Advantages & Disadvantages of Sick Pay Schemes (OSP)

The Advantages & Disadvantages of Sick Pay Schemes (OSP)

All businesses experience staff absence due to ill-health from time to time. For some, it can be an occasional inconvenience. For others, it can become a headache that compromises the businesses' ability to function.

At some point, all business owners must consider whether or not to offer Occupational Sick Pay (OSP on the employee payslip). Maybe you are thinking about this now because your business has grown and you are reviewing your staff benefits. Or perhaps because you are just embarking on becoming an Employer and it's on your list of decisions to make.

If you don't offer an Occupational Sick Pay scheme, then your employees will, most likely, be entitled to Statutory Sick Pay (SSP). That's providing they meet qualifying criteria. You can read more here.

There are advantages and disadvantages to an Occupational Sick Pay scheme. Here are three of each.

3 Advantages Of An Occupational Sick Pay Scheme:

A Healthier Workplace

Part of being a responsible and desirable employer is how you discharge your duty of care towards all of your employees. One advantage to Occupational Sick Pay is that it helps you to do this by building a healthier workplace. When people suffering from contagious conditions stay away from work, you prevent the wider workforce being affected.

Prevent Financial Hardship

Another advantage to Occupational Sick Pay means you can reduces the fear, stress and anxiety of financial hardship faced by a sick employee. You offer them peace of mind that, whilst they take time off to recover, they will still be able to pay their bills for a defined period of time.

Facilitating A Positive & Supportive Culture

As part of your employee benefits package, an Occupational Sick Pay scheme contributes to a positive and supportive culture. By making your staff feel valued and cared for, you make them less likely to abuse your trust. This is important to both the retention of staff as well as attracting new talent to your business.

3 Disadvantages Of An Occupational Sick Pay Scheme:

Increased Absenteeism

There is a risk of your Occupational Sick Pay scheme being abused by unscrupulous employees who think they can get away with taking days off whenever they feel like it. This can be easily addressed with consistently applied, fair and robust absence management policies and systems.

Cost To The Business

This is a crucial aspect to consider and it's worth talking through with your accountant and your HR advisor. Inevitably, people will become unwell. When this happens, you need to have a clear understanding of the full financial impact. For example, some businesses (i.e. shops and restaurants) may be able to manage with reduced staffing for a finite period of time. Others, however, are subject to statutory requirements which may result in the need to employ temporary staff (i.e. childcare providers) in order to remain open.

Rewarding Poor Health

Another disadvantage of sick pay schemes is the flipside of providing a supportive culture is the risk that you are seen to be rewarding ill health. This is particularly relevant where you have multiple employees with varying levels of health and wellbeing. Staff who enjoy good health and rarely take any time off may become jealous of staff who do not have such good health and, as a result, take more sick days, for which they are paid.

In Summary:

Weighing up the disadvantages and advantages to a Sick Pay scheme is the right choice for your business relies on the underpinning finances and policies you have in place. It also depends on the day to day operational needs of your business.

With robust absence management processes in place, you can negate risks such as frequent short-term absence and abuse of the scheme. However, you need to be able to consistently apply the rules in order to avoid claims of being unfair or discriminating between individuals or groups of employees.

Need A Little More Help?

That's okay, needing help is understandable. The decision to provide OSP is a big commitment and can be a daunting decision to make alone.

To find out how we can help you come to a well-balanced decision that is sustainable for your business, book a call with me today!

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