With infection rates surging, the shadow chancellor demanded that statutory sick pay (SSP) be extended to the self-employed and called for the reintroduction of SSP rebates for small firms.
The scheme – closed by the government in September – allowed employers to claim back the cost of two weeks of sick pay if a worker was self-isolating or had Covid symptoms.
According to an analysis by Labour, supporting businesses to cover sick pay would benefit more than five million employees and 600,000 small firms.
The party is also urging the chancellor to increase statutory sick pay – currently £96.35 per week and among the least generous schemes in Europe – in order to encourage workers who test positive for Covid-19 to self-isolate.
Ms Reeves said: “It is simply not good enough that nearly two years into this pandemic the government have still not sorted sick pay out and are expecting cash-strapped businesses to foot the bill.”
She added: “Labour would sort out and increase sick pay, extending it to the self-employed and allowing smaller firms to claim back the cost so they can support their staff to self-isolate.
“Labour backs British business and working people. That’s why we’re calling for immediate support for hard-hit businesses, the easing of the burden of Covid debt repayments during this new wave, and cuts in business rates. The chancellor needs to get a grip and support British business and workers before it’s too late.”
It comes after papers released at the weekend by the Scientific Advisory Group for Emergencies (Sage) stressed it was “almost certain there are now hundreds of thousands of new Omicron infections per day”.
A sub-group of the body SPI-B, which provides behavioural science advice to ministers, has also long been clear of the benefits of financial aid in supporting self-isolation.
In a cache of documents released on Saturday, the experts said: “Isolation, particularly on the basis of symptoms or following a positive test, but also when identified as a contact, is an important way to reduce onwards transmission. The benefits of financial aid and other support for isolation are magnified.”
Labour’s comments also follow a demand from the Liberal Democrats for the government to recall parliament this week and for the chancellor to deliver an emergency budget – as concern grows among businesses over the lack of extra support.
“Any further Covid restrictions without extra financial support could deal the finishing blow to high streets, theatres and travel businesses already on the brink of collapse,” the party’s leader, Ed Davey, said.
He added: “Pubs, restaurants and cafes are on their knees as cancellations over the Christmas period soar. It breaks my heart to walk along local high streets and see treasured pubs and restaurants all but empty at what should be their busiest time of year.
“Ministers must immediately recall parliament and introduce an emergency budget, to support struggling businesses. The chancellor is missing in action when he should be doing whatever it takes to save businesses on the brink.”
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