Why now's the time to extend Statutory Sick Pay to sole traders

Traditionally, freelancers have been uninterested in benefits such as sick pay. They have taken the view that being paid while unable to work is for employees, not those who work for themselves.

The sick pay position of freelancers – until now

The trade-off is greater freedom, greater flexibility and, all being well, the ability to charge their clients more for their services.

There are still many of our members who feel this way, but in the wider self-employed sector there has been something of shift in thinking, writes Andy Chamberlian, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE).

Today, six in ten self-employed people want SSP

Almost two out of three freelancers (58%) now believe they should be entitled to sick pay. Two factors, we believe, have driven this change in attitude.

  1. Freelancers are in a financially unstable and anxious position after the coronavirus pandemic and they generally feel unsupported by the government. Some were able to access the Self-Employed Income Support Scheme, many others were not. For a significant number, the last 18 months has been the toughest period they’ve experienced since going into business and very sadly, there are some businesses which haven’t survived.

 

  1. Low-income, vulnerable self-employment has risen in recent years and now makes up a larger proportion of the overall sector than it once did. In 2018, working with the Community Union, we found that around 21% of the self-employed were at risk of vulnerability. There are wildly different experiences within UK self-employment. Some freelancers are among the most well-paid individuals in the labour market, others are at the opposite end of the scale, and more in need of support.

How falling ill can really topple the self-employed

The confluence of these two factors is why IPSE is calling for Statutory Sick Pay (SSP) to be extended to sole traders. The UK’s 3.5 million sole traders are a hugely important part of the economy – it is essential that they are looked after if they fall ill and are temporarily unable to work as a result.

For anyone working for themselves, missing work through illness not only means an immediate loss of income, but it can often lead to lost income in future, particularly if a client removes them from a contract as a result. With the pandemic forcing many freelancers to expend their savings and others to accumulate debt, a short period of illness – and lost income – could put the recovery of their businesses in jeopardy.

Currently, sole traders can apply for the Employment Support Allowance (ESA). But for shorter periods of illness, we believe a more agile and immediately available system for Statutory Sick Pay should be implemented, to bring parity between sole traders and employee sick pay entitlements.

The UK is lagging on freelancer sick pay

In other parts of the world, governments do provide more generous protections for the self-employed when they fall ill. In Canada, self-employed people can claim 55 per cent of their earnings, up to a limit, if their regular weekly earnings fall by more than 40 per cent for at least a week due to illness. Similarly, the Danish system sees local authorities pay a proportion of self-employed residents’ income after two weeks of illness.

It is worth emphasising that the vast majority of self-employed people enjoy their way of working. Research from the Department for Business, Innovation and Skills in 2016 found that self-employed people most value their independence (79%), followed by their flexibility (75%). Over half said they are financially better-off in self-employment than as an employee, and 84 per cent said that life overall was better in self-employment.

Finally, our heartfelt plea to government…

IPSE will always celebrate self-employment as a very attractive option for workers, and we must not lose sight of what makes freelancing attractive – being your own boss, beholden to no-one, free to work in the manner you want. But this isn’t always the reality for every self-employed person and the pandemic has sent shock waves through the sector. To encourage the next generation to strike out on their own, the government must provide assurances that they won’t be left behind should the unexpected happen -- again. Granting access to SSP for sole traders would be a positive step in the right direction.

 

16th November 2021

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