Sickness absence advisory service will increase economic output by £900m, says Government

The new independent assessment and advisory service will provide bespoke independent advice to employers for cases of sickness absence lasting more than four weeks. Only 10% of workers in small businesses have access to an occupational health service according to Government figures, compared with more than half of staff in larger firms.

Lord Freud, the Minister for Welfare Reform, said that the new service would save employers up to £160 million a year in statutory sick pay and increase economic output by up to £900m a year.

"Long-term sickness absence is a burden to business, to the taxpayer and to the thousands of people who get trapped on benefits when they could actually work," he said. "So for the first time all employers, big or small, will have access to a service that offers the early support they need to keep people in work and fulfil their aspirations."

The new service, which is expected to be in operation from 2014, follows a recommendation by Dame Carol Black and David Frost, former director-general of the British Chambers of Commerce, as part of their 2011 independent review of sickness absence in the UK.

In its response to the report (80-page / 1MB PDF), the Government also announced that it would review guidance to doctors on how to complete 'fit notes', the replacement to 'sick notes' introduced in 2010. It will abolish the 'Percentage Threshold Scheme', which compensates employers who experience higher levels of sickness absence than average, and will instead consider the introduction of a tax relief on the cost to employers on taking steps recommended by the new advisory service as part of the 2013 Budget.

Sue Gilchrist, employment law specialist at Pinsent Masons, the law firm behind Out-Law.com, said: "employers often find that GPs' fit notes simply confirm what the employee asserts as the reason for absence, rather than achieving the Government's stated aim of 'encouraging communication between all parties with a focus on what someone can do and a return to work where appropriate'.  Further guidance for GPs which would assist with encouraging return to work will be welcomed by businesses".

Each year around one million employees take at least one period of long-term absence, defined as lasting for longer than four weeks, according to figures from the Department of Work and Pensions (DWP). Although most of those people make a speedy return to work, around 300,000 go on to claim health-related benefits. The Government has described this as a "huge loss in economic potential" which costs the taxpayer £13 billion in benefits each year, while reducing economic output by £15bn.

"What David and I found in our Review is that far too many people with potentially manageable conditions - like stress, or back pain - are effectively being signed off work for life, sliding from a short spell of sickness absence to a life of long-term benefit dependency," Dame Black said.

"The changes being made by the Government will begin to change that. They will ensure that employers and employees get the best possible access to occupational health advice and support. And the new service will also provide much-needed support for GPs too, so they can spend more time helping their patients and less time having to police the benefit system," she said.

"Absence and how to address it is a key issue for many employers, and effective use of occupational health is certainly one way of nipping non-genuine absence in the bud and assisting with the management of genuine absences," said Gilchrist. "One of the issues we commonly see is where an employee goes off sick in response to a disciplinary process commencing, often citing stress as a reason for absence. While the Government's proposals would help employers who don't already have access to occupational health facilities in-house, by the time the employee is seen they will already have been absent for four weeks, often in receipt of company sick pay. In a disciplinary type situation, we often recommend a referral before this, even within the first couple of weeks."

The Government said that: "there is now clear evidence that a successful approach requires quick access to a ‘holistic’ assessment that identifies all the issues that may be stopping an employee from returning to work." Although it is clearly a step in the right direction, and GPs can choose to refer before the four weeks expire, it remains to be seen whether such referrals will come quickly enough for many businesses".