The company said all staff who test positive – regardless of whether they are vaccinated – will be paid in full.
However, unvaccinated staff who are required to isolate because they have been identified as a close contact of someone with the virus will only receive statutory sick pay unless there are mitigating circumstances.
It comes as employers face mass absences and labour shortages as a result of staff self isolating with the new Omicron variant.
Next acknowledged it was an "emotive topic" but under the proposals unvaccinated workers who are required to isolate could now receive as little as £96.35 a week - the Statutory Sick Pay minimum - unless there are mitigating circumstances.
Some companies, such as Amazon, have said they will not be adopting the absence policy.
Ikea, who employ over 10,000 people in the UK announced the move this week. They said said in a statement: "Fully vaccinated co-workers or those that are unvaccinated owing to mitigating circumstances which, for example, could include pregnancy or other medical grounds, will receive full pay.
"Unvaccinated co-workers without mitigating circumstances that test positive with Covid will be paid full company sick pay in line with our company absence policy.
"Unvaccinated co-workers without mitigating circumstances who have been identified as close contacts of a positive case will be paid Statutory Sick Pay."