The Government has recently launched a new consultation entitled “Health is everyone’s business - Proposals to reduce ill health-related job loss” (the Consultation), with the stated aim of supporting more disabled people and people with long-term health conditions to remain in work which is sustainable and positive for their health. While the aims underlying the proposals are clearly positive, some of them could impose an increased burden on employers if they are taken forwards. Below, we highlight a few of the key proposals identified in the consultation and their potential impact on employers.
Right to request workplace modifications on health grounds
The first major proposal is to introduce a right for employees to request modifications to their work or workplace on health grounds. This right would be broader than the existing duty on employers to make reasonable adjustments for disabled employees under the Equality Act 2010, as it would also apply to individuals who would not be considered to have a ‘disability’ under the legal definition (a physical or mental impairment which has a substantial and long-term adverse effect on the individual’s ability to carry out normal day-to-day activities).
The reasoning behind this proposal is that the existing legal framework (i.e. the reasonable adjustments duty under the Equality Act and the obligation on employers to protect the health, safety and welfare of their employees under health and safety legislation) leaves gaps meaning that employees with health conditions or on a period of sickness absence may only receive limited support from their employer to help them stay in or return to work, and some such employees may be dismissed without any prior effort by their employer to reintegrate them into the workforce.
In order to limit the impact on employers, the Government suggests that eligibility for the right to request could be restricted to employees who have had long-term sickness absence of four or more weeks. However, it makes alternative suggestions of extending eligibility to employees with a cumulative total of four or more weeks of absence, or to those returning to work from any period of sickness absence, or even to any employee who can make a case for modifications on health grounds.
The Consultation notes that, to be effective, any modifications would have to be bespoke, flexible, ongoing and agreed collaboratively between employer and employee. The proposal is therefore for a right to request modifications, via a process similar to that applicable for flexible working requests. Modifications that could be deemed reasonable might include changes to working hours, patterns, tasks or duties, or to the physical working environment. As with flexible working, the employer would be able to refuse a request on legitimate business grounds. A Code of Practice would provide guidance on the application of the right to request, the timeframe within which employers would be required to respond and the business reasons that could be appropriate for refusal.
With regard to enforcement of the right, the Government envisages employees first making use of available internal grievance procedures to resolve any dispute. However, if this were unsuccessful, then employees would be able to bring a claim in the employment tribunals.
When considering the potential impact of this new right, it is worth noting that many employers already offer workplace modifications such as changes to working hours, duties, etc. to employees returning from long-term sickness absence as a matter of best practice and part of a workplace wellbeing strategy. Indeed, given the complex nature of the legal definition of disability and the difficulty of determining whether or not the reasonable adjustments duty applies, it is often safest for employers to treat employees who have been absent on long-term sick leave as if they were legally disabled and make adjustments accordingly. That said, the introduction of the proposed right could nonetheless impose a significant new burden on employers, particularly if eligibility is set broadly. Further, while the ability to decline a request on legitimate business grounds will provide some comfort to employers, its usefulness will depend on how ‘legitimate business grounds’ are defined and how far employers are required to go to demonstrate that a given case falls within them.
Statutory guidance to encourage early support for sick employees
The Consultation also includes a proposal to strengthen statutory guidance “to encourage employers to take early, sustained and proportionate steps to support a sick employee to return to work before that employee can be fairly dismissed on the grounds of ill health affecting their capability.”
The rationale underpinning this proposal is that there is evidence that early intervention and sustained workplace-based support during sickness absence are important elements to facilitate return to work, while a lack of support from an employer can be a factor in prolonging long-term sickness absence. The Consultation notes that dismissal protections can be an important lever for driving early and supportive employer action and international models of managing sickness absence tend to place more prescriptive requirements on employers than apply in the UK.
The introduction of statutory guidance requiring an employer to take steps to support a return to work before being able to dismiss fairly for capability has the potential to substantially increase the risk for employers around capability dismissals. That said, if the guidance were to provide clear direction, such that employers who followed it could feel confident that they had done enough to reduce their legal risk, this could be seen as beneficial for employers. Moreover, the Consultation emphasises the Government’s desire to avoid imposing too prescriptive an approach, as well as a commitment to respecting the existing body of case law on the fairness of capability dismissals and maintaining the core test of whether an employer has acted reasonably.
Reforming statutory sick pay
The Consultation puts forward several proposals for reforming statutory sick pay (SSP), including extending eligibility to those on the lowest incomes, strengthening compliance and enforcement and, potentially, introducing a rebate on SSP for SMEs who comply with certain best practice steps. However, the proposal which has the perhaps the greatest potential impact on employers is to amend the rules to allow for payment of SSP to continue during a phased return to work following sickness absence.
Under current rules, payment of SSP stops as soon as an employee returns to work, even on reduced days or hours. In practice, this can result in an employee who returns to work, for example, working alternate days or half days being worse off financially than if they did not return at all. This can be a disincentive from returning to work, or can push employees to return to their full hours before they are well enough to do so.
The proposed change would mean that an employee on a phased return could receive a pro-rated amount of their normal pay for the hours or days when they are at work and a pro-rated amount of SSP for the hours or days when they are off. Since phased returns are less likely to be necessary following short periods of sickness absence, the new rule would only apply after absences of two weeks or more.
An employee’s entitlement to SSP is subject to a 28 week maximum across any linked periods of incapacity for work (i.e. absences which are not more than eight weeks apart). However, the Government is proposing that SSP paid for part-days of absence during a phased return would not count towards this maximum entitlement.
In addition, the Consultation indicates that employers who provide company sick pay will be expected to ensure that they mirror the pro rata approach to SSP in their company sick pay provision as well. This would involve additional costs for employers and would mark a change from the current position under case law which has established that employers are entitled to limit pay for employees on a phased return on the basis of the work that they actually do (if on reduced duties), or the hours/days that they actually work (if on reduced hours/days).
Given the benefits to employers of reducing the length of sickness absences and retaining experienced employees in work, some of the proposals put forward in the Consultation will be welcome. However, it will be important to ensure that any changes do not impose too great an administrative or financial burden on employers, or create unnecessary complexity or uncertainty.
How we can help
Make UK will be submitting a response to the Consultation to put forward the views of UK manufacturers. If you have any questions about the Consultation or would like to contribute to our response, please contact Tim Thomas, Director of Employment and Skills Policy, by email to [email protected].
To find out more about this and other key legal developments for employers, come to one of our free Employment Law Updates (sessions running at various locations on multiple dates in September and October). For more information and to book your place, click here.