Employment Rights Bill (Eighth sitting)

Chris Law Excerpts

Committee stage
Thursday 5th December 2024 Public Bill Committees

[Alison Hume]

It is a pleasure to serve under your chairship, Sir Christopher.

We in this place enjoy the employment rights that come with our job, which is to serve our constituents to the best of our ability. When we are unwell, we can take time off but we are still paid. Before I arrived here, I spent a considerable number of years working as a freelancer while bringing up my family; I believe that is now called being a worker in the gig economy. I understand all too well the pressure for people to work when they are unwell, as they juggle work around caring responsibilities, as I had to for my disabled son, and worry about money, as our family worried about how we would pay the rent and the other bills if I did not work.

At present, large numbers of workers either rely on statutory sick pay or receive nothing at all if they are absent from work due to illness. Those workers are more likely to be low paid than others. We also heard in the evidence sessions last week that women are currently more likely to miss out on statutory sick pay than men, because they do not earn enough to meet the threshold or have not been in their jobs for long enough. It is estimated that 1.1 million workers earn less than £123 a week and most of them are women who are not eligible for statutory sick pay at all.

In practice, as we heard in the evidence sessions last week and as Minister just referred to, that means that people drag themselves into work despite the fact that they are ill. As it stands, our sick pay system pushes far too many people to go to work when they are ill. Working while in poor health is more common among those from marginalised ethnic groups, people in lower-quality jobs and workers lacking formal qualifications.

Under the Bill, hundreds of thousands of people will qualify for sick pay from the first day that they are ill. That change and other changes will help to increase productivity, reduce prolonged illness due to exacerbating existing conditions, and lead to better public health outcomes. Lower-paid workers will no longer have to face the unpalatable choice between coming to work and risking spreading infection, or struggling to put food on the table and to pay bills. Those are very real concerns that, as I mentioned, I have faced.

In conclusion, I believe that the Bill will transform the world of work for millions of people across the country. If I may say so, it is a privilege to have played a small part in scrutinising it.

[Chris Law (Dundee Central) (SNP)]

It is good to see you in your place, Sir Christopher. I will speak to an amendment on this issue shortly, but I will briefly say that everyone in this room, at some point in their working life, will be ill. It is not something that we would choose or desire, and most of us want to get back to work as soon as possible. The problem is that it happens, and when we are off ill we still have bills to pay, families to keep and mortgages or rents to pay. The level of statutory sick pay is frankly woeful in this country—in fact, for those hon. Members who do not know, it is the worst in the developed world. We should all be ashamed of that and we need to really think about it.

I welcome the changes to ensure that everybody gets statutory sick pay, but I find it disgraceful that we have not even touched on its level: it is £116 a week, or £6,000 a year. At some point in our lives, all of us have worked in very low-paid jobs. We have all done that, particularly in the early years. We would never imagine that somebody could live on £6,000 a year. Not everybody is expected to be off for a year, but some are, due to prolonged illnesses.

I will talk about this issue more on my amendment, but before I go into it in detail, I really want to hear from the Minister what changes the Government look to make so that we are no longer the sickest country in the world for being unreasonable, unfair and unjust to employees, and to ensure that statutory sick pay, which is about 17% of the average income—it was 35% when it was introduced—will start to restore the proper justice required for employees.

[Laurence Turner]

The shadow Minister’s comments to the effect that he accepted in practice the arguments on the workplace and presenteeism were welcome. If, through this Committee, we can reach some degree of cross-party consensus on the issue, it would be a real advance and proof of the value of this process. I mean that sincerely.

I turn to the measures. The question of waiting days is as old as the national insurance system. Although many of the incremental changes made in the Bill are welcome, it is time to take a step forward. The case for that step was proven during the pandemic. The Minister quoted USDAW research, and I am obliged to quote GMB research, which found that 90% of care workers could not afford to take time off if they became ill. That meant that during the pandemic, many people were presenting at work either for the duration of their illness or for the waiting period, and we have very good evidence of that. I will quote one example. A study by Dr Laura Shallcross and other authors in The Lancet found that the odds of covid infection in care home residents and staff and of large outbreaks

“were significantly lower in LTCFs”—

long-term care facilities—

“that paid staff statutory sick pay compared with those that did not.”

