Employers must be wary when tackling sick leave

Businesses are haemorraging billions of pounds because of real and invented sick leave, but schemes to cut absence rates can sometimes exacerbate the problem.

The CBI estimates that sick leave costs business about £11bn each year, with staff taking a remarkable 166 million sick days.

A few years ago, some employers dipped their toes in the transatlantic waters by adopting a US concept of 'duvet days'. Instead of having to book holiday in advance, or invent an attack of 'food poisoning', workers could legitimately convert a number of single days' holiday to casual paid leave by simply ringing up on the day to say they wouldn't be in. While that no doubt discouraged workers to lie about why they wanted time off, it had the potential to cause havoc by increasing incidences of unplanned absence.

The UK's growing absenteeism culture has recently hit the headlines again. In the same week that Tesco announced the introduction of various voluntary pilot schemes aimed at reducing staff absenteeism, a survey by the Foreign Office revealed that 40 per cent of those interviewed would be prepared to 'take a sickie' to go to Euro 2004.

Although the Tesco scheme has received a fanfare, the supermarket is following - no doubt cautiously - in the footsteps of other employers who have already trodden this path. Schemes in operation include not paying sick pay for all or part of the first three days of sickness (the days when no statutory sick pay (SSP) is payable). Another is the 'stick and carrot' approach, where staff are given a few extra days' holiday (but lose them if they take days off sick) or other rewards for good attendance.

Critics of such schemes highlight the potential to penalise staff on lower incomes who are genuinely sick, but who will force themselves to go to work to avoid loss of income. They point out that this could also slow down the recovery process and cause germs to be needlessly spread to others, thereby exacerbating the problem.

Forms of incentivisation may alleviate this effect, but what about the perception of unfairness when a worker who takes a day off with a nasty 24-hour tummy bug is treated in exactly the same way as an employee nursing a hangover? And what happens after the unpaid days have passed? If, by staying away for a longer period, the employee gets back pay for the unpaid days, that may encourage workers to take even more time off than they might otherwise have done. It truly is a tricky problem.

From a legal perspective, it is a common misconception that employers are under a duty to pay sick pay. SSP is payable by an employer only after a period of four or more consecutive days of sickness. Employers frequently top up SSP, and will also cover the three 'waiting days' during which it is not payable, but they are not legally obliged to do so.

Before implementing fundamental changes to a sick-pay system, employers will no doubt try to identify the root causes of absenteeism. Absence levels and patterns should be carefully monitored, and the consequences of abuse of the sick pay system clearly communicated to employees. Employers should meet with their staff to identify the underlying reason for any regular short-term absence. If workers know they can 'get away with it', and there is a culture of 'everyone does it', then the problem will only get worse.

Employers that contemplate introducing tougher measures to reduce excessive absenteeism should remember that any change to sick-pay arrangements will constitute a change to the terms and conditions of employment, and employee consent will be required. The only way to introduce such a change without consent would be to terminate the existing contracts and offer new terms. If faced with entrenched opposition from its workforce, most employers would consider this a dangerous strategy and a step too far.

By Linda Farrell, Partner, Bristows.