Sick pay costing nurseries thousands of pounds

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Cash-strapped nurseries are facing a new financial struggle after it has emerged that many are losing thousands meeting sick pay costs.


Sharon Fairley, founder of the Little Flyers nursery group near Edinburgh, says she has spent £4,000 on sick pay in the past six months alone and this doesn't include replacement staff costs.

She said, 'The additional cost of sick pay, which is not something that can be budgeted for, comes on top of high business rates and funding issues, and will seriously jeopardise the viability of my company. To say I am angry and upset is quite an understatement.'

Employers have not been able to reclaim statutory sick pay - £88.45 per week for up to 28 weeks - since April last year. The Government has advised nurseries to claim Employment Allowance, a reduction in their Employer's National Insurance Contributions of up to £2,000 per year, to offset these costs.

Ms Fairley added, 'I have paid out far more on sick pay, plus the additional overtime needed in cover, than the £2,000 received from Employment Allowance.'

Keith Appleyard, treasurer at Brighton-based Fiveways Playcentre, said he has had to raise fees from parents by 2 per cent as a direct result of his sick pay bill. He said, 'Last year I had two employees on long-term sick leave due to cancer treatment; their statutory sick pay was nearly £2,500 apiece, and meanwhile I still also had to pay for their cover. This was a major contributing factor to our making a trading deficit of £15,000 last financial year.'

Another employer, Liz Swatton, principal at Meadows Pre-School, London, said the cost almost brought down the business. 'We had a part-time member of staff who was off work for three-and-a-half months, from December to March last year. The cost almost made us go bankrupt. Not only did we have to pay her sick pay and holiday entitlement that accrued while she was absent, we also had to pay for staff cover. The final cost was over £7,500 plus national insurance and tax.'

Fit for work?

The abolition of sick pay reclaim was accompanied by a new 'Fit for Work' referral scheme, designed to encourage employers to manage long-term absence better.

This requires the consent of the employee, who must have a reasonable likelihood of 'making at least a phased return to work'.

The Department for Work and Pensions (DWP) said the previous scheme was 'outdated' and that 'any financial loss to business from the ending of the Percentage Threshold Scheme (used for sick pay reclaim) will more than likely be offset by a reduction in lost working days, earlier return to work and increased economic output'.

However, several employers have said their employees have not been absent for four weeks at a time, meaning they don't qualify for referral.

Toad Hall Nursery Group's Sophie Haylock, HR manager, said, 'In the past 6 months, statutory sick pay costs at Toad Hall have been in excess of £9,000, with the absolute majority of these absences lasting less than four weeks.'

Mr Appleyard added, 'Usually, people are off sick for shorter periods - three to 10 days - and this costs me another £1,000 per year. Yet Fit for Work ... wouldn't have helped me with these shorter absences.'

He added, though, that he wouldn't rule out using Fit For Work altogether. 'We do seem to find we are getting more frequent claims of sick for "stress"; I would use it for that. GPs seem to be ready to sign people off for two to four weeks with stress. Nothing is being done to help them get back to work. If you're depressed, work can be therapy.'

However, Ms Fairley said, 'If I know someone is on chemotherapy there is no way I am going to refer them to Fit For Work.'

Sick note culture

Referrals can be made by employers or by GPs, though more than 60 per cent of GPs are currently not aware of the scheme, according to research by health insurance company Cigna. An assessment is made by an occupational health professional, usually by telephone, and a 'return to work plan' produced.

Another nursery owner from Hampshire, who has spent £3,000 on two members of staff on long-term sick leave, before adding cover costs, said, 'I agree there is a sick note culture, and doctors give sick notes too easily. But the point is you are just not going to get anywhere with (Fit For Work). A HR company told us we have to be really careful when you approach people about this, and I just think it will be more hassle than it's worth.'

A better option, according to Toad Hall's Ms Haylock, was access to good HR advice. 'We are managing our costs through attendance management procedures. A service offering free access to HR support on managing attendance could have been a more useful service,' she said.

A spokesperson for the DWP said, 'Fit for Work is designed to help people return to work after being off sick for four weeks or more, by offering them a fast-track referral for an occupation health assessment. The service also runs a helpline and website, run by experts, that offers free, impartial advice to the public, including employers and workers in cases of short sickness absences from work.'

Once referred to the service, an employee will receive a call within two working days from a Fit for Work case manager.


According to HR expert Jacqui Mann, of HR 4 Nurseries, return to work interviews are where 'a lot of employers fall down'. 'Employers have to keep on top of (sickness), and when they don't, that is when it becomes a real issue,' she said.

'Employees have a contract with the hours they will be working. You can ask questions pertaining to why they haven't fulfilled their side of the contract. You can also ask for consent to contact their GP to ask questions about their condition, though there is a charge to the employer for this. If the employee refuses you can say "We need to find out what the issues are and I have no evidence to prove that you are ill".

'A lot of employees are concerned that their GPs are going to hand over the whole medical file to us, but we just ask questions such as "Is this condition covered by the Disability Discrimination Act?"

'If an employee still refuses permission, this can be use as evidence for dismissal,' she added.

'The thing employers have to be wary of is if an employee has a condition covered by the Disability Discrimination Act. That's not to say you can't dismiss someone who is disabled. I find the majority of people who have a disability do not make a big thing of it.

'It is those employees who think they know their rights that will try it on and say you can't ask those questions, but you can.'

Statutory sick pay only comes in after the fourth day of sick leave, which many employers aren't aware of, she added.

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