day of incapacity to work by way of Clauses 10 and 12, and the removal of the lower earnings limit—that is, the requirement to earn at least £125 per week—through Clauses 11 and 13. However, Clauses 11 and 13 also set in legislation that the rate of SSP will be set at the lower of £118.75 or 80% of the employee’s normal weekly earnings. That payment is extremely low by international standards, as we have heard from many noble Lords. It is one of the lowest rates in the OECD.

If you were to divide this amount by a typical 40 hours worked by full-time employees in a week, this would provide under £3 per hour to employees who are ill. Of course, many workers work more than 40 hours per week, decreasing this hourly amount even further. But in the context of rising housing costs, food prices, energy bills and household bills, such a small payment is inadequate to meet basic living standards. I ask your Lordships: do we believe that those people can survive on £3 an hour? That is an important question that we must consider when we look at this amendment.

In fact, in the context of universal credit, the Joseph Rowntree Foundation estimates that to afford the basic household essentials, a single adult requires at least £120 a week and a couple £205 a week. It is clear that a review of the adequacy of the SSP rate is crucial to ensure people are not plunged into poverty just for becoming ill, which is something that happens to all of us. Proposed new subsection (7), in Amendment 72, makes provision for the Secretary of State to ensure that no employee receives less statutory sick pay than they would have received before the Bill’s enactment, as a result of changes under Clause 11. This is important because according to the TUC, an 80% replacement rate as under the Bill will see 300,000 workers entitled to a lower rate of SSP than currently. Many of these individuals work for multiple employers, work part-time and receive low wages. According to the Safe Sick Pay campaign, three-quarters of those impacted will be women. Disabled people will be disproportionately affected, almost half of whom are aged between 20 and 54.

Using the SSP amounts in place before April, the Safe Sick Pay campaign outlined the example of an employee who will now lose out. That employee, working for multiple employers, earning £123 a week, would have received £116.75 a week of statutory sick pay because they earned above the lower earnings limit. Following the Bill as it stands, that same employee will see a 16% reduction in their entitlement and receive only £98 a week, as this would represent 80% of their earnings. Many workers, particularly those in low-pay positions, already struggle to afford the shortfall caused by SSP when ill. Increasing that shortfall will make it more unlikely that workers will have adequate savings to mitigate the loss of income. Proposed new subsection (7), in Amendment 72, provides a way for the Secretary of State to rectify this situation and ensure that no one is worse off as a result of SSP changes made by the Bill. It is vital that His Majesty’s Government do not intentionally or unintentionally cut sick pay for hundreds of thousands of workers.

I will now briefly turn to some of the other amendments and the debate on this group so far. Amendment 73 in the name of noble Baroness, Lady Coffey, and Amendment 74 in the name of the noble Lord, Lord Fox, call for the establishment of a scheme for reimbursement of statutory sick pay costs incurred by companies with fewer than 250 employees. This is an interesting proposal, as we have heard from the noble Baroness, although we have yet to hear from the noble Lord, Lord Fox. I look forward to hearing the Minister’s response on the practicalities of such a proposal.

I feel very strongly that mental health is health, and that this is not just to do with those facing mental health conditions; it goes wider than that. It is important to note that this is about all workers who have been signed off from work; there are lots of different reasons why they might be ill, including those relating to mental health.

The aims of these amendments differ from those of Amendment 72, which seeks to address gaps in the Bill concerning adequate sick pay for workers—gaps that cause some concern, especially the consequential effects on low-paid workers. I hope that, in responding, the Minister addresses my concerns: the adequacy of the SSP rate as set out in the Bill; the effect on low-income workers, without relying on the welfare system to offset that effect; and whether His Majesty’s Government will commit to a review of SSP rates, so that workers are not punished by measures in a Bill which is expected to strengthen their workplace rights.