Welfare Reform Bill

Legal Eagle / 16 September 2011

With more people than ever out of work through illness and poor mental health, Alison Hjul asks how the Welfare Reform Bill is aiming to get them back into the workforce

The health benefits of a stressful week in the office over one spent relaxing in the garden may not be immediately obvious, but it’s widely accepted that work is good for us. Not only does a job provide a steady income, but it offers mental stimulation, a sense of purpose and social interaction with colleagues.

Yet a growing number of people are missing out on working life. Long-term absence is on the rise, according to the CBI/Pfizer absence and workplace health survey 2011, with periods of 28 or more continuous days off making up a third of total working time lost. Furthermore, the Department of Work and Pensions (DWP) reports that, of the UK’s 2.6 million incapacity benefit claimants, more than half have claimed for at least five years and a third for 10 years or more.

A high price

With absence costing employers £17 billion a year, the government’s welfare reform programme, which aims to save £4 billion by 2014/15, has been a welcome relief. “We welcome the government’s plans to get people off benefits and into long-term employment, and to tackle long-term sickness,” said Katja Hall, CBI chief policy director, at the launch of the Welfare Reform Bill in February.

Alongside the government’s proposed system of training and support to get people back into work, there is a clear call to action for businesses.

Katharine Moxham, spokesperson, Group Risk Development

New DWP figures indicate that the government’s reforms are having the desired effect. Of the 1.3 million Employment and Support Allowance claimants assessed between October 2008 and November 2010, just 7% were found to be too sick too work. More than a third (37%) were considered fit for work, while 36% dropped out of the application process altogether and a further 17% were found able to do some work with the correct support.

A problematic process

The assessments have been criticised by some ministers and union leaders for being too tough, and several cases have been found to be wrongfully rejected – according to the DWP, 39% of appeals have been successful. And, with unemployment at 2.43 million, many of the newly fit for work aren’t easily going to find a job.

But employers have a responsibility, too, in helping to reduce the benefit burden on the state, says Katharine Moxham, spokesperson for Group Risk Development. “Alongside the government’s proposed system of training and support to get people back into work, there is a clear call to action for businesses.”

The good news is that many organisations are taking a more proactive approach to workplace health and wellbeing. For example, three quarters of respondents to the CBI/Pfizer survey have prioritised improving employee wellbeing over the next year, with the most common interventions being counselling, access to occupational health support and more flexible working.

Respondents also recognise the role of line managers in facilitating employees’ return to work. They say it’s important for managers to remain in contact with an employee during their absence and a return to work interview is the most effective technique for rehabilitating employees.

However, managers have to be properly trained to recognise when someone has a potential long-term health issue. “The sooner you intervene the better,” advises Moxham. Research by Legal & General, for example, found that 67% of employees were able to return to work when the insurer was notified of their absence within six weeks compared to 49% when notified later.

“Group income protection (GIP) has a huge role to play in early intervention and managing a successful return to work. It enables the employer to assess someone’s level of ability long before the state can,” says Moxham.
GIP is an insurance policy that provides a continuing income for employees who are prevented, through sickness or injury, from working for a prolonged period of time. Payment kicks in after a waiting period – typically 26 weeks – and is paid until retirement or for a fixed period. Employers are usually able to take advantage of GIP cover once someone has been absent for more than four weeks.

It has evolved from being an insurance product and benefit for senior employees to an essential employer policy, says Moxham. “Policies now include many value-added services such as interventions, rehabilitation services, employee assistance programmes and HR helplines.”

If an employee is on sick leave awaiting counselling, for example, the insurer may provide access to cognitive behavioural therapy so they can get back to work sooner. But British bosses need to be made more aware of the benefits, says Moxham. “We’ve seen with our research a frightening degree of ignorance and inaction.”

Policy changes

The Government’s reform programme, however, appears to be spurring employers into action. Among respondents to the Employee Benefits/Friends Life Group Risk Research 2011, 27% said they’d reviewed their return to work/rehabilitation strategy in the past 12 months, while 36% agreed they’d need to review their absence strategy in the next 12 months.

The review could include proposals to reduce national insurance contributions for companies that provide GIP or charge higher NI for those who don’t. “There’s a strong argument for the government to incentivise employers,” says Moxham. “I’m convinced they’ll increasingly see the value of group income protection as more responsibility is placed on businesses to manage absence and rehabilitate employees back into the workplace.”#