Is it legal to cut sick pay for unvaccinated staff isolating for COVID-19?

A number of household names have taken the policy decision to cut sick pay for unvaccinated staff who must self-isolate because of COVID exposure. This is said to be in response to unprecedented levels of staff absence as well as encouraging those who remain unvaccinated to get the COVID-19 jab. With a number of large businesses now taking this approach, it could open the floodgates for other companies to do the same. What sick pay do employers have to pay and is this approach without legal risk? Employment partner David Jepps explains.

What is the difference between Statutory Sick Pay and Company Sick Pay?

Sick pay stems from two main sources:

• Statutory Sick Pay (“SSP”) that provides for payment of a modest amount to all qualifying employees; and
• anything else that an employer pays to an employee, which for the purposes of this article we will call “Company Sick Pay”, which is paid instead of or in addition to SSP. Company Sick Pay usually starts from the first day of incapacity, whilst for SSP there are four “qualifying days” before it starts.

Employers must pay SSP where employees qualify for it and will have elected whether to make Company Sick Pay an entitlement or simply their choice.

Company Sick Pay can be a right written into a contract of employment or just paid at the employer’s discretion out of goodwill. As long as SSP rules are observed, Company Sick Pay rules and payment levels can be set by the employer. Larger employers will often pay Company Sick Pay as an entitlement, whilst smaller ones will only commit to SSP.

A typical Company Sick Pay entitlement would be two weeks’ full salary in an any rolling period of one year but for very large private employers and most public sector employers, entitlements can extend to six months’ salary or more.

What changes were made to SSP during the COVID-19 pandemic?

Generally, sickness pay entitlement is triggered by “incapacity” which usually equates to an employee being too sick or injured to work.

At the start of the pandemic, SSP rules were changed to include COVID-19 scenarios because self-isolation or having tested positive with no symptoms was not covered by the SSP definition of incapacity. Those rules have since been tweaked many times and are expected to stay in place until 24 March 2022.

Currently for SSP to be triggered for COVID-19 reasons, an employee does not have to be unwell or too unwell to work. They can display no symptoms, but if they have tested positive or have been required to self-isolate, SSP will be available up to certain limits. Employers can make more than one SSP claim but the COVID-19 rules only allow for up to two weeks’ SSP to be paid per employee.

Where an employee must quarantine after travel, there is no cover. It is not clear whether employees self-isolating after having returned from abroad and awaiting the results of a PCR test are covered. The rules have not yet been tweaked in this respect and may not be in the future given that such requirements are currently in the process of being relaxed. If such employees test positive, they are then covered, but if not, then on the basis that tests are currently required within two days of returning to the UK, the necessary four qualifying days to trigger SSP payments will not have been met.

Can employees insist on working from home when isolating to avoid triggering SSP?

Triggering sick pay may not be attractive to employees or employers.

As SSP rates are low (currently £96.35 a week) and any contractual sick pay might only be activated by actual illness, many employees will readily agree to work from home if they can, in order to continue to receive full pay. But strictly speaking, employees cannot insist on homeworking unless they already have the right to work from home.

Where an employee cannot work from home, taking paid holiday is another possibility and should occur by agreement as qualifying employees can insist on SSP and enforce their rights in a Tribunal. SSP is not due where employees are working or on holiday so cannot be used to “top up” SSP where SSP is not due. Some employers may exercise a discretion to pay Company Sick Pay where there is no entitlement, but the overall movement is currently more in another direction.

Can employers elect who to pay Company Sick Pay to?

Recently many high-profile employers who have many staff who cannot work from home, such as Ikea and Next, have elected not to pay Company Sick Pay to unvaccinated employees who are required to self-isolate or have tested positive and are asymptomatic or are otherwise well enough to ordinarily work. Assuming that an employer’s Company Sick Pay is discretionary or if it is an employee entitlement, that entitlement is not triggered (as there is no incapacity). Employers can therefore adopt such an approach under contract law.

Taking away a clear entitlement, such as SSP or any non-discretionary Company Sick Pay, that would otherwise be triggered is a very different matter and risks deductions from pay, breach of contract and constructive dismissal claims. Constructive dismissal is where an employee can treat the employer’s conduct as being bad enough for them to treat themselves as dismissed and can in turn lead to an unfair dismissal claim.

There is also a serious risk of discrimination claims if factors, such as an employee not being vaccinated for health reasons, are not considered and appropriate exceptions not made.

Employers should be aware that the SSP rules mentioned above apply to England and that different rules can apply in the rest of the UK.