If you read nothing else, read this…
- So far, the impact of welfare reform on employers has been limited.
- Employers have access to government occupational health helplines to supplement fit notes.
- Group income protection schemes offer free rehabilitation and early intervention services.
- Employers should try to notify insurers as early as possible when employees are off work.
- Employers should have clear policies setting out what to do in the event of long-term sickness absence.
Welfare reforms are pushing employers to play a more active role in getting sick staff back to work, says Edmund Tirbutt
In theory, employers should be feeling the effects of two different strands of government reform designed to reintegrate partially fit employees back into the workplace by putting the emphasis on what they can do, rather than what they cannot do.
In October 2008, incapacity benefit was replaced by the Employment and Support Allowance (ESA) for new claimants, and existing incapacity benefit claimants will soon start being assessed under the new system. Also, last April, the sick note system, which limited GPs to assessing a patient as being either fit or unfit for work, was replaced by the Statement of Fitness for Work (also known as the fit note). This gives GPs an additional option of saying that an employee may be fit for work taking account of certain advice.
This is being seen as the start of a trend towards shifting responsibility for sick staff away from the state. Joy Reymond, head of rehabilitation services at Unum, says: “It would not surprise me if, eventually, employers are required to have more occupational health input into helping people recover and accommodating them into the workplace. The government seems very interested in European models and it could make all employers more responsible for sickness absence and return to work, particularly in the first 12 months.”
But even the measures already introduced have had limited impact on employers. Anecdotal evidence suggests GPs are often effectively turning fit notes into sick notes by playing it safe and saying people are not fit for work. And even when staff are declared partially fit, most big employers are tuned into making short-term modifications to reintroduce staff to the workplace.
For smaller employers, the fit note system can help where GPs consider people partially fit for work. This is largely because the employer is getting a free medical opinion and has access to specialist occupational health helplines.
Dr Doug Wright, principal clinical consultant at Aviva UK Health, says: “Employers do not have to be concerned with whether GPs are confident of their ability to offer advice in this area because, as soon as they receive the fit note, they can access the occupational health helpline to get extra advice. However, I suspect many employers do not realise these helplines are available.”
Incapacity benefit switch
But the real impact of the switch from incapacity benefit to ESA is also yet to be felt. The new system is clearly more onerous than the old one, but the process of reappraising existing incapacity benefit claimants will not happen nationally until February 2011, following pilot schemes this October.
Barring a miraculous economic upturn in the next few months, it is debatable whether employers will be looking to take on new staff at all and those that are recruiting will clearly prefer people with recent work experience rather than the long-term unemployed. Howard Rayner, group legislation manager at Canada Life, says: “People always think it affects employers when the government changes its approach to welfare, but it does not. Employers are unlikely to have to worry about taking on partially fit staff until the economy starts booming again.”
In the longer term, the fact that state disability benefits will be harder to claim should make group income protection schemes more attractive. Employers should also realise the value of schemes’ free rehabilitation and early intervention services. Many income protection schemes also automatically include employee assistance programmes (EAPs), which can be especially valuable in preventing stress-related problems from developing into full-blown absence issues.
The fact that income protection normally pays out according to an employee’s ability to perform their normal work should make it more attractive in view of the government’s aim to get partially fit people back into any kind of work, and an income protection scheme’s rehabilitation capability will assess someone’s fitness for work much more quickly than under the ESA system.
Income protection in demand
Chris Ford, director of group risk at Jelf Employee Benefits, says: “As employees become aware of the lack of state benefits, they should start asking employers whether they have income protection, so employers should be keen to be seen to be offering a decent package. A scheme paying out for a limited term of two or three years can cost as little as 0.5% of payroll. I think welfare reform can start income protection being viewed more as a must-have.”
Even though most large employers will already have income protection, insurers and consultants point to practical steps to make rehabilitation processes more effective. Most stress employers cannot manage what they do not measure, so they should try to notify insurers earlier when staff are off work.
Many employers still pass income protection claims to insurers after 20 weeks, but they should be doing so after a month, or even a week. When Legal and General is notified of a claim after four to five weeks of absence, its average length of a terminated claim is 51.7 weeks. But when it is notified after 26 weeks, this rises to 73.1 weeks.
Sarah Brown, principal, health and benefits at Mercer, says: “Employers need to focus on turning the tap off, or at least reducing it to a drip, and in my experience even blue-chip companies can wait too long. The secret is to identify those off sick early by improving internal processes so line managers flag it up the day it happens and refer it through lines of support in occupational health.
“An organisation must have a clear policy on what it does in the case of long-term sickness. There are a number of options to consider, including possibly a case for terminating employment after a certain period. Many larger companies have discretionary practices that can get them into trouble.”
Employment and Support Allowance
The Employment and Support Allowance consists of two phases:
- The assessment phase during the first 13 weeks of a claim while a decision is made on the individual’s capability for work through the work capability assessment. A single person aged under 25 receives up to £51.85 a week, rising to up to £65.45 a week for those aged 25 or over.
- The main phase starts from week 14 of the claim if the work capability assessment shows that an illness or disability does limit the ability to work. There are two main groups within this phase:
- Work-related activity group for those expected to take part in work-focused interviews with a personal adviser. They will get support to help prepare for suitable work. A single person will receive up to £91.40 a week.
- Support group for those with an illness or disability that has a severe effect on their ability to work. They are not expected to take part in any work, but are permitted to do so on a voluntary basis. A single person will receive up to £96.85 a week.
- Health for Work Adviceline (England) 0800 077 8844
- Healthy Working Lives Adviceline (Scotland) 0800 019 2211
- Health at Work Adviceline (Wales) 0800 107 0900
- Labour Relations Agency Helpline (Northern Ireland) 028 9032 1442
Read more about group risk