§ Mr. Chapmanasked the Secretary of State for Social Services if he has any plans to change the sickness benefit scheme.
§ Mr. Patrick JenkinI intend to publish a Green Paper in the spring of next year setting out the Government's proposals for the payment of sick pay by employers.
Over 80 per cent. of all employees have some cover for sickness from their employers. In a large number of schemes, sick pay is made up either of full wages or of full wages less national insurance benefit. In either case, since national insurance sickness benefit is not taxable, employees can be better off sick than in work and this does not seem very sensible.
I am therefore considering proposals for legislation to place a duty on employers to pay an amount of sick pay roughly equating to the average at present paid by way of national insurance sickness benefit. Such sick pay would be taxable. Employers' liability would be limited to the first eight weeks of sickness in any tax year. The proposed scheme would apply to all employers and would cover all employees except those with earnings below the lower earnings limit for national insurance cover and those who have opted out of national insurance cover. As part of the reform, I shall propose that employers should not he required to pay sick pay for the first three days of a spell of incapacity. In addition, separate spells of three days or less would not be linked for sick pay purposes. Thus, only if sickness lasts for four consecutive days or more would sick pay be a statutory requirement. A similar change in the rules would apply to those entitled to national insurance cover. Employers will of course remain free to retain or introduce arrangements which go beyond the proposed statutory minimum.
For employees whose sickness in any tax year exceeds eight weeks, and for 92W those not covered by the scheme, national insurance sickness benefit will be available subject to the contribution conditions. The national insurance scheme will continue to provide sickness benefit for the self-employed and for others who have no employer. People receiving invalidity benefit will continue to do so as long as they qualify.
Employers would be compensated for the increased cost involved mainly by a reduction in their national insurance contribution liability. Consideration will be given to the problems which may face very small firms.
The Government will take full account of any representations made during the period of consultation following the publication of the Green Paper before final decisions are taken.