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Cost of doing business crisis | Moving forward with staff on long-term sick leave
Written by Alexandra Farmer on 14 November 2022
As the cost of doing business crisis continues, employers are trimming down on spend and looking for ways to get the most out of their team. This means ensuring everyone is present and performing at their best.
Part of this, of course, is managing long-term sickness absence. Having a member of staff on leave for an indefinite period can be a drain on productivity and resources and many businesses simply can’t shoulder this additional expense right now.
As well as paying SSP, having an employee on long-term sick could mean paying for temporary cover. It could also cost your business in other ways, namely lost productivity and added strain on other members of staff who end up carrying the extra load.
And it’s a growing problem. According to the Office for National Statistics, the increase in long-term sickness started pre-pandemic in 2019 then rose sharply, with the number of people economically inactive due to long-term sickness reaching a record 2.5 million between June and August 2022.
Unfortunately for employers, long-term sickness is one of the most difficult kinds of absence to manage, especially for smaller organisations with smaller teams and less-flexible finances.
At WorkNest, we’re seeing more enquiries from employers who are keen to progress situations forward in 2023 – whether that’s accelerating a return to work or, if it becomes clear that there’s no reasonable prospect of a return, going down the medical capability dismissal route.
Capability dismissal as an alternative to redundancy?
In our experience, most employers aren’t using capability dismissal as an alternative to redundancy. However, it’s fair to say businesses are feeling the pressure of the economic climate, and therefore needing to be proactive in managing their employee relationships.
After all, the single biggest cost to any business is the labour cost. In fact, on average, it makes up 70% of a business’ overall expenditure.
As such, businesses are acutely alert to the impact that absence is having on business efficiency and other colleagues’ workloads. Especially where there is favourable sickness payment schemes, they will want to keep on top of managing absence to ensure there’s no abuse of the system available.
However, as a general rule of thumb, unless there is early medical evidence that confirms an employee isn’t going to be fit to return to work for a long time, it’s unlikely that it will be reasonable to progress with an ill-health dismissal before six months of absence.
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The causes
According to CIPD, the most common reasons why employees take a long-term leave of absence include mental ill health, musculoskeletal conditions and stress.
The vast majority of the cases we’re seeing at WorkNest are mental health related – which is perhaps unsurprising given the various stressors people are facing right now, including the cost of living crisis. Echoing the CIPD’s findings, absences due to back pain are also common.
Interestingly, we’re seeing far fewer absences due to COVID and very few long COVID issues.
Many of the reasons for long-term absence may raise issues of disability, if the employee’s condition has a “substantial and long-term adverse effect” on their ability to carry out “normal day-to-day activities”. This can make dismissing those on long-term sick risky, given the potential for discrimination claims.
What can employers do?
When an employee has been off work for a long period of time with no clear sign of when they will be able to return, it can feel as though your hands are tied.
You’ll no doubt want to move the situation forward, particularly given the costs involved, but at the same time you might be worried about legal missteps or making the situation worse. In many cases, employers simply don’t know what to do for the best.
In these scenarios:
As a minimum, a welfare meeting once a month will enable you to regularly explore the reasons for the absence, how any medical intervention is assisting the employee in their recovery, and whether there’s anything you can do to support them in returning to work sooner. Note that as the employer, it’s up to you to seek out this information – it’s not the employee’s responsibility to update you.
Where absence becomes long term – normally defined as a period of continuous absence of more than four weeks – medical evidence, from either a doctor or Occupational Health professional, is likely to be imperative. This will provide insight into:
- The employee’s condition(s) and what measures are in place;
- Whether the employee will be fit to return to work; and
- If the employee has a disability, whether any reasonable adjustments need to be made.
No employer is expected to hold a job open indefinitely – how long you may be expected to do so will be fact sensitive, taking into account the job and the employee’s illness. Case law has highlighted that the following factors may be relevant when deciding how long it is reasonable to wait:
- The availability of temporary cover (including its cost);
- Whether the employee has exhausted their sick pay;
- The administrative costs that might be incurred by keeping the employee on the books; and
- The size of the organisation.
Before you dismiss, beware...
Before considering progressing to a potential dismissal, it’s important to:
- Consider reasonable adjustments to assist the employee in returning to work, i.e. changes to their job or potential redeployment.
- Consider any benefits that may be available. For example, do they qualify under any permanent health insurance or ill-health pension provisions?
It’s important to consider these points before progressing to a potential dismissal as this can reduce the risk of unfair dismissal and discrimination claims, as well as potential breach of contract, which could arise if you haven’t fully explored contractual benefits.
Of course, prevention is often better than cure. There are a few things you can do to reduce long-term sickness absences and their impact on your business, including:
- Creating a formal policy to show employees that you take absence seriously and set out how long-term sickness will be dealt with;
- Conducting risk assessments to identify and reduce any risks that may be contributing to such absences, such as unreasonable workload demands;
- Maintaining regular contact with employees when they are off sick; and
- Conducting return to work interviews after each absence to make sure employees really are well enough to return to work, identify absence trends and deter bogus absences.
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Get absences under control with WorkNest
When it comes to employee absences, it’s important to follow the correct process, and quickly, as getting it wrong or letting issues linger can greatly impact your bottom line.
WorkNest’s Employment Law, HR and Occupational Health experts can help you to manage all kinds of absenteeism and move long-term absence cases forward, whether by advising on reasonable adjustments and facilitating a return to work or helping you to navigate capability dismissals compliantly.
Alongside advice, we can help to develop your sickness absence policy, deliver management training, and provide simple-to-use HR software which will enable you to effectively record, track analyse and report on absences, enabling better decision making.
Start solving your absence challenges today. To discuss your specific situation, call 0345 226 8393 or request your free consultation using the button below.