How Much Is Long Term Absence Costing Your Company?

In Business, Industry News, Protection by PCH Staff

Long-term sickness absence, which is classified as a period of absence of six months or more, costs private sector businesses in the UK a whopping £4.17 billion a year, according to a new report from the Centre for Economics and Business Research (Cebr).

For a typical business with more than 500 employees, the cost of long-term sickness absence per year is £770,000.

Furthermore, mental health problems account for the largest proportion of this cost, some £1.17 billion and cause over 70 million working days per year to be lost. And with one in four people estimated to experience mental health issues at some point in their lives, it’s a situation that employers need to actively address going forward.

Commissioned by employee benefits provider Unum, the report also found that the cost of long-term sickness absence appears to be a growing exponentially, having increased from £3.13 billion in 2012 and set to reach £4.81 billion by 2030.

But there is hope for businesses as the Cebr report also discovered that early intervention services, such vocational rehabilitation, can significantly reduce the average length of absence by as much as 17% for all conditions. This equates to a reduction of more than a year for the average long-term absence of seven years, or turning an absence of seven months into six months.

Moreover, early intervention services have even more of an impact on mental health conditions, with an 18% reduction in the duration of absence.

In addition to vocational rehabilitation services, the Cebr report also lists Mental Health First Aid, physiotherapy, cognitive behavioural therapy, positive ageing guidance and early intervention helplines as early intervention services.

Early Intervention Services Increase ‘Payback’ to Employers

Often provided as part of a comprehensive Group Income Protection (GIP) package, these early intervention services can kick in within a week of a sickness absence starting and can increase the payback employers get on their investment in the policy.

For example, for every £100 an employer spends on a GIP policy they get £61 back by avoiding Occupational Sick Pay (OSP). However, when early intervention services are actively used, this payback is increased by around 10%, or £66 for every £100 spent.

As well as the OSP paid to the absent employee, the report also quantified the other costs of long-term sickness absence, namely: the salaries of replacement staff, the recruitment and training costs associated with replacement staff and the quantifiable loss in productivity overall as a result.

Peter O’Donnell, Chief Executive Officer, Unum said: “To avoid these preventable business costs, employers should implement a strategy which mitigates the impact of sickness absence. An effective way to do this is through early intervention services which help employers step in when employees show the first signs of having a health problem, and often come as part of a Group Income Protection package.”

Many employers only see the cost of a Group Income Protection scheme as an expense and fail to utilise the added value services provided, which have for many of our clients saved significant money. This when coupled with our unique claims monitoring service offers a true return on the investment.

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