Should firms be cutting sick pay for unvaccinated employees?

Next and Ocado have joined a growing list of companies reducing sick pay for unvaccinated staff. But introducing such a policy can have both legal and cultural consequences

As coronavirus cases continue to spread across the UK, a number of large employers have made the decision to cut sick pay for employees who aren’t vaccinated.

Furniture retailer Ikea, online supermarket Ocado, retailer Next and regional water company Wessex Water are among the latest businesses to issue updates to their sick pay policy in the face of new isolation rules. 

Each has made the decision to restrict sick pay to statutory sick pay (SSP) levels for those who are unvaccinated and have to isolate after coming into contact with someone who tests positive for the virus. Sick pay for unvaccinated staff who test positive for Covid-19 will remain the same.

Recent changes to self isolation rules mean that those who are double vaccinated no longer need to isolate if a close contact catches Covid-19, as long as they continue to test negative. Companies that are reliant on staff being in stores, offices or in people’s homes will therefore have to contend with fewer staffing shortages if more of them are double vaccinated. 

Philip Richardson, partner and head of employment law at Stephensons Solicitors, believes this decision represents “a shift in the way in which organisations are now approaching the pandemic”. He adds: “Many have reached a point of intense pressure when it comes to staffing and costs and it is highly likely that other firms will follow suit, including SMEs that often take the lead from their PLC counterparts.”

Many companies have reached a point of intense pressure when it comes to staffing and costs. It is highly likely that other firms will follow suit in cutting sick pay for the unvaccinated

A Wessex Water spokesperson says: “The vast majority of our workforce has been vaccinated and it’s important as a company providing essential services with key worker employees that the remainder get vaccinated to protect themselves, customers and their colleagues.

“Absences due to Covid have doubled in the past week, so we need everyone to be available so we can continue to provide uninterrupted essential water and sewerage services.”

The legalities of changing sick pay for the unvaccinated

Ikea and Next acknowledge that the topic of vaccinations is “highly emotive” and any employer looking to change sick pay based on an individual’s vaccination status will need to carefully consider the wording of their employees’ employment contracts. 

Rustom Tata, chairman and head of employment at law firm DMH Stallard, says: “In some cases, the contract of employment will be drafted in such a way that an employer will retain a degree of discretion as to whether or not to top up any SSP entitlement. 

“However, many contracts provide that the entitlement to company sick pay builds on the entitlement to SSP and so removing that element may be problematic.” 

Employers will need to take care in handling sensitive personal data regarding an individual’s vaccine status 

If there is no clear discretion in the contract, it is possible that employees will be able to claim for unpaid wages or breach of contract if their sick pay is cut.

There are also strict rules associated with handling health records. Tata warns that “employers will need to take care in handling what is sensitive personal data regarding an individual’s vaccine status”.

A spokesperson for Ikea confirmed that it was not storing information relating to its employees’ vaccination status. He adds: “We appreciate there are many unique circumstances. As such, all will be considered on a case-by-case basis.”

There will also be some people who are unable to take the vaccine, whether because of certain health conditions or allergies. Although none of the employers mentioned are cutting sick pay for those who can provide a valid medical reason for not getting vaccinated, any employer looking to follow suit will need to apply an element of discretion.

Richardson advises: “It would be sensible to consider the policy on a case-by-case basis to avoid any allegation of discrimination, although if tested a company may have grounds to objectively justify this on grounds of public health and safety.”

A bad move for company culture?

Beyond the legal context of cutting sick pay, introducing such a policy could have wider consequences for employers. Emma Parry, professor of HR at Cranfield School of Management, cautions that this could, in the short term at least, lead to people hiding when they feel sick or have been exposed to Covid-19, therefore increasing the risk of others being infected.

Although she recognises that many businesses are struggling with increased staff absences, she warns that the decision to reduce sick pay risks creating divisions within an organisation, harming the employer-employee relationship. 

Parry says: “In the longer term, we know that creating an organisational culture that is inclusive and based on trust is important to promote employee engagement. The role of an employer in such a culture should be to educate and support staff in making informed decisions about whether to be vaccinated and to encourage an open conversation about such issues.” 

Ikea and Next are not the first companies to reduce sick pay for the non-jabbed. Supermarket chain Morison’s first introduced the policy in September last year in an effort to address pandemic costs and a slump in profits.

Tata believes the more important issue this ongoing debate highlights is the low level of SSP offered in the UK, which, at £96.35 per week, is roughly a sixth of the average weekly earnings in the UK.  He says: “While some will say that SPP shouldn’t be a ‘skivers’ charter’ at a time of continuing public health crisis, it seems like this particular safety net isn’t fit for purpose.”

A recent survey from the Chartered Institute of Personnel and Development revealed that 62% of employers consider the SSP rate to be too low and should be increased. A more generous statutory sick pay allowance would help to support people who have to self isolate as well as their employers, who are having to make difficult decisions during a staffing shortage crisis.