Aviva Absence Management Report August 2012
Overview of the report Sickness Absence 4 Sickness absence is a big concern for many employers. 40% have seen more people taking sick leave over the past few years. The impact of staff sickness on the workplace 5 Employers are seeing a significant effect on productivity and staff morale as a result of sickness absence. Employee concerns about sickness absence 6 Employees main concern is how they d cope financially if they were unable to work. 21% said they d feel stressed about having to return to work before they felt well enough to do so. How are employers tackling sickness absence? 8 Employers are offering a range of health and protection benefits as part of their employee benefits package. The most widely offered benefits are Group Life Insurance (28%), Private Medical Insurance (28%) and Group Income Protection (14%). Employers awareness of Welfare Reform 11 Some employers are unaware of the Welfare Reform changes and the potential impact of those changes on their employees. Employers views on managing staff back into the workplace 13 There s mixed views from employers on their abilities to help their staff return to work following sickness. How Aviva can help 14 Income Protection claim trends 15 Aviva Absence Management Report 2
Foreword As an experienced provider of Group Risk products, we re keen to understand the challenges that employers face in relation to rehabilitation and absence management in the workplace. We use those insights, together with information drawn from our own business, to consistently improve the products, services and support we offer our corporate customers. Our 2012 Absence Management Report comes at a time when the Coalition is embarking on one of the most radical and far-reaching restructures of the Welfare System the country has seen for many years. There is a particular focus on helping people move off benefits and back to work where this can be fairly achieved. This includes those individuals who have fallen out of work due to long-term sickness, but may be able to get back to employment with the right support. In November this year, the Government is due to respond to the recommendations made by the independent Sickness Absence Review team. The extensive review of the sickness absence system in the UK represents an encouraging stepchange in thinking. The focus is no longer on tackling issues such as the financial cost of long-term sickness in isolation; instead, it is taking a more cohesive approach exploring what is driving the issues and considering solutions to tackle them. Aviva is already starting to work with corporate customers in this way. Our experience shows that companies are increasingly looking for needs-based solutions that offer a tangible return. They want tailored benefits packages that not only identify and tackle the issues but also help prevent them occurring in the first place. In this report, we ll be exploring employers and employees views and understanding of a number of key areas in the Welfare Reform programme. We focus on four areas; employers awareness of the changes to Employment and Support Allowance (ESA), their behaviours, experience and concerns around sickness absence, and the impact of staff sickness on their business. We also ask employees for their views on sickness absence to understand their concerns and reveal what really matters to them when it comes to the support they receive when they re unwell. Our research uncovers a positive move towards early intervention by some employers. However, despite this encouraging step, it s apparent that many employers are still struggling to effectively manage sickness absence. This in turn is impacting their business productivity and staff motivation and morale. Moreover, it could also be pushing staff back into the workplace before they re well enough to return. Our findings reconfirm the need for employers to have additional support to help them manage their employees ill health, rehabilitation and return to work. Products such as Group Income Protection can be highly productive in addressing these issues, and we re renewing our commitment to increase awareness of the valuable benefits this product has to offer. We hope you find our report interesting, insightful and useful. Steve Bridger, head of group risk, Aviva Aviva Absence Management Report 3 97001234_GEN4673.indd 3 10/08/2012 14:43
Sickness Absence Just under half the employers we spoke to (45%) said that sickness absence is a big issue for their business and 40% say they ve seen more people take sick leave during the last few years. This was a view confirmed by our employee research with a quarter (25%) of employees saying that they ve been off sick for two weeks or more. Sickness absence is becoming more of an issue Given these findings, it s not surprising that over a quarter (26%) of employers feel that sickness absence is becoming more of an issue for their business. When we asked employers what they thought could be driving this increase, just over half (56%) said that they believe it s due to stress-related illness. This view is confirmed by our employee research, which shows that mental health issues are the leading reason for long-term absence. Around a quarter (28%) of employers believe people are afraid to take time off for relaxation, and 27% say people are working too hard. Interestingly, employee s ages are also thought to play a role in sickness absence: 38% of employers believe younger employees are