January 20, 2022

Sick pay cuts for unvaccinated UK employees who are required to self-isolate – what are the risks?

Barista wearing mask

IKEA, Next and Ocado have all recently announced that they will reduce the sick pay entitlement for some unvaccinated staff who are required to self-isolate after close contact with someone infected with Covid-19. These employees will now be entitled to statutory sick pay (SSP) only, subject to the eligibility requirements of the scheme. With SSP currently at £96.35 per week, affected unvaccinated staff will likely suffer a financial detriment from the change. Morrisons supermarket chain have also recently confirmed that they made a similar move in autumn last year, and some employers have even introduced risky “no jab, no job” policies outside of the health and care sectors.

Double vaccinated employees now do not have to isolate if they have close contact with someone infected with Covid-19, so for retailers reliant on staff being in their stores, there is a very obvious incentive to encourage employees to be vaccinated in order to avoid staff shortages.

The position with these renowned retailers is that unvaccinated workers who are told to isolate but test negative now get SSP only, whereas covid-positive staff get full sick pay regardless of their vaccination status.

Why Change Your Sick Pay Policy?

We are now at a point in this pandemic where businesses need to plan longer term. Short term fixes are no longer appropriate, particularly as covid-related absences remain high. Whilst the topic of vaccinations remains an emotive one, the retail sector in particular needs to continue delivering their services, and they need staff available to do so.

Company sick pay policies vary between employers as to their wording - whether or not the terms are contractual, and whether the employer retains any discretion over implementation.

The Legal Risks

If sick pay terms are contractual, an amendment not to pay company sick pay for unvaccinated self-isolating staff raises the question whether the change to contractual terms is unlawful. Usually, changes to contract terms can only be implemented with the employee’s agreement. Where agreement cannot be reached, employers may end up down the path of “fire and rehire” – which means dismissing the employee on the basis of their current contract, and offering them a job on the new contract terms. If employers do not agree amendments to the contract terms with their employees, or re-engage on new terms, but instead simply withhold contractual company sick pay beyond any circumstances set out in the employment contract, the company may be exposed to claims for unlawful deductions from wages, breach of contract and unfair (including constructive) dismissal.

In the absence of an express provision in the contract about company sick pay, employers should also take care to identify whether the obligation to pay company sick pay has been implied into the contract through custom and practice.

If sick pay terms are non-contractual and subject to the employer’s discretion, the employer may have more flexibility to make changes. However, employers should be wary of non-contractual changes that differentiate between categories of employees. There are many potential pitfalls to consider, such as discrimination and human rights claims in respect of individuals who refuse to be vaccinated. Employers and employees both have an implied duty of mutual trust and confidence into the employment relationship – employers should take care that their decisions, even in respect of their discretion, do not go against this.

Ultimately, when it comes to vaccinations (outside of health and social care) employers need to deal with each individual on a case-by-case basis, and properly consider the reasons for not being vaccinated. From a data protection perspective, employers also need to be particularly careful when recording employees vaccine status as it is regarded as sensitive personal data.

Most of us are now resigned to the fact that covid is here to stay. As we hopefully transition from pandemic to endemic over the next few months, the decisions that businesses make in relation to their staffing and HR issues, and how they communicate to the same to their staff, will be significant. An inclusive culture focussed on educating and supporting staff to make informed decisions about vaccinations is really important.

For further information about the employment law implications of Covid-19 and vaccinations in the workforce, please contact a member of our Employment team.

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