The use of employee assistance programmes is on the increase as the prices fall and providers become competitive over business, says Sam Barrett
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Being able to look after employees’ wellbeing, deliver a valued benefit and exercise a duty of care for staff for as little as £3 per employee per year is an attractive proposition. And, with employee assistance programmes (EAPs) fitting the bill, it’s no surprise that more and more organisations are buying into this benefit.
While precise figures on market growth are not readily available, most providers agree sales are on the up. Tony Urwin, clinical and business development manager at Bupa Wellness, says that, over the last five years, the number of employers that offer an EAP has more than doubled. He believes the initial growth came on the back of a Court of Appeal ruling in February 2002, which endorsed EAPs as a means of safeguarding an organisation from stress claims, although this has since been overturned by other high-profile legal cases.
"The profile [of EAPs] is much higher now. Organisations are seeing the other benefits an EAP can deliver," he explains.
There has also been a shift in the types of organisation introducing an EAP. James Bradley, director of service delivery at EAP provider Employee Advisory Resource, says: "We’re seeing a broader range of types of organisations interested in EAPs. Traditionally, take up was in the pharmaceutical, petrochemical and finance sectors, but I’ve seen a lot of growth recently [in] the retail and manufacturing sectors as well as [among] smalland medium-sized enterprises."
This increased demand has triggered a price war, with the cost of EAPs tumbling over the last two years. "Prices have dropped around a third [since 1999]," says Bradley.
Counselling charges
This means that, depending on the service and number of employees covered, employers can expect to pay anything from between £3 and £25 per person.
Rather than charging a set price, many providers now charge a flat fee for a telephone-based service, with any face-to-face counselling incurring an additional cost.
Jayne Carrington, managing director of EAP provider Right Corecare, says an organisation with 1,000 employees would pay around £14 per person per year for its full service, or £5 a year for its telephone-based service if billed separately for counselling. She explains this option is particularly popular in the public sector where budgets are tight. "Paying for counselling separately is [also] attractive for organisations introducing EAPs [for the first time]," she adds.
Due to the pressure to keep costs low, EAP providers are keen to extend their services into untapped markets, with many eyeing smaller organisations as an area for growth.
Employers of this size, however, may find that the advantages of offering an EAP differ to their larger counterparts. Their size often means that providing anonymous feedback on the types of calls received is not viable as it can be easy for the company to identify which employees have used the service. Instead, smaller companies tend to benefit more from the support element of the service, particularly in areas such as employment law.
Spreading costs
However, the prices that EAP providers charge can be off-putting for smaller organisations. Many costs, such as those for installing and promoting a service, remain the same whether an organisation has 50 or 50,000 employees. Mark Holt-Rogers, a senior consultant for EAP and health solutions provider First Assist, says: "Pricing is hard for smalland medium-sized enterprises. You really need at least 250 employees to spread the costs effectively."
Paul Roberts, director of independent advisers EAP Services, believes many smaller organisations will source telephone assistance services through other routes, such as healthcare cash plans, due to cost issues. "Many cash plans include telephone helplines and cover for counselling. They don’t cost much more and provide additional benefits such as dental and optical cover," he explains.
But Colin Whitehead, sales director at EAP provider ICAS, has one client that has just ten employees. "You have to keep the service simple, making it more economical by having annual reporting and online applications. Delivering the service is tricky, but it is a valuable service for small organisations, particularly for the HR resource."
Besides trying to break into the small-business market, EAP services are evolving. Many providers are adding wellbeing benefits alongside counselling and management support services. Kate Bawden, an associate at Mercer Human Resource Consulting, says: "We’re going to see more growth into areas such as lifestyle and healthy-living advice. This will make [EAPs] more integrated with other benefits such as occupational health." Providers are also developing online services to complement their telephone helplines. Bupa Wellness’ Urwin, for example, explains it is looking at ways to deliver some types of counselling, such as trauma therapy, using online programmes, once it has proved this is clinically sound.
Impact on absence
The increased competition and price war will inevitably mean consolidation in the market. "There are a lot of smaller providers that have their own niches which might not survive on their own," says Bawden.
Although plenty of jostling is expected in the market, providers remain positive about the future of EAPs. Roberts firmly believes they will become more widely offered as an employee benefit. "Providers are adding in more services and if an organisation [purchases] the right [product] and promotes it correctly, an EAP can have a dramatic impact on absence and employee wellbeing," he explains
EAPs can also provide management support, helping with everything from employment law changes to identifying stressed employees. Anonymous feedback to employers, meanwhile, can help to identify any potential problems among their workforce.
Initially, EAPs were primarily used by companies in the pharmaceutical, petrochemical and financial sectors. However, take up has now extended into numerous other sectors such as retail and manufacturing.
- For more information on employee assistanceprogrammes visit the website:employeebenefits.co.uk/benefits/health
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THE FACTS
What is an employee assistance programme (EAP)?
At its most basic level, an EAP is a confidential helpline for employees which provides advice on issues such as debt, stress and relationships, although this can be extended to cover other personal and work-related issues. These can be backed up with access to a face-t-face counselling service, which is included in some products.
EAPs can also provide management support, helping with everything from employement law changes to identifying stressed employees. Anonymous feedback to employers, meanwhile, can help to identify any potential problems among their workforce.
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What are the origins of EAPs?
EAPs first appeared in America in the 1920s, however, they weren’t commonly used until after the 1940s when they were use to tackle drink and drug problems. It wasn’t until the1980s that EAPs reached the UK.
Initially, EAPs were primarily used by companies in the pharmaceutical, petrochemical and financial sectors. However, take up has now extended into numerous other sectors such as retail and manufacturing.
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Where can employers get more information and advice on EAPs?
The Employee Assistance Professionals Associations (EAPA) is a professional body for EAPs. It’s website can be found at www.eapa.org.uk or telephone 0800 783 7616.
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NITTTY GRITTY
What are the costs involved?
Costs vary depending on head count, the industry sector and the type of product. Prices typically range from £3 per employee per year for a basic telephone-based contract, up to between £20 and £25 per employee for a more comprehensive service.
What are the legal implications?
Employers htat offer an EAP for staff, proactively promote it, and operate a system of management referral, may be considering to have exercised a duty of care towards staff. However, following several high-profile legal cases, employers should not assume that simply offering an EAP will protect them from litigation. Employers should also check the experience and quality of the service, because poor counselling could result in legal claims.
What are the tax issues?
Although general welfare counselling is exempt from benefits-in-kind taxation, any legal and financial advice is regarded as a taxable employee benefit. The difficult of calculating the financial aspect of this when provided through the EAP means this tax is rarely collected, but employers are advised to check with their accountant or local tax office.
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IN PRACTICE
What is the annual spend on EAPs?
Figures from industry body the Employee Assistance Professionals Association (EAPA) show that £22.53 million was spent on EAPs. In total, 1,137 organisations offer EAPs which cover some 2,26 million employees. A further £2 million is spent on telephone counselling helplines, covering another 1.79 million employees.
Which EAP providers have the biggest market share?
This is a competitive market where ICAS, OOC Worldwide, Ceridian and Bupa Wellness are among the major players.
Which EAP providers increased their market share the most over the past year?
Providers say that Bupa Wellness and PPC Worldwide are among those that have increased their market share.