UK employers hit by hidden costs of sickness absence

Absence from work is costing UK companies up to 16 per cent of their annual salary bill - yet half of these costs could be avoided.

This is the key finding of a new report commissioned by Unum, the UK’s leading provider of income protection. The report, entitled ‘Towards a better understanding of your sickness absence costs’, is the culmination of a year long survey by the Institute of Employment Studies of a cross-section of UK businesses.

It highlighted that, despite expressing concern at the rising cost of sickness absence, employers consistently underestimate the cost to their business, and few have strategies in place to quantify and manage sickness absence effectively.

The report also draws together new and existing findings on the true cost of sickness absence, including:

• Sickness and absence cost UK employers £11 billion each year (Confederation of British Industry)



• Each year, 6.5 million working days are lost through work-related stress or depression (Health & Safety Executive)



• One in seven adults will be off work for at least six months because of illness or injury



• Sickness absence can cost individual employers up to 16 per cent of payroll each year (Unum / Institute of Employment Studies)

The report indicated that employers can reduce the financial impact to their business by up to half through effective management of absence, early intervention when staff are off sick and rehabilitation/return to work programmes.

Another solution is Group Income Protection insurance, which pays out a proportion of salary to employees if they are unable to work because of illness or injury - removing the increasing burden of Statutory Sick Pay on employers.

Typically, such a scheme costs just one per cent of payroll. Some schemes offer rehabilitation programmes and invaluable support to both the individual and the employer.

Eugene McCormack, Director of Marketing at Unum, said: “Organisations that continue to ignore their absence costs are operating inefficiently. Taking steps to reduce these costs by investing in Group Income Protection can help to manage costs and keep them to a minimum.”

The findings will be presented on Tuesday October 16 at a half-day seminar in Westminster attended by leading figures from the business, government, and voluntary sectors. (MB)