Unum's Andrew Potterton discusses the impact for SMEs following last year's changes to Statutory Sick Pay and how intermediaries can help manage the fallout of rising sickness absence costs.
The government's decision to scrap the Statutory Sick Pay (SSP) Percentage Threshold Scheme (PTS) last year was met with concern from businesses, especially smaller firms who depended most on the scheme.
However, it is now - almost a year on - that many SMEs are really starting to feel the impact of mounting sickness absence costs.
The unpredictable costs of sickness absence can cause problems for any business, but for SMEs the costs of covering SSP can be a huge burden on cash-flow.
Previously, the PTS would offer compensation to employers experiencing high levels of sickness absence, allowing them to recover some or all of the SSP they incurred - but now this has been scrapped to fund the new Fit For Work service, employers are left to bear the full cost themselves.
So as these concerns start to become a reality, what measures can employers take to mitigate against the unpredictable impact of high sickness absence - and what do brokers need to bear in mind to be able to support their clients?
Intervention
Whatever the size of the business, the value of early intervention in tackling health and wellbeing issues at an early stage cannot be underestimated.
Brokers should make sure their clients understand the options available to them when they buy some protection products.
Employee Assistance Programmes, for example, offer employees face-to-face counselling and advice on a wide range of issues and provide a wealth of support for HR, line managers and business owners.
Rehabilitation expertise comes with these products too and this will complement the occupational health advice Fit For Work is expected to offer.
Protection
This is also a good time for brokers to explain to clients the different financial protection products available to help mitigate the costs of sickness absence.
For example, Sick Pay Insurance provides employees with regular income if they are off sick for up to 12 months, supporting employers' occupational sick pay commitments to staff.
Benefit can kick in after as little as one week's absence and insurer validation can help employers manage absence consistently across the workforce.
This is a particularly important consideration for small businesses which may not have a formal HR department to handle the process.
Rehabilitation
An added benefit of protection products is that they come with vocational rehabilitation services to support employees if they are ready to return to work, as well as advice for employers should they need to make alterations in the workplace or develop a phased return to work plan.
This helps to get employees back to work when they are ready and reduce the likelihood of a recurrence.
What next?
If small firms haven't yet started weighing up the options, now is the time - and brokers have an important role to play in supporting them to do this.
Sickness absence will always be a risk for businesses, but putting the right measures in place to reduce the likelihood of absence and to mitigate the associated costs when it does happen can provide a safeguard and peace of mind.
Brokers should act now to work with their clients in developing the right strategy for them.
Andrew Potterton is head of proposition development at Unum.
