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Autumn Statement 2011 (3) – Independent Review of Sickness
Monday, December 5th, 2011
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As part of the announcement of the Government’s Welfare Bill in February 2011, the Prime Minister announced a review into sickness absence. This was to be jointly chaired by David Frost CBE, Director General of the British Chambers of Commerce and Dame Carol Black, National Director for Health and Work. This was all part of the wider Employment Law Review, whose measures are detailed in part (2).
The review was jointly sponsored by the Department for Work and Pensions (DWP) and the Department for Business Innovation and Skills (BIS). The objectives of the review were to make recommendations on how to reduce the administration and operational burden of sickness in the workplace on employers whilst looking at reducing costs for employers and taxpayers alike. Essentially, this was looking at the current system and making recommendations on how to help keep people in work with the aim of reducing the estimated £100 billion cost of working age ill-health to the economy (Dame Carol Black ‘Working for a Healthier Tomorrow’).
The main recommendations from the report are summarised:
- After an employee’s absence has lasted four weeks, they should be referred to a newly-created Independent Assessment Service (IAS) who would provide advice on how the employee could be supported back to the workplace
- Expenditure by employers specifically for keeping employees in work, or aiding their return to work, should attract tax relief – for example, medical treatment and the costs of rehabilitation
- The Percentage Threshold Scheme (PTS) should be abolished, as this is costly and offers the employer no incentive to get the employee back into the workplace. The savings from this could be used to fund the IAS role
- Record-keeping requirements under the Statutory Sick Pay scheme should be abolished, saving employers money in administration, which would offset the money lost by abolishing the PTS
- Government should offer a job-brokering service to anyone with a sickness record of 20 weeks plus to enable long-term sick employees find suitable employment before they ‘fall into the benefits system’
The report is certainly worth bookmarking and, at 112 pages, is bedtime reading for sure. In terms of its relevance to the Autumn Statement, the Government has promised to consider the review and respond in 2012.
Comment
The report indicates that the reason for the tax relief measure is so that this will encourage smaller employers to offer incentives to get their employees back into the workplace. Such employees are likely to be lower paid and this tax relief would be targeted at the Basic Rate payer. This does seems complicated and open to abuse.
Abolishing the PTS seems harsh on the smaller employers, who are often the ones that will benefit from the reimbursement scheme. A review of the reimbursement scheme is probably more beneficial, to make it simpler if nothing else! We hope that this recommendation is not pursued.
The abolition of SSP record-keeping, and the suggestion that this will offset the losses incurred by abolishing the PTS, seems a bit of a throw-away remark. Abolishing PTS will harm the smaller employer, whilst abolishing SSP record-keeping will have a negligible impact on them. Conversely, the larger employer, where there is less of a workplace sickness issue anyway, will hugely benefit from the reduced administration. Further, SSP record-keeping would still be necessary, if only to ensure we still knew when to complete the SSP1 and transfer them to Jobcentre Plus.
The job-brokering system just seems to be an attempt to move a sick employee from one employment to another without becoming a financial drain on the State. Surely, more emphasis needs to be put on existing employments offering mediation and rehabilitation services rather than the, seemingly, discriminatory way people would be sent for brokering after 20 weeks’ sickness.
Further Information
- Payroll Help - Autumn Statement 2011 (1) – Pensions, Tax & NICs
- Payroll Help - Autumn Statement 2011 (2) – Employment Law
- DWP – Health at Work – an Independent Review of Sickness Absence
