Employee Benefits Summit 2012: Tax incentives could help to tackle long-term sickness absence

More than half (56%) of delegates at the Employee Benefits Summit 2012 believe that the introduction of tax incentives would make some difference to how their organisation helps long-term ill employees.

A further 16% said that this would make a big difference, while 11% felt their organisation is already demonstrating best practice in this area.

Speaking in a session titled ‘Reducing the cost of sickness absence to employers, taxpayers and the economy’, David Frost, co-chair of Health at work – an independent review of sickness absence, which was published in November 2011, explained that the review included proposals to change the tax rules on medical intervention for employers.

Among these was the proposal that private medical insurance should not be taxable for basic-rate taxpayers. “It would be beneficial for basic-rate taxpayers to do something like that,” said Frost. “More needs to be done to assist organisations with their healthcare needs.”

Frost also suggested that the tax relief on employee assistance programmes (EAPs) should be retained.

The cost of sickness absence to an organisation can be significant. Overall, employers spend £9 billion a year on sick pay for absent staff, while the Centre for Economics and Business Research has estimated that sickness absence costs organisations with 500 employees or more £650,000 a year, said Frost.

However, 59% of summit delegates said that, while both long- and short-term absence was costing their business money, they did not know how much. Just over a third (35%) said they knew roughly how much absence is costing their organisation.

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