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20 Jan 2022

Can employers cut contractual sick pay for unvaccinated employees required to self-isolate due to close contact with a positive COVID-19 case?


Hitting the headlines recently have been reports of companies such as IKEA, Ocado and Next cutting contractual sick pay for unvaccinated employees required to self-isolate as a result of being in close contact with someone who has COVID-19.  Employers adopting such strategies may do so for a number of reasons, for example, to encourage vaccination among staff, to deal with mass employee absences as a result of the Omicron variant and for financial reasons on the back of two years of grappling with the pandemic.  Many employers will be reading these headlines with interest and contemplating introducing such a policy.  In this alert we consider the legal implications for employers.

What is contractual sick pay?

It is worth setting out the distinction between contractual sick pay and statutory sick pay (“SSP”).  SSP is a legal requirement which allows qualifying employees to receive £96.35 per week for up to 28 weeks of sickness absence. 

Contractual sick pay refers to enhanced sick pay which employers may choose to offer to their employees (unlike SSP there is no legal requirement to do so).  Contractual sick pay may be set out in an employee’s contract or in a sickness absence policy and entitle the employee to full pay (or a percentage of full pay) for a certain period of time if they are off sick, over and above any SSP entitlement. 

The changes that companies are making is to the contractual sick pay element not to SSP.  However, the changes are in relation to unvaccinated employees who are required to isolate due to close contact, not in relation to unvaccinated employees who actually contract COVID-19.    

Can employers change contractual sick pay?

In general, a change to contractual sick pay is a change to an employees’ terms and conditions of employment which requires employee consent.  It is advisable to consult with employees in advance about changes, and if there are circumstances in which an employee’s refusal to accept the changes will result in dismissal and re-engagement on new terms, and this may impact 20 or more employees, then this could trigger collective consultation requirements.  (For more information on dismissal and re-engagement and the latest developments, please see our previous alert on this topic by clicking here.)

In circumstances, which concern reducing sick pay for unvaccinated employees who are required to self-isolate due to close contact (rather than due to illness), it will be necessary to analyse whether there is any contractual entitlement to sick pay.   It will be important to consider what, if anything, your sickness absence policy says about this and what communications there have been with employees, in order to determine if employees have a contractual right to sick pay when self-isolating due to close contact.

What are the risks associated with implementing such a policy?

Aside from the above, a key risk area is discrimination claims.

Applying different policies to those who are vaccinated and unvaccinated may be indirectly discriminatory, if it puts certain groups with protected characteristics at a disadvantage.  For example, if an employee has a disability and does not get the vaccine for medical reasons they may be indirectly discriminated against on the grounds of disability.  Similar arguments may be brought by employees who are unvaccinated on the grounds of religion or pregnancy, which are also protected by discrimination law. 

Employers adopting this strategy would be prudent to carve out such groups from their policy. For example, IKEA has said that the policy does not apply to those with “mitigating circumstances” such as pregnant employees or those unvaccinated due to other medical grounds.1

A key point to note is that indirect discrimination can be objectively justified if it is a proportionate means of achieving a legitimate aim.  For example, employers may argue they are trying to encourage vaccination among their workforce, protect all their employees’ health and safety in this respect or ensure they are able to continue to operate their business effectively.  Many employers may consider that they can objectively justify any indirect discrimination or at least they are prepared to take the risk of claims given the difficult situations in which they find themselves. 

Given the ever-changing landscape of the pandemic, these specific policies are untested in the courts and we’ll wait to see if other human rights arguments are raised, with employees of public authorities alleging such policies are a breach of their right to a private life or the right to freedom of thought, conscience and religion. 

Finally, its worth mentioning that there are also data protection implications regarding asking employees about their vaccination status, especially if employers are keeping records.  If you would like more information on this our data protection specialists are delighted to assist.



Paul Reeves

Paul Reeves
Head of employment

T:  +44 20 7809 2916 M:  +44 7919 694 135 Email Paul | Vcard Office:  London

Leanne Raven

Leanne Raven
Senior knowledge lawyer

T:  +44 20 7809 2560 M:  +44 7827 353 108 Email Leanne | Vcard Office:  London