Frost/Black call for £150m tax breaks for workplace health

Employers should be encouraged to offer tax breaks for interventions that prevent sickness absence or help absent employees back to work more quickly, but income protection should not be given fiscal support by the Treasury, the Frost / Black report into long term sickess absence has concluded.

The report, written by David Frost, former director general, British Chamber of Commerce and Dame Carol Black, National Director for Health and Work, estimates that providing tax relief for basic rate taxpayers on employers’ expenditure on health initiatives would cost the Treasury about £150m, but this would be offset by overall savings to business in the region of £250m, making an increase in output for the economy as a whole of around £100m.

The report also proposes the establishment of a newIndependent Assessment Service (IAS). The IAS would provide an in-depth assessment of an individual’s physical and/or mental function and advice about how an individual on sickness absence could be supported to return to work.

Fit note guidance should be issued to ensure that judgements about fitness to work move away from only job-specific assessments, the review says.

The reviewers also called for the establishment of a new job-brokering service to help long-term sick employees find new work before they fall onto the benefits system.

Frost and Black also recommended that the Government should end the ESA assessment phase altogether. People should go onto ESA only if they qualify after a WCA, or as at present, if they qualify to pass directly onto ESA without a face-to-face WCA, they said.

David Frost says: “The current certification system does not provide employers with the advice they need to make informed decisions about their employees’ capability for work. The establishment of the Independent Assessment Service will provide practical support and help to allow employers to make informed judgements about a return to work for their staff.”

Black says: “Sickness absence from work can be unavoidable, but when unduly prolonged it is wasteful and damaging. We believe we have presented an urgent and compelling case to change the current system so that it unashamedly promotes work for those that can.”

Frost / Black recommendations in full

1. The government should fund a new Independent Assessment Service (IAS). The IAS would provide an in-depth assessment of an individual’s physical and/or mental function. It would also provide advice about how an individual on sickness absence could be supported to return to work. This service should usually be accessed when an individual’s absence spell has lasted around four weeks.

2. The government should revise fit note guidance to ensure that judgements about fitness to work move away from only job-specific assessments.

3. The government should do more to improve knowledge and awareness among healthcare professionals, particularly those involved in certification, of the WCA and the benefits system generally and the importance of work for health.

4. Expenditure by employers targeted at keeping sick employees in work (or speeding their return to work) such as medical treatments or vocational rehabilitation should attract tax relief. This should be targeted at basic-rate taxpayers.

5. Existing tax relief on employee assistance programmes (EAPs), which provide information, advice and counselling on a variety of issues causing absence and/or performance problems should be retained.

6. The government should abolish PTS which compensates mainly smaller employers for very high rates of sickness absence in their organisations, but reduces incentives to manage absence.

7. Record-keeping obligations under SSP should be abolished, thereby helping to reduce employer administrative burdens.

8. The government should update its Employers Charter to address misconceptions around sickness absence management, especially legal uncertainty.

9. The government should carry out further research into the reasons behind the significant number of people claiming ill health benefits who come straight from work, especially from smaller employers, but appear not to have been paid sick pay by their employer beforehand.

10. Public sector employers should take immediate action to bring the worst performing parts of the public sector up to the standards of the best. Government should also review OSP in the public sector.

11. The introduction of a new job-brokering service to help long-term sick employees find new work (where appropriate) before they fall onto the benefits system. This service should be offered free by the State in cases of very long-term absence (at 20 weeks or sooner if the Government is convinced of the business case to do so), but should be available earlier for individuals and employers that are willing to pay for it. Government should consider delivering the service as an extension of the Work Programme.

12. The Government should end the ESA assessment phase altogether. People should go onto ESA only if they qualify after a WCA, or as at present, if they qualify to pass directly onto ESA without a face-to-face WCA.

13. The recommendation above should be supported by changes to Jobcentre Plus’ claims policies and processes to prevent large numbers of people being inappropriately directed towards ESA.