Consultant Paul Avis looks at the cost of not training managers how to deal with absences.
Employers still remain blissfully unaware of the implications of when a line manager fails to properly enforce a good absence policy.
Absence or attendance management is possibly the one area that most organisations struggle to manage efficiently and effectively, so to set up an organisational infrastructure there are two strands that have to be in place before consideration of any services (such as Occupational Health) and benefits (such as private medical or group income protection) is made.
Without a clear policy wording and line managers trained in sickness, absence and disability management, there seems little point in spending money which will never be utilised. The purpose of this article is to highlight what should be included in both stages of the development of the organisational healthcare strategy and will also assess how effective such interventions will be.
Are employers good health managers?
The short answer is mostly no! In a 2006 Norwich Union survey of HR priorities for their organisations, employee health and well being came fourth (38%) following staff attraction/retention (68%), staff motivation (50%), legislative compliance (47%) and absence management at 35%. This implies that half of employers aren't worried by legislative compliance and two-thirds don't view their employees as valuable assets, once employed. With double digit increases in employer liability (ELI) and group income protection insurance costs over the past five years, one would imagine that proactive case management and vocational rehabilitation (VR) would be the norm.
In fact only 7% of ELI claimants are in VR and the compensation culture is going to get worse not better. The NU survey summarises: "There are already examples of best practice but the simple truth of the matter is not being grasped." Whilst it is easy to blame employers, this is a complex area with many historical and legacy obligations alongside changing legislation. The need for multiple policies, diverse stakeholders, lack of line management training and commitment shows why this area of management is so complex. The UK is now leading the world in absence management and integrated, total, comprehensive healthcare solutions. The problem is that employers do not routinely seem to want to engage with such solutions, however good.
So what core legislation should employers be aware of?
Employers should already be aware of the Disability Discrimination Act (1995) but it is astonishing how speedily it is being refined. The volume of changes and increases in organisational responsibility from December 2005 implies a great deal of familiarity is required. As the latest and last modular discrimination body that was launched (CRE and EOC were due to merge into the Commission for Equality and Human Rights in 2007) this has been partly due to the Disability Rights Commission fighting hard for reform. Removal of the small employers exemption, inclusion of the police and fire service and partnerships, refinements to qualification such as non-clinically recognised definition of mental health, progressive illness inclusion from diagnosis date, removal of the justification defence and burden of proof transferred to employers all imply that organisations must work within this legislation.
Looking at the Employment Tribunal statistics surely the paucity of annual DDA cases implies that employers should have no fear? The opposite is true as the Act is so clear that when employers fall foul of it, they settle out of court, with unlimited amounts, often with their ELI picking up the costs. With litigation costs taking 60% of all settlements, a lack of action on the DDA can genuinely cease businesses who become uninsurable for ELI.
Further core legislation is the Welfare Reform Act (2006) which will see the Pathways to Work approach to case management rolled out from October 2006. Whilst some pundits have criticised the £360,000,000 allocated to the new approach, implications for employers are numerous. Currently £70.05 per week is available for employees after SSP is exhausted, potentially no help with immediate mortgage payments and repayment back to the Compensation Recovery Unit, should a lump sum from a third party be settled. It is no wonder that many employees have sued their employers once their contract is terminated as reliance on Incapacity Benefit has never been a good choice: employees can lose everything.
The new Employment and Support Allowance is based on employees having limited capacity for work, an assessment phase and uses work focused interviews, personal action plans and so forth. Whilst the political ethos surrounding work is good for you, the new Bio Psycho Social model of disability implying that VR is demedicalised, one would imagine that an hegemonic legitimisation of this approach is inevitable. However how bad Incapacity Benefit has been in the past it will now be a lot harder to get and employers will have to take the strain as fewer employees qualify for it.
Final salary pension schemes used to granting ill-health early retirement pension schemes have seen the impact on the visibility of the capitalised cost under FRS 17 accounting changes. This option has been removed by many employers, implying a reliance on Incapacity Benefit. For Public Sector employers, the Freedom of Information Act (2000) ensures an ongoing scrutiny of sickness absence performance measures such as sick days lost, number of IHERP granted and percentage of employed people with disabilities. Accident books were reconfigured to comply with Data Protection (1998) legislation whilst the Fourth Code means that employers should have explicit consent to hold any sickness records, use a single, limited access database and this means that the line manager's notes about sick employees can be disclosed. This can be torturous in a Tribunal setting!
The 2004 CIPD Rehabilitation Guide estimates that 20 policies are needed by an employer to run an absence effectively, whilst our own experience involves in excess of 30! Line managers who proactively engage with absence management may have better competencies in policy enforcement, but for those that do not, application inconsistency becomes a recipe for disaster. A consistent, supportive, depersonalised approach every absence is the only way that organisations can address the issue.
Not all legislation gets through and the December 2005 u-turn on the Accounting Standards Board, The Operating and Financial Review, shows that positive approaches are yet to be embraced by the government. This included sections in company accounts on Health and Safety, recruitment and retention (disabled employees), workforce performance (absence rates), morale and motivation and social and community. Whilst US subsidiaries comply with Sarbanes Oxley Act (2002), which has Human Capital Management (HCM) provision, the UK does not.
Tony Blair's pre-election comment, "Human capital is the 21st century equivalent of the 19th century natural resources", established the need to protect and develop these valuable assets. Employers can be sure that whilst employee protection is high on the agenda, employer protections are being eroded by an increasing burden of legislation. Best practice will be the only practice and the need to invest to save in employee health management has never been higher.
Paul Avis is the director of Employ-Mend Limited, The Drive House, Manor Farm, Kenn Moor Road, Kenn, Near Clevedon, North Somerset BS21 6TZ, Telephone Number: (01934) 875930, Fax: (01934) 875915, [email protected]