That was one of the key determinants or predictors of where outbreaks might occur.

To perhaps quote a more human voice, a social worker and member of the GMB said:

“For me, being on a zero-hours contract, I don’t always get work. If I become ill, I don’t get paid. If I get a cold or flu-related illness, I am expected to stay at home without pay, because I may pass the illness on to our service users. It is a very, very stressful life.”

When the Chartered Institute of Payroll Professionals surveyed its members, 47% agreed with the abolition of the waiting days period, so there is support in this area among private sector practitioners. When the Fabian Society, of which I declare I am a member, looked at this question, it found that the cost to business of adopting that measure would be very low—somewhere in the region of £15 per year for each employee.

As matters of cost have been raised in Committee on several occasions, I shall finish by quoting from the 2010 Black review, commissioned by the then incoming Government, which I think is still the best evidence we have of the cost of the statutory sick pay regime. It said:

“Great Britain has a mixed approach to sickness absence. Although employers in theory bear the cost of Statutory Sick Pay (SSP), the cost itself is not very high. Barriers to dismissal are relatively low (although it should be noted that dismissing someone specifically to avoid paying SSP is illegal). Employers are therefore obliged to bear little cost or accountability for sickness absence, albeit many employers choose to pay more in occupational sick pay (OSP) than the statutory obligation.”

There are many cases where occupational sick pay is paid at a rate higher than the SSP rate. That is of course welcome, and accounts for the majority of employers. For those employers who are being brought into paying SSP earlier, as we have heard, the cost is low, but the changes could make a really significant difference to the lives of some of the lowest paid workers in the economy. This measure is extremely welcome.

--- Later in debate ---

[Justin Madders]

We have had a good debate. Most Members have spoken positively about the need for this change. Obviously, this was a measure brought in temporarily by the previous Government, during covid. They recognised the particular issue at the time.

Before I turn to the shadow Minister’s comments, I wish him the best of luck in the Mid-Buckinghamshire pantomime. I hope he does not become the George Lazenby of the Conservative party as a result. He raised two perfectly reasonable questions. The first was on Northern Ireland. I can assure him that it was not an oversight. It has been introduced as an amendment because, as this is a transferred power to Northern Ireland, we need their consent before it can be included. I think he will understand that putting it in without getting that agreement might have been counterproductive.

On the second point that the shadow Minister made, about abuse of the provision, of course employers already have the power to deal with employees whom they feel are falsely taking time off sick. Whether that is day four or day one, those powers are already there.

My hon. Friend the Member for Scarborough and Whitby made a very powerful speech to highlight the impact on particular groups. The evidence we heard from the Women’s Budget Group last week was particularly important in that respect. Other Members who spoke, my hon. Friends the Members for Birmingham Northfield and for Stratford and Bow, raised a whole plethora of examples with pieces of evidence in support of the policy. I think it is one that is generally supported.

To deal with the point made by the hon. Member for Dundee Central about the level of statutory sick pay, he may not have seen my opining on SSP at the evidence session last week, or the famous comments from the former Health Secretary about it not being enough to live on. I recognise that. Unfortunately, however, I have to give him the stock answer, which is that the actual level is set by the Department for Work and Pensions. He made a fair point about people on long-term sick, because there is a huge interplay between people on long-term sick and the benefits system, but it is in the Department’s gift to set the rate and to look at how it interplays with accessibility to other benefits, which of course depends on people’s individual circumstances.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Statutory sick pay: lower earnings limit etc

[Chris Law]

I beg to move amendment 158, in clause 9, page 26, line 17, leave out “the prescribed percentage of”.

[The Chair]

With this it will be convenient to discuss amendment 159, in clause 9, page 26, line 19, leave out paragraph (b).

