ABI WELFARE <strong>REFORM</strong> FOR THE 21ST CENTURYWhat happens if an employeeleaves work due to ill health?When an employee leaves work due to ill healthor disability, employers are required to pay weeks. But nearly half (43%) of employers offersome form of sick pay provision over and aboveminimum statutory requirements in the form of where SSP is no longer payable, if an employee submit a claim for State welfare benefits. If theyhave paid National Insurance for at least twoyears they can claim contributory Employmentand Support Allowance (ESA).The Carol Black and David Frost ‘Health at WorkReview’ estimated that around 110,000 people year – i.e. they were unable to work for more straight from employment to claiming ESA.ESA is paid initially for 13 weeks at around £70per week, during which there is a WorkCapability Assessment to determine whetherthe individual is entitled to the benefit. Aroundone third of ESA claimants end their claim beforethe assessment is complete, most because theyget better and return to work. A further third arejudged ‘fit for work’ and so not entitled to benefit.They can submit a claim for Jobseeker’sAllowance, which has tougher conditions and ispaid at £70 a week. The remaining ESAclaimants receive around £100-110 per week,and about half are required either to join theGovernment’s ‘Work Programme’ or attendregular interviews at Jobcentre Plus.As a result of recent welfare reforms,contributory ESA can be claimed for only oneyear. After this time (and for those who do notqualify for Contributory ESA), income-basedESA is available. This pays at the same ratesbut is very tightly means-tested. Those living inhouseholds with no other source of income willusually qualify for income-based ESA, but othersources of income (earnings, savings, pensionand insurance income) are usually deducted £for £ from the amount of ESA claimable.Self-employed people are not entitled to SSP,so if they do not have other forms of protection(like IP) they can immediately claim ESA if they estimated to do so.In addition to Employment and SupportAllowance, the welfare system provides thefollowing means-tested support for those onlow incomes:Tax credits provide financial support forthose with children, and for some workers onvery low incomes without children;Housing Benefit provides (partial) supportfor the costs of renting accommodation; andSupport for Mortgage Interest providestime-limited support for mortgage holders.The Personal Independence Payment alsoprovides non-means-tested financial support todisabled people who meet qualifying criteriarelated to their care and mobility needs. This hasrecently replaced the Disability Living Allowance,which continues to be paid to existing claimants.The ‘journey’ through statutory occupationaland state support is set out below. As thisillustrates, many of those leaving work dueto ill health will only engage with structured,State-funded support after being off workfor a year or more, if they receive support atall. Overall, IP does not fit easily into thisState welfare ‘journey’. Group IP policies (GIP)effectively occupy the space before an ESAclaim is made; while individual policies (IIP) runalongside, and interact with, all stages of thewelfare journey.The journey through occupational and State support (Source: Black / Frost Review, 2011)28 Weeks 39 WeeksESAbenefit and supportWorkSicknessabsenceClaim toEmploymentSupportAllowance(ESA)WorkCapabilityAssessmentJSAbenefit and supportWorkInactivityabi.org.uk8
Trends in Health and WorkThe Black / Frost ‘Health at Work Review’found that every year 140 million workingdays are lost due to sickness absence,equivalent to 2.2% of working time with acost to employers of £9 billion per year.Most of this absence is short term, but eachyear one million workers are off sick longterm (for more than four weeks).Although high, sickness absence levels havebeen in decline in recent years. A 2013 CBIsurvey of employers echoed the findings thatabsence (not just sickness absence) levels areat record lows, currently 5.3 days per employeeper year. 2 Labour Force Survey data suggests that theincidence of poor health among the workingpopulation has not declined – and may evenhave increased. This is illustrated below.Number reporting health problems,by economic status(Source: Labour Force Survey & CESI analysis)10m9mRecessionEconomically activewith health problemsEconomically inactivewith health problemsThese trends show a steady increase in thenumber of people in work with health problems(the dip at the end most likely reflects samplingvariations) while the number out of work withhealth problems is broadly flat. This may reflectemployers and employees getting better atmanaging health conditions in the workplace, ora greater pressure on employees to stay in workwhen ill or injured.‘Economically active’ includes people who arecurrently unemployed but looking foremployment, or required by the State to look foremployment to quality for certain welfarebenefits. So part of the growth may beaccounted for by reforms that have made itharder to claim ESA, which in turn means thatmore people who might previously have beenon ESA are instead on JSA, and required toactively look for employment.CESI’s analysis finds a strong workplacegrowth in mental illness (which has morethan doubled since 2005) and depression/anxiety, with growth also in progressiveillnesses (e.g. Cancer, Multiple Sclerosis,Parkinson’s Disease, Muscular Dystrophy,Diabetes).Reason for IP claims(Source: CESI / ABI data collection)8mProgressive illness (e.g cancer)0 0.05 0.1 0.15 0.2 0.25 0.3 0.357mMental illness or depressionMusculoskeletal problemsOther health problems or disabilitiesHeart, blood pressure orblood circulation problemsStomach, liver, kidney or digestive problemsChest or breathing problems, asthma, bronchitisDifficulty in seeing or hearingEpilepsy6m5m4m20062007200820092010201120122CBI (2013) Fit for Purpose: Absence and workplace health survey 20139Follow us on Twitter @BritishInsurers
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