Industry urges radical action to cure sickness absence

Britain’s manufacturers are urging tax breaks to tackle the UK’s chronic sickness absence problem, which would encourage more employers to pay for private treatment for employees and ease the burden on an under pressure NHS.

The call was made today by EEF on the back of the UK’s biggest business survey on sickness absence and, ahead of a Green Paper on workforce health to be published this summer.

The survey, published with Jelf, shows that long term absence is continuing to increase; while, at the same time, the NHS is proving unable to support the working age population by providing timely and effective rehabilitation and medical treatment.

Key findings:

  • Two fifths of manufacturers say long term absence increased in last 2 years
  • NHS not meeting needs of 40% of manufacturers to get employees back to work
  • Only 1 in 5 of manufacturers currently pays for non NHS medical treatment
  • 60% of manufacturers would pay for private treatment if cost offset
  • ‘Fit Note’ system continues to deteriorate
  • Manufacturers pay out £0.6bn pa in sick pay, £211 per employee

Furthermore, the survey shows a further fall in employers’ confidence in GPs to improve return to work rates with the effectiveness of the ‘fit note’ system continuing to deteriorate.

According to EEF, more fiscal incentives to encourage employers to provide private healthcare is required as part of efforts to tackle the UK’s productivity puzzle, believing that a fit and healthy workforce is an essential component of economic growth.

Head of health & safety policy at EEF, Terry Woolmer explained: “Keeping people fit and healthy, while enabling a speedy return to work from absence is essential to economic growth and improvements in productivity.

“However, currently we have long term absence on the increase and an under pressure NHS which is struggling to deal with the issue. Given this situation is only going to get worse with an ageing population radical action is now required.

“Government must now use fiscal incentives to encourage employers to pay for private medical treatment and allow it to be offset in the same way as other business expenses. Not only would this help take the pressure off the NHS but it would allow a speedier return to work. This would be a win win for Government, the employee and employers.”

In response, EEF has made the following recommendations:

  • Review the current levels of employer taxation for employer led health interventions where they are currently taxed as benefits in kind.
  • Carry out sensitivity analysis of different fiscal incentives such as changes to allowable business expenses, tax credits and tax relief.
  • Treat tax relief for Private Medical Insurance (PMI) in the same way as the £500 tax exemption for treatments recommended by the Fit for Work service.
  • Consider tax relief on Income protection insurance or group income protection (GIP) as a means of providing sick pay and rehabilitation support to employees through employers.
  • Provide some form of fiscal incentive to companies who fund treatments as part of rehabilitation which would otherwise have had to be provided by the NHS, or which prevented state Employment and Support Allowance (ESA) payments.