--- Later in debate ---

[Chris Law]

I have already touched on the impact that illness has in our lives. Some of us have family members who have been long-term sick. If they have been in employment, £6,000 a year as an annual amount is clearly not going to be enough. I am glad that the Minister has raised the issue and addressed it, and I hope that the DWP can consider those levels. We are still the sickest country in the developed world, and I hope that that will change under this Government.

I will leave my comments on that for the moment, apart from one, which is about the TUC. I am sure that those on the Government Benches will be well aware of this. Previously, the TUC campaigned for an increase in the weekly level of sick pay to at least £320 per week. That is something to consider. I advocate statutory sick pay being based on the national living wage in respect of each hour during which the worker would have worked, but for sickness.

My amendment, however, is small and one that I hope will get cross-party support, largely because it is so modest and seeks to protect the lowest paid workers. I therefore hope to get to a conclusion today. This is not about a hammer to crack a nut, but about a small change that would help the most vulnerable and low-paid workers in our societies.

According to the Centre for Progressive Change, the wording of the Bill will make up to 1.3 million employees worse off. The Bill’s wording specifies that employees should be paid either SSP or a prescribed percentage of their usual pay, whichever is lower. However, that creates a group of workers who will receive even less in sick pay under the new arrangements than they do now. After 14 years of austerity, I am sure that the new Government do not want that to get even worse.

That is because although that group of workers might be earning above their lower earnings limit, reducing their earnings in line with the prescribed percentage would result in a weekly sick pay amount that is lower than statutory sick pay. For example, an employee earning £125 a week will currently get sick pay of £116.75. However, they would only receive £100 for the prescribed percentage of 80% or, worse, £75 for a prescribed percentage of 60%. The lower the replacement rate, the more employees will be affected, with a quarter of a million employees losing out on the 80% rate and 1.3 million employees losing out at the 60% rate.

The amendment would allow for those earning less than statutory sick pay to have their full earnings replaced. Frankly, that is the bare minimum that this Government and this Bill should be doing. That should be a starting point for statutory sick pay, increasing to the point where it is in line with the national living wage.

Employees earning less than statutory sick pay are by definition low earners. The evidence is clear that households with low incomes spend the vast majority of their earnings on essentials, such as rent and food. Cutting the incomes of those employees, even by a small percentage, risks them being unable to afford essential costs, pushing working families into hardship and deepening poverty. The changes in income may be especially difficult to bear during times of ill health, when the ability of households to adapt to budget losses is inevitably reduced.

An example of modelling that has been mentioned already is by WPI Economics. It shows that the direct cost to businesses of providing full earnings replacement would be small, calculated at £125 million per year across the entire UK economy. That is equivalent to £15 per employee per year. Reducing the earnings replacement rate below 100% as proposed would save businesses a small fraction of that already small amount, providing trivial cost savings for businesses. Furthermore, modelling shows that full earnings replacement would generate economic gains to businesses, the Treasury and the wider economy. With direct business benefits expected to be £1.1 billion, businesses would see aggregate net gains of around £1 billion every year from providing 100% earnings replacement.

I reiterate that the amendment makes a small change that should be regarded as the bare minimum. Further reform and increases to the sick pay system need to be implemented. As was mentioned earlier, we learned during the covid pandemic that employees coming into work when unwell can have a detrimental impact on public health and the economy. Those who come into physical contact with many people at work are often the least able to afford to self-isolate without pay or to have access to employer-provided sick pay, and are more likely to engage in presenteeism.

The UK’s current sick pay system contributes to economic stagnation, exacerbates the spread of infectious disease, makes long-term sickness absence more likely and drives people out of the taxpaying workforce. Everything that the Committee has discussed so far, across all parties, is about getting people into the workplace. The increased ill health adds a significant extra cost to the NHS, adds many more patients to waiting lists and increases the UK benefits bill. Workers themselves face financial hardship. There is no upside to the current system.