burning the candle at both ends and 30% feel that the ageing workforce is contributing to their absence rates. Causes of sickness absence The two main reasons employees gave for long-term absenteeism are problems with mental health (29%) and musculoskeletal issues (21%). This is followed by cardiovascular illness (13%) and other serious illness such as cancer (10%). Reasons why why employers employers think think that that sickness sickness absence is is increasing for for their their business business Personal problems/family People working too hard People don't take time off to relax Ageing workforce Young workers burning the candle at both ends Increase in stress 25% 27% 28% 30% 38% 56% 0 10 20 30 40 50 60 These findings reflect the trends we re seeing in research associated with our Income Protection products as well. An infographic on page 15 provides a detailed overview of our claims trends. Aviva Absence Management Report 4
The impact of staff sickness on the workplace The extent of sickness absence in the UK is well documented. In its recent Labour Force survey, the Office for National Statistics estimates that 131 million days were lost to sickness in 2011 an average of 4.5 days per person. This not only has a financial impact on a business, in terms of lost revenue, labour costs and sick pay, but also has a knock-on effect to staff wellbeing. The employers taking part in our research confirm the significant impact that sickness absence can have on the workplace both in terms of business performance and the workforce: 40% of employers say that work is passed to another employee to pick up. 17% say they ve seen other team members take sick leave as a result of a colleague s absence. Around one in ten (13%) say they ve seen team motivation fall. This can affect business performance. Over a quarter of employers (27%) admit that productivity can fall when a member of staff is ill and absent, and 22% say that it impacts the business financially. One in five (21%) admits that service standards can also fall. Just 9% of employers say that staff sickness has no impact on their business. The impact of staff sickness on the workplace The impact of staff sickness on the workplace Motivation and morale falls Struggle to cover cost of temp and employee's salary 13% Other staff go off sick Service standards suffer Financial impacts Productivity can fall 15% 17% A colleague has to pick up work 21% 22% 27% 40% 0 10 20 30 40 50 Aviva Absence Management Report 5
Employee concerns about sickness absence Sickness absence is also a significant worry for employees. Half of employees (50%) stated that their key concern, after recovery (61%), was making ends meet if they were off work. A quarter (25%) would worry about the pressure it would put on their family. It s not surprising then, that over a third of employees (39%) said recovering and getting back to work would be a priority if they were off long-term sick. Just under one in five (19%) went as far as to say that the thought of returning to work would keep them going. Around half of employees admitted that the prospect of not being able to work long-term would leave them feeling depressed (48%) and bored (46%). A third (33%) said that it would affect their self-confidence. Responsibility for helping employees return to work 43% of employees felt that it was the joint responsibility of the employer and employee to help people back to work following ill health. Just over a third (36%) felt that it was the sole responsibility of the employer. Around a quarter (23%) said it was the State s responsibility to support an employee when they are unable to work due to sickness. How employees would feel if they couldn t work long-term How employees would feel if they couldn t work long-term 60% 51% 50% 46% 48% 40% 33% 30% 26% 20% 21% 10% 6% 7% 0% I'd enjoy the free time Relieved not to be working Concerned about my career Concerned about family Lose self-confidence Bored Depressed Stressed about money Aviva Absence Management Report 6
My Aviva claims manager was very encouraging about my efforts to go back to work, but, at the same time, I didn t feel as if I had to prove anything or rush back. Without the policy I know the stress of the financial burden would have delayed my recovery. Inger Wallis, Aviva Income Protection customer. The support employees would like to help them back to work While employees want to return to work as soon as possible, one in five (21%) said they d feel stressed about having to return to work before they felt well enough to do so. When asked what support they d like from their employer to help ease their transition back into the workplace, 35% said they d like to know that they had a regular income while they re off sick. Over half (52%) of employees would like flexible working hours to allow for treatment and sickness. A third (33%) of employees would like to be able to build their hours up when they felt well enough and 41% said that they d like as much time off as possible to help accommodate and assist their recovery. How long employees think How long employees think they they could could survive survive on on Employment and and Support Allowance Support Allowance 8% 20% 17% Around one in seven (15%) employees said they d like access to private medical treatment that could help speed up their return to work and 14% would like counselling support. 