Statutory sick pay (SSP) has been making headline news during the coronavirus crisis, thanks primarily to Chancellor Rishi Sunak’s decision to temporarily enable businesses with fewer than 250 employees to reclaim the costs from the government for up to 14 days.
The benefit – payable at a rate of £94.25 during the 2019/20 tax year and rising to £95.85 for 2020/21 – can also now temporarily be claimed from day one as opposed to the traditional fourth consecutive day of illness.
But some may recall that before these oh-so-dark days the g ove r nme n t p rodu c e d a consultation paper containing recommendations about SSP that could be highly relevant to group risk.
Health is everyone’s business: proposals to reduce ill health-related job loss, published in July 2019, included proposals to amend SSP rules to allow for phased returns to work, to widen eligibility to those on the lowest incomes and to strengthen compliance and enforcement.
Of particular relevance to group income protection – and the early intervention and rehabilitation services it includes – the paper also considers how a rebate of SSP might be designed for SMEs that support employees on sickness absence.
The original system of SSP rebates, which allowed employers to reclaim any SSP paid to employees over and above the set percentage threshold of their NI contributions, was abolished in April 2014 to fund the government’s ill-fated Fit for Work scheme – which had its assessment service withdrawn in 2018
But this previous entitlement had fewer implications for group income protection as eligibility was not linked to providing employee sickness absence support.
Mattioli Woods employee benefits team director Sean McSweeney say s: “The consultation didn’t actually define the support that would secure a rebate but group income protection rehabilitation services are a classic example of absence support. Potentially, it could be possible for a micro-employer to get a rebate on even a limited-term group income protection scheme, which could justify the costs.
“So, it’s quite an exciting time but we will have to wait until there are clearer proposals from the government and, with the massive disruption being caused by the coronavirus issue, one has to question whether the green paper is really likely any time soon.”
The consultation paper does outline a number of ways in which a potential rebate could function, including being ‘conditional on demonstrating a good outcome’ or being available ‘to SMEs who can demonstrate they have adopted sickness absence best practice procedures and are taking steps to attempt to help an employee return to work (even if that employee ultimately cannot)’.
Towergate Health & Protection head of group risk David Williams says: “I feel the outcome-based option is dangerous because it could result in employees being encouraged to come back to work when they are not fully recovered. But having the rebate linked to companies demonstrating best practice around staff absence is much better.
“Potentially it could be a good break for group income protection, but the government probably still thinks of the product just as a sickness payment mechanism rather than a rehabilitation capability. So, the industry should be asking it to make it clear that group income protection is one of the tick boxes for the rebate.”
Therein lies the nub of the problem. This massive consultation paper dwelt endlessly on occupational health but did not actually mention group income protection once! And this is far from being the first time this has happened to the industry.
Canada Life Group Insurance marketing director Paul Avis says: “We have been doing a volume of consultation responses in recent years on the health side and we haven’t been getting too much out of them. Despite all our efforts in 2017 on Improving Lives, there was no mention of group income protection in this consultation and the important role it can play.”
Nevertheless, inputs from providers and industry bodies should leave the government in little doubt about what the product can actually do. Let’s just hope it reads them!
After all, it’s not as though the SME sector was bounding from strength to strength before the coronavirus lockdown. According to the Federation of Small Businesses’ (FSB) latest Voice of Small Business Index, confidence was at its lowest point during the final quarter of 2019 since the last recession. Profitability was also at a five-year low, with 42 per cent of small businesses reporting a decrease in profits.
Howden Employee Benefits & Wellbeing head of benefits strategy Steve Herbert says: “The bottom line is that when we get back to full recovery it’s absolutely critical that businesses bounce back as soon as they possibly can, especially as SMEs may have incurred debts during the crisis. “Absence is a major drain on productivity although, generally speaking, the UK has done quite well over the last 20 years in reducing absence rates. However, the danger of presenteeism is possibly even greater, and the coronavirus crisis should have highlighted this like never before. Group risk providers are increasingly offering access to services that can help with presenteeism, like online GP appointments, counselling services and employee assistance programmes.”
The plain truth is that the government simply cannot afford to overlook group income protection this time. A single absenteeism or presenteeism case can have such a massive impact on the bottom line that the matter of who pays for SSP can seem virtually irrelevant.
Box: Continuity needed
Group Risk Development (Grid) spokesperson Katharine Moxham highlights that a major problem with inputting into government consultations on workplace health is that they are project based, so you are dealing with different people each time.
She says: “I get the feeling that there’s not a huge amount of continuity behind these exercises. Fit for Work was shelved but there seems to be no collective memory of the fact that occupational health on its own didn’t work.
“If you’ve already focused on a service that doesn’t work then surely there is no point in focusing on the same thing? They need to look beyond occupational health and, although they were beginning to ‘get’ group income protection when they produced the Improving Lives roadmap in 2017, they seem to have forgotten about it since.”
However, the first output of Grid’s newly formed Workplace Public Policy Committee has been to send a ministerial letter this February outlining a range of non-legislative and low-cost potential initiatives and highlighting what group income protection can do.
Box: ABI rams home the message
Key points of the submission made by the Association of British Insurers (ABI) to the consultation included:
• More onus could be put on the employer to encourage and support the employee in returning to work. Group income protection insurance schemes can not only provide financial support for those who fall sick but can also provide services which support earlier returns to work.
• Smaller businesses can have access to insurance products. Swiss Re Group Watch data shows that 70% of in-force policies protect fewer than 250 members. Some employers will have sick pay arrangements in place but not insure them. Therefore, the SSP eligibility criteria could be re-thought and employers should be guided or advised on the various types of products and services available to support returning sick employees to work. There may also be value in offering an SSP rebate where there is a suitable return to work plan in place.