A meaningful increase to statutory sick pay would immediately turn the situation around. SSP reform would enable people to more proactively manage their health conditions, remain linked to their employers and stay off benefits when they fall ill. Modelling by WPI Economics shows that implementation of an increased SSP rate alongside the other changes put forward in the Bill would deliver substantial economic benefits for the UK, including net gains of up to £800 million for businesses, £1.7 billion for the Treasury and £2.1 billion for the wider economy—all upsides.

The onus is therefore on the Government to either: substantially increase the basic rate of statutory sick pay—although I have heard already that it is the DWP that needs to consider that—benchmarking it to the national living wage rate for normal working hours; use the Bill to amend existing primary legislation to give the Secretary of State additional powers, via secondary legislation, to change how the statutory sick pay rate is calculated; or, at the least, hold a statutory consultation with a timeline to establish what the new benchmark rate for SSP should be.

In the meantime, 100% replacement of earnings for employees earning below statutory sick pay is an easily affordable policy. It brings substantial net benefits to UK businesses, the Treasury and the wider economy. At the same time, it would avoid making over 1 million employees even worse off than they are today when forced to take time off sick. It would reduce hardship among employees with the lowest pay.

[Justin Madders]

I am grateful to the hon. Member for that helpful run-through of some of the issues that we are actively considering. He will be aware that a consultation on the issue closed only yesterday, so I would not want to pre-empt the outcome by accepting the amendment today. We understand the various arguments he has advanced that the level should be higher. He will not be surprised to hear that contrary arguments are put forward by some groups around having an incentive to take sick days when they are not needed.

Some of the modelling figures that the hon. Gentleman has come up with do not quite fit with the ones we have on where people would lose out at certain rates, but that will be considered in the round when we formally respond to the consultation. We hope to do so early in the new year, because we wish to put this into the Bill before it finishes its progress. It is something we are actively considering at the moment. I should be grateful if he would withdraw the amendment, so that we can take full account of the consultation that we have just completed.

[Chris Law]

I have listened with great interest to the Minister. I thank him for his comments and for the consultation that concluded yesterday. It would be helpful to hear today what the conclusion of the consultation is. I have made it crystal clear that none of us present want to see those at the lowest end of earnings worse off than they currently are. The Bill has been brought forward in good faith and good will, I am sure, by the new incoming Government to improve the lives of everyone, most of all those at the most vulnerable end. I have spoken to employers and employees quite widely about this, and the feeling I hear constantly is that this is a no-brainer. Delaying would be very difficult.

[Justin Madders]

I understand the point the hon. Member is making, but he will understand that when a Government Department—in this case the Department for Work and Pensions—undertakes a formal consultation, it is obliged to consider all responses before coming to a conclusion. That is why it is premature to agree to his amendment.

[Chris Law]

I thank the Minister for his intervention, but this is not a DWP issue. We are not talking about the level of SSP. We are talking about a sentence in the Bill that puts in a threshold that will make people on the lowest incomes worse off. That is an issue for the Minister for Employment to address rather than DWP. The level of SSP more widely has been discussed, and that may be an issue for DWP to consider. I think there will be disagreement over what that level should be. I have already quoted the TUC’s £320 a week, and I have suggested the national living wage. I look forward to that consultation, but this amendment seeks to strike a sentence out, nothing more.

[Justin Madders]

The very issue that the hon. Member is putting forward in his amendment is the issue that the Department for Work and Pensions is consulting on at the moment, which is why it would be premature to make a decision at this stage.

[Chris Law]

I need to ask for your advice, Sir Christopher, because at this point I would press the amendment to a vote but I want to be charitable and open to understanding what we are expecting from this consultation and when we would be able to bring this issue back—perhaps even during this Committee.

[The Chair]

One of the options open to the hon. Gentleman is to withdraw the amendment today but with a view to coming back to it on Report. Whether he wishes to do that or put the matter to a vote today is a matter for him.

[Chris Law]

Thank you for that advice, Sir Christopher. Based on that, I would consider coming back to this on Report, given the fact that I have not seen the consultation and I would like to work in the spirit that we have done so far in this room to try to bring about the best for all. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Government new clause 6—Statutory sick pay in Northern Ireland: lower earnings limit etc.

Government amendment 107.