Sick leave reviewed as part of Welfare Reform

The Government has announced an independent review into sickness absence in the workplace.

The review is to be co-headed by David Frost, head of the British Chambers of Commerce and Dame Carol Black, who led a similar review in 2008 that resulted in the new "fit note" system.

Legal & General has welcomed the announcement. Diane Buckley, managing director of group protection at Legal & General, said: "We have been highlighting to government the savings in Statutory Sick Pay and Occupational Sick Pay which could be made available as a result of more widespread take-up by employers of Group Income Protection (GIP) policies."

"There are typically three beneficiaries from a GIP policy, employers see a reduction in the cost to the business, the state benefits from a reduced exposure to paying benefits and the individual benefits from rapid intervention and has a much-improved chance of returning to work. A thriving GIP market helps reduce this waste of economic and human capital."

The Chartered Institute of Personnel and Development (CIPD) has pointed out that the average cost of absence is far higher in the government sector, where occupational sick pay schemes are most generous.

The median cost per employee in the public sector is £889, more than twice that in the manufacturing and production sector (£400), according to CIPD figures. In both private sector services companies and non-profit organisations, the average annual cost of sickness is £600 per employee.

The CIPD also supported the review. Ben Willmott, senior public policy adviser for the CIPD, said: "We welcome the Government's logical linking of its plans to restructure the welfare system with a review into sickness absence.

"Employers, government, and voluntary and private sector providers need to work together to do more to stop people falling out of work for long periods.

"The review can help shine a light on some of the obstacles that prevent companies from supporting employee wellbeing and managing absence effectively. For example, only a minority of small firms provide access to occupational health services for their staff even though evidence suggests such services are the most effective means of helping people with health problems back to work.

"A key issue the review might usefully consider is the issue of encouraging early intervention and referral to specialist support such as counselling or physiotherapy services."