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Do you know what happens to your pay when you're off sick? New research shows that more than 2.5 million workers are unaware that they could face a significant salary shortfall if they are unable to work for some time.
Just 4% of Brits know how much they would receive in statutory sick pay, the survey from Direct Line showed, while 8% have never even heard of it. Indeed, many Brits mistakenly believe that their employer would continue to pay their full salary if they were off sick, over an average estimated period of three and a half months.
In reality, a survey of HR professionals conducted by Pureprofile reveals that 43% of firms reduce an employee's wages after two weeks, while 16% even switch to statutory sick pay after just four days off work. Government policy states that employees are entitled to statutory sick pay if they are too ill to work after they have been off for four days in a row, up to 28 weeks.
However, statutory sick pay is likely to be much lower than regular pay, at an official rate of £89.35 per week, which is less than a fifth of the average weekly wage of £510. And it's not only salaries that are lost, as 21% of firms that pay bonuses withhold these if an employee has been on long-term sick leave.
Even if your company offers its own sick pay scheme, 30% will require employees to have worked there for one to two years before offering it, and 92% of companies require formal documentation before they can authorise a longer period of sickness.
Trevor Bush, head of Direct Line Life Insurance, commented: "This research highlights a worrying disconnect between peoples' expectations and what they would actually be entitled to if they were to unexpectedly fall ill. Statutory sick pay is significantly lower than the national average salary and people are only eligible for 28 weeks, so those with long term conditions could find themselves struggling financially if they are unable to work for a long period of time."
To prevent a long-term illness from costing you more than your health, consider keeping three months' wages in reserve in a dedicated savings account. This would come in handy if you unexpectedly lose your job as well. An easy access or notice account could be your best bet, as you wouldn't have to wait too long (or at all) to access the funds, should you need to.
For extra security, or instead of an emergency savings pot, you could take out income protection. Such a policy should help you cover your mortgage or rent as well as other outgoings while you recover from a sickness or get back on your feet after a redundancy.
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