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Cutting sick pay for unvaccinated workers

Posted on 24 January 2022

An increasing number of employers - such as IKEA - are reported to be reducing company sick pay for unvaccinated staff who have to self-isolate when they come into close contact with someone with COVID-19. With Omicron continuing to cause staffing and cost pressures on businesses, many employers may be considering following suit. Employers doing so need to be mindful of the discrimination, data protection and other employment law risks that come with such an approach, as well as the associated employee relations issues.

Background

In December 2021, self-isolation guidance for fully vaccinated people was relaxed: they are no longer legally required to self-isolate if they are identified as a close contact of someone who has tested positive for COVID-19. However, those who are unvaccinated are still required to self-isolate for a full 10 days after their date of exposure.

Businesses have been struggling with staff absences and rising pandemic-related costs in the face of the fast-spreading Omicron variant. In response, companies such as IKEA, Morrisons, Ocado, Next and Wessex Water have introduced cuts to company sick pay for unvaccinated staff who have to self-isolate in the circumstances mentioned above. Provided they are eligible, such unvaccinated staff will still be entitled to statutory sick pay (SSP), which is currently £96.35 a week. Reports suggest that unvaccinated staff at the employers mentioned above will, however, still receive full company sick pay if they test positive for the virus, as in that situation everyone is required to self-isolate, whether vaccinated or unvaccinated.

Legal risks with such a policy

Discrimination

A policy which treats vaccinated and unvaccinated staff differentially can cause legal headaches.

A policy of cutting sick pay for unvaccinated staff puts the unvaccinated at a particular disadvantage. If, as a result, employees with a particular protected characteristic are disproportionately disadvantaged by the policy, the employer may be exposed to an indirect discrimination claim. Relevant protected characteristics in this context include:

  • disability, for example where an employee cannot be vaccinated for medical reasons;
  • pregnancy, as pregnant women may be less inclined to have the vaccine; 
  • race, as vaccine hesitancy is reported to be materially higher among certain ethnic minority groups; and
  • religion, where for example the vaccine contains (or is believed to contain) ingredients which adherents of a particular faith are mandated not to ingest.

An unvaccinated employee with anti-vax beliefs may also try to argue that such beliefs are protected a "philosophical belief" under the Equality Act 2010. While there are a number of difficulties with such an argument, this type of claim is at present untested in the Employment Tribunal and it is likely only a matter of time before we see a claim made on this basis.

Where the sick pay policy is alleged to be indirectly discriminatory, an employer can avoid liability by objectively justifying the policy as a proportionate means of achieving a legitimate aim. Cost saving alone is not a sufficient legitimate aim. Instead, employers must point to a reason such as reducing workforce disruption and/or health and safety concerns, and must also show that the policy is proportionate in the circumstances.

Arguably, the highest-risk approach for employers would be to apply the reduced entitlement to sick pay policy to all unvaccinated staff on a blanket basis, without considering whether an individual employee's refusal to be vaccinated is linked to an underlying protected characteristic. Some employers have said they will make exceptions for unvaccinated staff with "mitigating circumstances", for example where the employee is unable to have the vaccine for medical reasons. Where employers do this, they should ensure that they adopt a consistent approach across the business, again to limit discrimination risk.

Vaccination status is an emotive topic and can trigger disputes amongst staff. Colleagues may draw conclusions that an employee is unvaccinated due to their self-isolation absence. A further risk from an employment perspective is therefore claims of bullying or harassment, for example by an employee who has been grilled by colleagues as to why they are not vaccinated.

Contractual and consultation claims

Employers need to take care where their company sick pay scheme is contractual, as limiting an unvaccinated employee's sick pay to SSP without obtaining their consent will likely be a breach of contract. Such contractual claims are less of a risk where company sick pay schemes are discretionary. It's worth bearing in mind that an employer who makes moves to change contractual sick pay entitlement in this way may also trigger collective consultation obligations.

Data protection

Implementing a policy which distinguishes between vaccinated and unvaccinated staff means employers need to know about the vaccination status of their staff. Collecting and using staff vaccination status information raises data protection issues, as an individual's vaccination status constitutes "special category data" under the UK data protection law. Current guidance from the Information Commissioner's Office highlights that an employer's reasons for asking for this information should be clear and compelling (for example, because it is needed in order to update the employer's workplace risk assessment) and it is unclear whether asking for employees' vaccination status for the purposes of implementing the reduced sick pay policy would suffice. Employers wishing to collect this information should consider carrying out a Data Protection Impact Assessment (DPIA) to show that the lawfulness of collecting and using this data has been properly considered, and to ensure that appropriate data security and retention measures are taken. It will also be important to ensure that the employer's employee privacy notice properly takes into account the capture and use of this information.

Practical considerations

  • While there are understandable business reasons why employers may consider cutting sick pay for unvaccinated staff, employers should first consider the legal risks and practical challenges associated with introducing such changes. Employers should also ensure they communicate the policy carefully, to help manage employee relations issues. It is notable that John Lewis has just publicly announced that they will not be taking this approach, because they prefer not to create a link between pay and vaccination status.
  • Employers should be aware of the risk of unintended consequences that may arise from adopting such a reduced sick pay policy, including the possibility that doing so may encourage unvaccinated staff to come into work in breach of the rules, because they can't afford to just receive SSP if they were to self-isolate at home.
  • Some employers are reported to have introduced this policy as a deliberate way of encouraging workforce vaccination take-up. Historically employers have tended to adopt an incentivising approach to encourage vaccinations, for example by offering a small payment for those who get the jab. We must wait and see whether the opposite approach of cutting sick pay to encourage vaccination will have the same effect.
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