Plans to expand statutory sick pay under Labour’s proposed Employment Rights Bill could lead to higher levels of absenteeism and increased pressure on UK businesses, members of the House of Lords have warned.
During a debate on the legislation on Tuesday, Conservative peer Lord Hunt of Wirral said the reforms risk encouraging workers to stay at home even when not medically unfit for work, potentially adding to staffing challenges in sectors such as hospitality and retail.
“There may be little incentive to attend work when they feel under the weather or even when they simply feel they would prefer a day off,” Lord Hunt told the chamber. “The absence of financial pressure could lead to increased absenteeism in the short term, which could lead to operational challenges.”
The Employment Rights Bill, which is being steered through Parliament by Deputy Prime Minister Angela Rayner, proposes several changes aimed at increasing worker protections. Among them is a move to make statutory sick pay available from the first day of illness, rather than the current fourth, and to abolish the £123-a-week earnings threshold, which currently excludes millions of lower-paid and part-time workers.
Mental Health and Sickness Claims
Concerns were also raised over the growing number of sickness claims linked to mental health. Baroness Cash pointed out that mental health conditions now account for half of all new sickness claims, and questioned the criteria used to approve time off.
“A diagnosis of stress, low mood, burnout — all of these are now signed off on GP sick notes,” she said. “There’s a confusion between transient life difficulty and clinical disorder.”
She warned that similar reforms in Sweden had contributed to a sharp rise in sickness absence, and said the UK risks following the same path if access to paid leave is expanded without adequate safeguards.
“In Sweden, they did what this government is proposing to do and it led to rocketing absence levels,” she said.
Record Levels of Absence
The latest figures from the Office for National Statistics (ONS) show that 185.6 million working days were lost to sickness or injury in 2022, the most since records began. Sickness rates have risen steadily in the wake of the Covid-19 pandemic, with the highest levels observed among workers in health and social care, public administration and manufacturing.
According to the ONS, mental health, musculoskeletal problems and respiratory illnesses remain the leading causes of long-term absence. The increase in sick days has prompted concern among employers and economists, and some have warned that it could affect productivity and delay economic recovery.
In a recent report by the Institute for Public Policy Research, absenteeism was described as “a significant drag on the UK’s labour market”, with implications for output, recruitment and staff morale.
Business Fears over Cost and Disruption
Employer groups have raised further alarm over the broader implications of the Employment Rights Bill. In addition to the sick pay reforms, the proposed legislation includes:
- The right to request flexible working from day one
- A ban on exploitative zero-hour contracts
- Automatic unfair dismissal protection from the first day of employment
A survey released this week by the Chartered Institute of Personnel and Development found that a quarter of UK employers are planning redundancies in the next three months, citing concerns about rising costs and added administrative burdens stemming from proposed employment law changes.
The Bill has also attracted criticism from other Conservative peers. Baroness Meyer warned last month that the legislation could leave the country vulnerable to industrial action and lead to the “economic chaos of the 1970s”. Lord Sharpe of Epsom suggested that increased access to flexible working could create operational risks in the security services and “unintentionally create significant risks to national security”.
Reforms Under Scrutiny
The Employment Rights Bill is part of Labour’s wider agenda to strengthen worker protections and reduce insecurity in the labour market. Its supporters argue that the current sick pay system is outdated and fails to protect the most vulnerable, including agency staff, zero-hour workers and those in the gig economy.
But as the Bill makes its way through the House of Lords, peers continue to raise objections to its scale and pace. Further amendments are expected before the legislation is returned to the House of Commons for final approval.
For now, businesses are preparing for potential changes to workplace policy, HR procedures and employment contracts, and weighing the balance between protecting worker wellbeing and maintaining operational stability.