HR 21 July 2015

Making sick leave a less painful experience

Absence costs the UK economy around £17bn a year

One of the most frequent enquiries employment lawyers get is from small businesses worried about sickness absence. The department for work and pensions revealed last year that more than 96,000 employees were off sick for a month or more and long term absence – or even odd days off here and there – can seriously affect productivity as well as morale. The government abolished the scheme which repays a percentage of statutory sick pay (SSP) to small businesses last year, so it’s more important than ever to know where you stand.

Although the law around sick leave and pay is incredibly complex, the best place to start is by having a clear policy. Although a separate policy is always better, if you can’t afford to draft a handbook or sickness policy, it can be dealt with quite adequately in the employment contracts.

Firstly, think about how you monitor absence. Most keep this simple, with the employee responsible for self-certifying with mandatory daily reports for the first seven days, followed by an obligation to produce a formal “fit note” from their GP. Monitoring when the employee is better is also important, when return-to-work interviews can be a useful way of tracking any regular issues that may crop up.

The most painful absences for small businesses are long-term, or employees who take the odd day here and there – but do it regularly. Most small businesses prefer not to pay any contractual sick pay (continuing to pay the employee normal salary whilst off sick) and would rather put employees straight on to SSP which, as well as being cheaper, arguably encourages employees only to go on sick leave when absolutely necessary.

Most employers are not aware that they have no obligation to pay an employee when off sick and furthermore, that SSP does not kick in until the employee has been off for at least four consecutive days, within a period of eight weeks or less. So when an employee first goes off sick, you don’t need to pay them at all for the first three days. After eight weeks with no sick leave, that pattern starts again – no SSP (and arguably no salary pay) for the first three days. SSP is then payable by the employer (unfortunately with no compensation now payable back from the government) for 28 weeks, after which the employee will be paid directly by the DWP.

In reality though, for periods of short-term sickness, which small business has the time, or the inclination, to calculate and prorate when and how much salary isn’t being paid and when SSP kicks in? Although there is a useful tool on the website, let’s face it, by the time most employers get round to working it out, PAYE has already gone through. In fact the number of businesses taking advantage of these “free” three days is very low, if non-existent.

The position is leaning towards making it easier for companies to dismiss an employee who is on long term sickness absence

Furthermore, being the altruistic and savvy bunch that they are, most new businesses will know that happy employees are one of the most important indicators of business success. And so, within the “SSP only” policy, most will include a right to receive full, contractual salary for a certain number of days off sick, entirely at the company’s discretion. This allows for sympathetic support to be given to genuinely sick employees.

But what if this absence goes on and on and neither of you know when the employee will be back at work? The courts understand that it’s not good for business to have an employee still on the books but on long-term sick leave and, subject to certain very strict and important legal requirements, the position is leaning towards making it easier for companies to dismiss an employee who is on long-term sickness absence.

If you are looking to dismiss, the red-top issues de jour, stress, pregnancy and holidays, are the ones to watch out for. Stress is rearing its head more and more often, and it’s tricky for employers who feel, quite rightly, that a certain amount of stress and expecting that you will be criticised constructively, go with the job of working for a new business. Many also feel that employees are convincing GPs too easily that they are stressed, and more often than not that it’s work causing the stress, with GPs not taking or having the time to assess them properly and instead frequently signing off fit notes with a vague “stress-related reason”, whilst prescribing sleeping tablets or similar to back up this all-encompassing and possibly meaningless diagnosis.

With a pre-arranged set of procedures, obliging the employee to undergo an independent medical assessment after a certain time, you can bring clarity as to whether the “stress” is normal and acceptable or something more serious. This will also have the added benefit of flushing out those employees who may be malingering.

For pregnant employees and those who fall within the definition of disability for the purposes of discrimination law, the stakes are even higher. There are hoops to jump through. And through them you must jump! The law is an ever-changing beast when it comes to whether you pay holidays when an employee is off sick (the current answer is yes) and as to what happens when an employee gets sick whilst on leave or can’t take their holidays because they are on long term sick leave and want to carry them over to the next year. It is, therefore, always advisable to take advice on any of these scenarios.

As above, the best way to avoid disagreements and worry is to have the policies in place first and if in doubt, take advice. Sickness absence is one of those areas which is rife with potential problems. And you can be sure that there will be at least one employee along the way who will take advantage of a badly drafted or non-existent sickness policy.

Image: Shutterstock

Philippa Wood is a consultant solicitor at Keystone Law.

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