The Fabian Society report calls for the next government to introduce a comprehensive new system of ‘British employment insurance’. The scheme would provide generous paid leave and temporary benefits when people have to stop working, with payments based on recent earnings. A YouGov poll reveals high public support for the proposals.

The key proposals include:

  • A major overhaul of maternity and parental leave. Parents on maternity or parental leave would receive half their usual earnings for up to 12 months. Six months would be reserved for mothers, and each parent could then receive up to 6 months parental leave. For the first time self-employed fathers would be able to claim paid paternity leave and parental leave.
  • Sick leave paid at 80 per cent of earnings from day one to week 28 of absence. Workers would be paid from day one of all sickness absences (to prevent the transmission of communicable diseases like Covid) and would receive four-fifths of their pay. This proposal is affordable for business because most large employers already provide sick pay above the minimum level set out in law. Small businesses would receive new money to help meet this cost and free occupational health services.
  • New support when people leave work. People who stop working would receive half their previous earnings (up to a capped amount) for six months in the case of unemployment, and 12 months in the case of sickness. The new payments would provide a cushion to help people find suitable work or focus on their health without immediate financial pressure. Minimum redundancy payments would also be increased in the first significant reform of the statutory redundancy scheme since 1965.
  • A new deal for working carers. Carers of disabled and older people would receive one week of paid leave each year that could be taken flexibly to balance work and care. They would also have a right to a further 3 weeks a year of unpaid leave. Alternatively, if carers need to stop work, they would be able to claim half their earnings for up to 12 months through a new carer’s insurance benefit. People in this situation would also be able to ask large employers to hold open their jobs for a year.
  • A new deal for the self-employed. Self-employed workers would be able to claim unemployment benefit for the first time, as well as having new rights to paid paternity leave and parental leave. A new sickness insurance payment would provide them with an equivalent to sick pay. The report also calls for paid time-off for training for the self-employed.

British employment insurance would benefit business by helping firms retain and recruit more workers. Overall employers would also gain financially from the new measures, because there would be new state subsidies to cover the higher costs of maternity pay (and sick pay in the case of SMEs).

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