Workplace Report June 2013


Paid time off, not a spoonful of sugar, helps medicine go down

A good sick pay scheme delivers support when it is needed and remain an important workplace benefit. Workplace Report analyses the results of a sick pay survey from the Labour Research Department’s Payline database.

Sickness absence is rarely far from the top of the human resources agenda. With austerity driving decision-making it’s perhaps not surprising that employers’ sick pay commitments are once again under scrutiny.

Health at work (2011) review of sickness absence

Two years ago the government commissioned an independent review of sickness absence by Carol Black and David Frost and their report, Health at work – an independent review of sickness absence, was published in November 2011. Much of its focus was on longer-term absence and getting people back to work, but it also suggested a “causal link” between high sickness absence and generous occupational sick pay (OSP).

“Where an employee can be off on full pay, there is no financial incentive to be at work,” according to the report. “Furthermore, paid sick leave can often be seen as an entitlement, to be used up each year in a similar way to annual leave. This may be an unintended consequence of OSP policy.”

If the report is right then employers like British Sugar, which offers 100% sick pay for up to 52 weeks for employees with four or more years’ service (coupled with a five-stage absence control procedure) seem not to have got the message.

Yet the report contradicts itself by noting a wide variation in levels of sickness absence between employers who offer the same services and operate the same OSP schemes.

“Many of the good examples of relatively low absence occur in parts of the public sector that share a centrally-specified OSP regime (that is a centrally-negotiated scheme for all employers within that sector), for example NHS employers, and the scheme for teachers and civil servants. Such a wide variation between employers who administer the same OSP rules would suggest that it is not the scheme but its management that impacts on absence levels,” the report said.

In the difficult years following the 2008 crash and recession, there has certainly been pressure on sick pay schemes at local authority level, and in parts of the civil service, such as the Department for Work and Pensions.

Private sector employers too have taken steps like the introduction of “waiting days” before sick pay is payable or applying inferior terms to new groups of employees.

However, there is also evidence of employers agreeing to improvements in sick pay, reducing the qualifying period for new starters or cutting existing “waiting day” rules. There’s a working party on improving sick pay in the NAECI engineering construction industry, following earlier sick pay improvements in Electrical Contracting and Heating and Ventilating.

In transport, National Express West Midlands increased sick pay for Standard Rate Drivers from six weeks full pay/six weeks half pay to eight weeks full/eight weeks half. And JD Williams Logistics (Shaw and Hadfield) agreed an additional week’s sick pay for longer serving staff.

Levels of occupational sick pay

Occupational sick pay does not bear much comparison with Statutory Sick Pay (SSP) which pays only £86.70 a week to eligible employees in 2013-14. And while SSP places an obligation of around £1.5 billion on employers, they “voluntarily” pay an additional £6.9 billion in OSP.

Most occupational sick pay schemes in Labour Research Department’s (LRD) Payline database survey offer 100% pay (including SSP entitlement) at the start of a period of absence.

It is quite common — particularly in the public sector – for this to drop to 50% (often with SSP on top) during the second half of the absence. So absent workers may be financially worse off, but the leave lasts longer.

There are some industries with lower cash-based sick pay rates, and there are agreements that pay less than full pay — for example 90% at WebberBus, 80% at Texturing Technology, and 60% under the Footwear NJC agreement — but these are the exception rather than the rule.

If the definition of sick pay falls short of regular earnings then employees risk being worse off even under a 100% sick pay policy. Shift payments are a case in point, but are included in the calculation of sick pay at food manufacturer Devro, and at Meggitt Aircraft Braking Systems.

There has been a re-negotiation of sick pay levels for many NHS staff. Sick pay under the NHS Agenda for Change agreement was recently set at basic pay for staff on spine points 9 and above (those paid more than £17,425). But for those on spine points 1 to 8, and those absent due to a work-related injury or disease, it still includes regularly-paid supplements, recruitment and retention premia, payments for work outside normal hours and high-cost area supplements.

SSP is payable from the outset of sick leave, subject to three “waiting days”, although employees need to have done some work under their employment contract before going off sick. OSP schemes are more likely to have some delay before entitlement accrues, but are less likely to make use of waiting days.

Under the 2013 pay deal at Birmingham Hippodrome, entitlement to company sick pay will now start after three months’ service and successful completion of the probationary period. It was previously available only after six months.

At the London Fire and Emergency Planning Authority, members of staff have an initial entitlement to four weeks at full pay, which rises to four weeks’ full pay and eight weeks’ half pay after four months’ service.

Use of waiting days is uncommon, but not unheard of. At G4S Rye Hill and Altcourseprisons three “waiting days” for OSP were introduced this year. But waiting days have just been removed for clerical and administrative staff at G4S Cash Solutions, while the Leather Producing Industry national agreement has reduced the number of waiting days from 10 to eight.

SSP is payable for a maximum of 28 weeks (employees not entitled to SSP may qualify for other benefits). That’s an unfamiliar period in most occupational sick pay schemes, although sick pay at ATOS Healthcare is based on a 28-weeks entitlement.

Taking all paid leave into account— whether paid at 100% or 50% — seven out of 10 agreements in the survey eventually provide a total entitlement of up to 52 weeks’ leave. At the middle of the range, median entitlement is 16 weeks after one year’s service, 26 weeks after two years and 52 weeks after five.

