Can you deduct salary during sickness absence?
Yes. A reduction in salary due to genuine sickness absence is permitted under the Skilled Worker sponsorship rules. You are not required to maintain a sponsored worker's full contracted salary during periods when they are off sick. The key requirement is that any salary reduction is temporary, relates to a genuine and documented sickness absence, and is not a permanent or unexplained change to the worker's contracted pay.
You should ensure that your sick pay policy is clearly documented in the worker's contract and applied consistently. The reduction must not bring the worker's pay below the minimum salary threshold applicable to their occupation code on a permanent basis.
What about the first days of sickness?
Some employers operate a policy of not paying for the first one to three days of sickness absence. This is permissible from an immigration compliance standpoint, provided it is set out clearly in the employment contract and applied consistently. The worker's overall annual earnings must still meet the salary stated on their CoS over the course of the year, taking into account any unpaid sick days.
Reporting obligations
If a sponsored worker's salary falls below the level specified on their CoS as a result of sickness absence, you do not need to report this as a change of circumstances provided the reduction is clearly temporary and caused by genuine absence. However, if a worker is off sick for an extended period and their total earnings for the year are likely to fall materially below the CoS salary, you should consult Borderless on whether any reporting action is required.
What you must not do
You must not permanently reduce a worker's salary or hours as a result of sickness without going through the proper change of circumstance process. Any permanent change to contracted salary or hours must be recorded on the Sponsor Management System.
Government guidance: https://www.gov.uk/guidance/sponsor-a-skilled-worker#worker-circumstances