How much sick pay should companies offer?

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Companies in many countries are legally required to compensate employees when they are too unwell to work. But just how much they should receive, and for how long, varies wildly between regions.

In the UK, statutory sick pay currently only requires employers to pay workers when they are off sick for four consecutive days (though the Labour government has said it plans to introduce sick pay from day one). The law then mandates a flat £116.75 per week regardless of salary (for full-time, median wage employees this is just 16 per cent of weekly earnings). 

Further afield, policies are more generous. In Sweden, for example, employees are entitled to 80 per cent of their salary for the first two weeks of sickness. Meanwhile, Germany is even more open-handed: offering employees 100 per cent of their earnings from the first day of illness, for up to six weeks.

However, that level of generosity risks acting as a malign incentive. Germany’s sickness absence rates (an average of 20 sick days per employee per year, compared with six for the UK) appear to have increased sharply, based on data from health insurance companies.

Sarah O’Connor, writing in the Financial Times this week, argues the “optimal” policy from an economic point of view would set generosity at the level that minimises shirking but also minimises the number of people going to work when sick.

But finding data to determine that level is difficult, and stricter policies have costs too. Limiting the pay of employees with long-term or chronic illnesses may push them to leave employment altogether, pushing up the numbers of working-age people on health benefits.

So what is the right balance? How much sick pay should companies be required to offer? Tell us your views by voting in our poll or commenting below the line.