21% 24% How Aviva is helping its customers When Inger Wallis best friend was diagnosed with cancer in 2008, it made her take stock of her circumstances. Inger decided that, as the main breadwinner, she would take out an Income Protection policy with Aviva. Months later, she started to feel unwell. She was rushed to hospital where tests revealed she had suffered from a ruptured aneurysm. After treatment, Inger needed medication once every three hours and was in hospital for three weeks. Less than a month 1-3 months Up to six months At least a year I don t think a family could survive more than a few weeks Following the aneurism, Inger struggled to concentrate and has had to re-learn how to complete everyday tasks. During this time, her Income Protection policy provided her with financial support. The idea of going back to work was daunting for Inger and despite her employers agreeing to a six month phased return, she decided to go back on a part-time basis. Since returning to work she has received rehabilitation benefit from Aviva to help top-up her income. Aviva Absence Management Report 7
How are employers tackling absence? Employers main focus is on financial issues related with running a business, with rising costs (47%) and managing cash flow (31%) their primary concerns. However, as we ve seen in the previous pages of this report, they also recognise the importance of keeping their workforce healthy and motivated. A quarter of employers say that employee morale is a key concern for their business and around one in five (19%) say they re concerned about keeping their staff healthy and happy. Employers are offering their staff a range of benefits to help keep staff healthy and at work. Insurance products such as Group Life Insurance, Private Medical Insurance and Group Income Protection still prove to be the most widely offered benefits. Around three quarters of employers (73%) have one or more health and protection products in their employee benefits package. The most widely offered benefits are Group Life Insurance (28%), Private Medical Insurance (22%), Group Income Protection (14%) and Group Critical Illness (14%). Moreover, the benefits that employers are offering closely match the benefits employees say that they most value when choosing a job. The most popular health and protection benefits amongst employees were Private Medical Insurance (22%), Life Insurance (20%) and Income Protection (17%). While the percentages vary slightly, these trends are fairly consistent with those found in our Working Lives Report, published earlier this year. Health benefits offered by employers 30% 28% 25% 22% 20% 15% 14% 14% 13% 13% 12% 10% 8% 5% 4% 0% Group Life Private Medical Insurance Group Income Protection Group Critical Illness Occupational Health Workplace wellness Benefits to help manage stress Cash Plan None but I m planning to get cover Aviva Absence Management Report 8
A step in the right direction Encouragingly, our research reveals that employers are beginning to adopt a more proactive approach to managing the physical and mental wellbeing of their staff. Just over a quarter (27%) of employers say they record staff absence on the day the member of staff goes off sick. This pro-active approach enables them to intervene early and take steps to support their employee s recovery and prompt return to work. One in five (20%) employers say they offer training to help line managers spot the signs of stress and ill health. 12% offer an Employee Assistance Programme. Just over a third (38%) say they strive to help staff realise a good work-life balance. Around one in ten employers (13%) say they offer workplace wellness benefits, such as gym membership discounts. While over a third of employers (34%) admit they still put the onus on employees to declare when they re feeling unwell, it s encouraging to see that employers are beginning to recognise the benefits of early intervention and programmes that promote a healthy workplace. Moreover, evidence suggests that many employers are beginning to reap the rewards of adopting a pro-active approach to managing sickness absence. Encouragingly, just over a third (35%) of employers say they ve seen their sickness absence rates fall over the past few years. While 16% of employers say they believe this is due to an increase in presenteeism, (people attending work while still unwell), there is significant evidence that reductions are a result of employers taking positive steps to control sickness absence as shown in the graph below and the case study on the following page of this report. Factors which have had a positive impact on sickness absence levels 35% 30% 25% 20% 31% 31% 29% 19% 56% of employers recognise that the longer an employee is off sick,the harder it is to get them back to work. 15% 16% 10% 8% 5% 0% Introduced new benefits Reviewed sickness absence policy Encouraged staff to lead a healthier lifestyle Introduced initiatives to aid early intervention Presenteeism has increased Our employees have just become healthier Aviva Absence Management Report 9
