This article is the third installment of our key employment issues for 2022 series. The first is on enhancing the work environment and the second is on managing reluctant returners.
Recent press reports have highlighted decisions by the likes of Ikea, Morrisons and Next to remove entitlements to enhanced sick pay from unvaccinated employees who are forced to self-isolate due to a close Covid contact. In this article we consider the reasoning behind this approach and the legal implications of following in the footsteps of these employers.
Why the difference in treatment?
At present, people who are unvaccinated are required to self-isolate for 10 days if they are a close contact of someone with Covid. This contrasts with vaccinated people (who are only required to self-isolate if they test positive, and even then only for five full days if they receive two negative tests by day six).
As such, businesses which require employees to be physically present to do their job, such as retail, construction and manufacturing, are battling chronic staff shortages caused by Covid-related absences. In other sectors, where the majority of staff may be able to do their jobs from home, the issue of self-isolation due to close contact with Covid is likely to have less of a practical impact.
The financial implications of ongoing sick pay costs are inevitably a motivating factor for some employers. The hefty Covid-related costs that employers have shouldered over the last two years have led many to consider ways in which in overheads can be cut (whether it is reductions in office space, discretionary spending, or recruitment, for example).
Practically, this change in approach towards unvaccinated employees means they will only be entitled to statutory sick pay of £96.35 a week, provided they meet the qualifying statutory criteria. The “top up” element which employers often pay – such as full salary for absences up to six weeks – is withheld for this category of staff.
Removing the additional pay from this category of employees is seen as an opportunity to both reduce overheads and, as some employers have argued, incentivise more of the workforce to get vaccinated as a means of creating a safer working environment.
Note that in each reported example of an employer which has adopted this approach, employees who test positive for Covid will still receive enhanced sick pay (also known as “company sick pay”), regardless of vaccination status.
Other employers, such as John Lewis, have made it clear that they will not differentiate when it comes to pay entitlements and vaccination status, citing a wish to avoid divisions within employees. A further issue is whether a cut in sick pay entitlement will actually disincentivise unvaccinated employees from complying with the current self-isolation rules after being in close contact with a positive case.
What are the key legal risks?
In summary, the key legal risks with amending company sick pay entitlements based on vaccination status are likely to include:
- Discrimination: Many employees have protected reasons for not being vaccinated, such as disability, pregnancy, or religious beliefs. Therefore, a sick pay policy which has an indirectly discriminatory impact on such groups will expose employers to potential discrimination claims unless they can objectively justify the need for their business to take that approach. The issue of justification is one which employers should consider early and fully document.
- Breach of contract: Company sick pay may in some cases be a contractual right. If so, a unilateral change imposed by an employer without prior employee consultation and/or agreement could result in unvaccinated employees claiming that their employer is acting in breach of contract.
Alternatively, the decision to pay company sick pay to staff may well be part of a discretionary sick pay policy, which an employer has previously made clear could be subject to change. While any change to a discretionary policy should also be implemented sympathetically, the risk of employment claims is generally less acute.
- Data protection: An employee’s vaccination status is sensitive personal data which employers should only process for a specific purpose which is fair, transparent and justifiable. Guidance from the Information Commissioner’s Office confirms that recording vaccination status for any purpose (in this case for determining sick pay entitlements) will amount to data processing under the UK data protection regime. As such, a data protection risk assessment should be conducted, which records the employer’s legitimate interest for the processing and the necessity behind it.
Should we adopt this approach?
What one employer considers to be an important step for their business to take is unlikely to be the same as another. Factors such as the employer’s particular sector, the number of unvaccinated staff to whom the policy will apply (i.e. the likely cost implications), whether company sick pay is contractual, and the likely impact on staff morale post-pandemic will all have a bearing on any decision to alter sick pay entitlement.
Larger employers with extensive HR support to implement the change may well consider that the benefits to the business outweigh any negative impact on their relationship with unvaccinated employees. Either way, tricky employment issues associated with employees’ vaccination status are likely to be troubling employers for some time to come.
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