Length of period of paid occupational sick leave

Paid leave (weeks) Percentage of agreements in survey
1 year service 2 years service 5 years service Maximum entitlement
Private production 11 12.5 17 25 26%
Private services 11 26 28 39 24%
Public sector 16 32 52 52 18%
Higher and further education 21 32 52 52 32%
All agreements 16 26 52 52 100%

Burton’s Biscuits (Moreton) has the longest entitlement in the survey, paying up to 78 weeks at full pay for employees with 15 or more years of experience; 65 weeks after 10 years; 52 weeks after five years; 26 weeks after three years; and 13 weeks after one year.

Some employers offer a specific additional entitlement to paid leave, in the case of injury. At Aberdeen University, unions are negotiating for the inclusion of discrete provisions for staff who are sick due to a recognised disability.

Where specified, sick pay entitlement usually applies to a 12-month rolling period, although in civil service and related employers, such as the National Assembly for Wales, entitlement is calculated on a four-year rolling cycle.

At Eurostar, there is a proposal to change from a fixed to a rolling year, but train drivers at Scotrail move next year from a rolling year to an April-to-March payroll year for this calculation.

Breaking things down by broad sector, after one year of service, production employers (manufacturing, utilities, construction and agriculture) provide around 11 weeks’ paid leave — for example 10 weeks at Nestlé Tutbury, 12 weeks under the Footwear NJC agreement. But by that stage some aerospace manufacturers are providing 24 weeks.

In private services, the one-year median is also 11 weeks (the entitlement for BP Oil drivers), but top entitlement is 32 weeks at Stena Line manning services, with Forth Ports (Grangemouth) and Greenock Telegraph not far behind on 26 weeks, and the RSPCA and the Association of Chartered Certified Accountants on 24 weeks.

In the public sector, employees with one year’s service have a higher median entitlement of 16 weeks — in most cases it includes equal periods on full and half pay. Many organisations offer this length of sick pay, but the Homes and Communities Agency provides 32 weeks (16 weeks full, 16 weeks half) after a year.

In higher and further education, median entitlement after one year is 21 weeks (22 at Heythrop College and 20 at South and City College Birmingham). But Hull University is ahead of the rest with 52 weeks’ entitlement (six months’ full pay, six months’ half pay) after one year.

After two years, overall median sick leave is up to 26 weeks. Little has changed among private production agreements with a median of 12.5 weeks (reflecting 12 weeks paid at Becker Industrial Coatings and 13 weeks at Invista Textiles). But the group of top production employers offering up to 24 weeks now includes Eaton Electric (full and half pay) and Joyglobal UK Pinxton (where its 24 weeks on full pay).

The extra year of service has a bigger impact among private service companies, taking median paid leave to 26 weeks. That’s what’s payable at Nottingham Community Housing Association and insurer Aviva. But while the housing association follows the public sector pattern combining full pay and half pay, the insurance company pays 13 weeks full pay and 13 weeks at 75% after two years’ service.

In the public sector and among higher and further education colleges, the midpoint after two years had risen to 32 weeks. Many employers offer sick pay at that level, with Hull University’s 52 weeks still topping the list.

After five years’ service, midpoint entitlement has reached 52 weeks across the survey as a whole, as well as among public sector employers and in higher and further education.

Among private production companies entitlement is shorter — 17 weeks at the middle of the range — reflecting policy at companies like Crown Paints (non-manual staff). By that stage British Sugar is already providing 52 weeks on full pay, as is Joyglobal and Burton’s Biscuits.

In terms of duration, maximum leave generally ends at 52 weeks, although employers often leave themselves discretion to extend this if they want. Private production companies offer a median of up to 25 weeks (24 at publishers EMAP Public Sector, 26 weeks at Michelin).

Private service employers in the survey offer a media of 39 weeks, reflecting the 30 weeks payable to BP Oil drivers and the 48 weeks payable at Ericsson (where sick pay is 100%).

Service required to reach full entitlement

Apart from the duration of any entitlement to sick pay and the level at which it is paid, schemes differ in the length of time it takes — and the number of stages — to reach full entitlement; and how much discretion management exercise in extending entitlement where that seems appropriate in individual cases.

Making a broad comparison, public sector sick pay schemes have more levels (combinations of a particular service requirement with a particular pay level) than most private sector agreements. The near-universal use of full pay/half pay arrangements plays some part in that. The private sector approach is more varied, but often involves fewer levels.

Public sector schemes are also much more uniform when it comes to the length of service required to reach the highest level of sick pay entitlement (typically five, otherwise four or three years). While reaching the maximum takes up to five years in a majority of the private sector schemes, in a minority of cases it can take 10, 15 or even 20 years — an approach that might prove unacceptable in the equality-conscious public sector.


Some organisations, including the RSPCA, make use of an insurance-based provision for longer periods of paid sick leave. The charity’s scheme applies, depending on service, for employees on sick leave after six or 12 months. And the introduction of Critical Illness Cover at Scotrail increased standard sick pay to 100% for up to 52 weeks for eligible train drivers.

The idea that sick pay schemes encourage higher absence, coupled with the desire to cut costs, may be used to justify further attacks on good policies. The LRD Payline survey confirms that sick pay lasts longer in the public sector and among education workers, but almost all of those schemes involve equal amounts of time on full and half pay.

By contrast, at least half of the private sector schemes provide only full sick pay. While public sector workers may well be singled out for having “gold-plated” sick pay, it could be that by providing longer leave (at a reducing rate of pay) their schemes are well equipped to help retain sick workers in employment — something the government wants to achieve.