News & Views

Review of long-term sickness absence launched

BY Gerry O'Hare
Employment law
BG Purple

A major review of long-term sickness absence has been established by the government in an attempt to reduce the £100 billion annual cost to the economy.

The independent review will look at ways to help more people stay in work and reduce costs both to business and the state. The panel will be jointly chaired by David Frost, Director General of the British Chambers of Commerce and Dame Carol Black, National Director for Health and Work.

Currently employers meet the costs of short term sickness absence, and the state picks up the costs of longer-term ill-health. More than 300,000 people leave work annually and claim sickness-related benefits. Once out of work those affected face a greater risk of their health deteriorating further, and the potential of themselves and their families falling into poverty.

The review, which is jointly sponsored by the Department for Work and Pensions and the Department for Business Innovation and Skills, will include a panel of experts from business, trade unions and health representatives. It will also feed into the wider Employment Law Review, which is looking at measures to reduce red tape and remove the burdens on business, encourage growth and maximise flexibility for employers and employees.

It is estimated that the total cost of working age ill-health to the government is over £60 billion per year when benefit expenditure, lost tax revenue, and NHS costs are taken into account. The total cost of working age ill-health to the economy is over £100 billion per year. Of this £30 to £40 billion can be attributed to mental health problems.

The government has also provided an additional £12 million of funding for health and work programmes, including the Fit for Work Service and Occupational Health Advice lines. Both have already proved highly successful in providing support for both employers and individuals in the early stages of sickness absence.

Employment Relations Minister Edward Davey said: "This is an important review which will help tackle the problems faced by business and individuals. Managing sickness absence more effectively will be a win-win situation for all - businesses, individuals, the taxpayer and crucially, the economy. It could improve productivity, boost growth and mean that many more people no longer have to rely on taxpayer handouts."

Joint review chairman David Frost, said that sickness absence had a huge impact on businesses – particularly on smaller firms that struggle with the processes, procedures and costs entailed.

The review panel will report later this year. We will keep LAWmail readers up to date with its progress.

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