The benefits of early intervention Aviva customer case studies Tom s story Tom* is a team manager covered on an Aviva Group Income Protection scheme with a 26 week deferred period. Even though Tom was still at work, his employer was concerned that he d been suffering from back pain for a long time. His employer was concerned that his condition could get worse and cause him to be off work long-term. They called our rehabilitation service centre to see whether there was any support available from their Group Income Protection policy. Aviva agreed to refer Tom s case to its case management team who arranged for an ergonomic assessment of Tom s work station and suggested a number of improvements. Working closely with Aviva s in-house physiotherapist, the case manager agreed a treatment plan for Tom which involved physiotherapy and general advice on how to manage his condition. Although he hasn t yet completed his treatment, Tom s symptoms have already improved by about 80% - and he hasn t taken any time off work. Katie s story Katie* is an accounts clerk covered on an Aviva Group Income Protection scheme. Even though the policy has a 26 week deferred period, her employer contacted us shortly after she was signed off work with depression. Aviva contacted her by telephone to discuss her condition and complete the necessary paperwork. During the call we ascertained that her GP had referred her for counselling through her local PCT. However, there was a four month wait for this service. With the agreement of her GP, we referred her privately for Cognitive Behavioural Therapy (CBT). She had her first session within a couple of weeks. Although Katie was keen to return to work, she was worried that she wouldn t cope. However, she chatted this through with her counsellor who helped her improve her coping skills. With her counsellor s and employer s support, she was able to begin a phased return to work, while continuing her CBT. By intervening early and giving Katie prompt access to the appropriate support, her health has improved considerably and she s been able to continue working through her illness. Not only is this an excellent example of the instrumental role Group Income Protection can play in helping an employee return to work but it also clearly demonstrates how the private sector can complement the existing state provision. *The customers names have been changed. I dread to think where I would be if I had had to wait that long for treatment, I do not think I would be where I am today without the privately funded treatment. Aviva Absence Management Report 10
Employers awareness of Welfare Reform There s a worrying lack of awareness among employers regarding State benefits. Over half the employers we spoke to (63%) admitted being unaware of the benefits paid through the Government s Employment and Support Allowance. The percentage of employers who are aware that an individual considered capable of moving off ESA into work will have the benefit time limited to one year. Nearly three quarters of them (72%) didn t know that people in the work-related activity group could find their entitlement to Employment and Support Allowance (ESA) rescinded after a year if they re considered capable of returning to work. Just one in ten (11%) employers had reviewed their sick pay arrangements following the Welfare Reform changes. 13% 7% 7% 17% 11% Employers are also unaware of the impact the new State benefits approach could have on employees with conditions such as cancer, multiple sclerosis and mental health issues. These conditions can present different levels of severity at different times, which means that employees could find themselves in the work-related group with limited financial support. When the situation was explained, just over a third (38%) felt it s a good idea to have a different approach for different conditions. However, a quarter of employers (24%) recognised the potential impact this could have on their employees and were concerned about employees being forced back into the workforce while still unwell. One in five (22%) felt it would be very difficult to put the correct measures in place to decide whether a person is fit for work. 45% Yes, we're considering taking out Group Income Protection Yes, we've changed our sick-pay arrangements No, I wasn't aware of this No, and it concerns me that employees may have their support withdrawn No, we've usually stopped supporting employees by this stage No, we've usually terminated their contract due to ill health by this stage Aviva Absence Management Report 11
There s a concerning lack of awareness among employers about the State support available to employees who can t work as a result of long-term illness or injury. This situation could leave employees without the financial and physical support they need to aid their rehabilitation and return to work. Steve Bridger, head of group risk, Aviva Employers views of the Sickness Absence Review When probed further about the Government s plans to put employers at the centre of managing employees back into the workplace following sickness absence, a quarter of employers (25%) agreed that it is a good idea, stating it s an employer s duty of care to support its employees. Around one in five (19%) said they already have a robust absence management strategy in place. Other employers were less positive: 19% said they d need an incentive from the State to pro-actively support employees through ill health and manage their return back into the workplace. Just over one in ten (14%) said that it was a good idea in theory but it wouldn t work in practice because the support just isn t available from the NHS. Over half (57%) said their employees needed to take more responsibility to keep themselves fit and at work. Only 9% of employers said they d like to work closer with GPs despite them being instrumental to the success of the Government s Fit Note initiative. 55% of employers say that encouraging people back into work following ill health has a positive impact on the employee and their colleagues. 58% of employers say that the responsibility to get employees back to work following long-term illness falls between the State, employer and employee. Aviva Absence Management Report 12
Employers views on managing staff back into the workplace When questioned specifically about their abilities to help an absent member of staff return to work following long-term sickness, 21% of employers said they feel equipped to do so. Financial protection and access to rehabilitation support from a Group Income Protection policy were cited as being instrumental. In contrast, 31% of employers said they offer little or no support to help people return to work following illness and nearly a quarter (22%) of employers said they don t have the resources or expertise to manage people back into the workplace effectively. A quarter (25%) said they were concerned about the length of time they d have to support an employee financially if sick leave was taken long-term. Encouragingly, many employers are starting to think about how they could address the situation: Around one in five (17%) employers are considering taking out Group Income Protection. A significant 43% of employers say they think that people should be auto enrolled onto a scheme that gives them financial protection in the event of long-term sickness absence. This is a view shared by 28% of employees. How equipped do you feel to support people 30% through illness and help them back to work? 25% 25% The State, employers, employees, healthcare professionals and insurers all have a role to play in tackling the country s sickness absence bill. With the right incentives and timely interventions, there s a real opportunity to make significant savings and also stop the financial stress and emotional pressures on the individual. Steve Bridger, head of group risk, Aviva 20% 21% 15% 16% 16% 15% 14% 14% 10% 5% 0% I'd worry we'd need to carry on paying sick pay Very - we offer financial protection and rehabilitation support We don't have the expertise I don't know what my obligations are We'd be fine with the right support We don't have the time to help people back to work It would be difficult to find alternative work for them as I wouldn't know what they are physically capable of Aviva Absence Management Report 13
How Aviva can help Long-term sickness absence continues to be an issue for many employers. It s not uncommon for an employee to go on long term sick leave at some point during their working career. However, many employers are still leaving themselves and their staff unprotected against sickness absence. Aviva s Group Income Protection policy offers employers financial protection as well as giving employees access to a range of rehabilitation support services. Dedicated claims visitors can meet with the employer (and employee if appropriate) to talk about the individual s circumstances. Where hours or responsibilities are reduced, a partial benefit can be paid to help ease an employee s return to work. Further information about our Group Risk products (including full details of cover options) can be found at: www.aviva.co.uk/health A range of videos can also be accessed at www.letstalkgrouprisk.co.uk Sickness absence not only has a knock on effect to other employees, but adds to the business concerns of employers as a whole. While it is encouraging that employers are implementing preventative measures to help control the effects of sickness absence, take-up of one of the most effective solutions Group Income Protection is still relatively low. Many of the challenges employers and employees face as a result of sickness absence can be addressed by Group Income Protection. In addition to offering employers financial support, employees can receive a partial benefit if they make a staged return to work, while accessing a wide range of rehabilitation support to help aid their recovery. Steve Bridger, head of group risk, Aviva Aviva Absence Management Report 14
Aviva s Income Protection claim trends Early to mid 40s - average age male and females stop work due to illness 33% female 53 years average age of claimant 9 years average time in claim Claims split by gender. 67% male 36 years - longest time in claim for an employee covered on a group income protection scheme. Age at start of claim 28 years current age 64 years Reason for claim: orthopaedic condition 28% 21% 18% 11% 9% 8% 5% psychiatric orthopaedic neurological rheumatological other illnesses cancer cardiovascular Claims in payment split by condition Source: Average figures calculated using Aviva s Group Income Protection and Income Protection claims data. The figures are correct as at 31 December 2011. Aviva Absence Management Report 15
Aviva Absence Management Report Methodology We commissioned a nationwide survey of 1,000 British adult employees and 500 employers, between 26-27 June 2012. The employer sample is broadly representative of UK companies across size of business, industry and sector. The research was carried out for us by market researchers OnePoll. Aviva Health UK Limited. Registered in England Number 2464270. Registered Office 8 Surrey Street Norwich NR1 3NG. This insurance is underwritten by Aviva Insurance UK Limited. Registered in England Number 99122, Registered Office 8 Surrey Street Norwich NR1 3NG. Authorised and regulated by the Financial Services Authority. Aviva Health UK Limited, Head Office: Chilworth House Hampshire Corporate Park Templars Way Eastleigh Hampshire SO53 3RY. aviva.co.uk/health GEN4673 08/2012 Aviva plc