If not, now is the time to give very serious consideration to implementing one. If you do have one, you should consider whether it is still fit for purpose. Why? Because under the Welfare Reform Act 2007, the Government has radical plans to cut both the number of people claiming incapacity benefits and the levels of benefit that they receive. If the plans are successful, the number of people claiming benefit will reduce by one million from the current 2.7 million.
Under the new rules coming into effect later this year, benefit will start, as it does now, after 28 weeks’ absence. In future, however, the period from 28 weeks to 41 weeks will be seen as an assessment period in which applicants will be assumed to be able to work until proved otherwise. As such, they will potentially receive the much lower benefit currently paid to a healthy jobseeker. For example, a married claimant with two children will receive a weekly benefit of £59.15 (if age 25+) compared with £128.95 currently.
What an applicant will receive from week 42, if he or she is successful in proving some level of incapacity, is not yet known, but it is expected to be less than now, except for claimants with the highest levels of disability. Furthermore, if a claimant has the potential to return to work, they will have to co-operate fully with initiatives to help them to do so or face losing their incapacity payments altogether.
So how does all this affect employers? Firstly, an employer who does not have a group income protection plan should ask themselves what they will do if an employee is still unable to work at the end of the period of contractual sick pay.
If the answer is to look to dismiss the individual because they can’t, or won’t, do their job and expect the State to pick up the problem, this is fraught with dangers, with increasingly active ‘no win no fee’ legal advisers keen to support disgruntled employees.
The legal profession is adept at exposing any weaknesses in an employer’s documented actions and will readily add disability discrimination to other employee grievances, given the opportunity. Where a tribunal finds that an employer could have done more to keep an employee at work, including making ‘necessary adjustments’ to the job description and the work environment, employers losing such cases face unlimited liability.
An alternative is to keep paying salary, on a ‘needs’ basis, but this requires a highly sophisticated assessment process and exposes the employer to the danger of creating an ill-defined salary continuance scheme, without adequate controls, through custom and practice.
A better approach would surely be to have a properly defined plan that provides insurance against this eventuality and, more importantly, rehabilitation and claims assessment techniques for getting people back to work if possible. In other words, a group income protection plan!
Employers with a group income protection (GIP) plan will need to take a close look at the terms. The chances are that it pays out on the assumption of a certain level of parallel State provision. If the current design tops up benefits to a prescribed level, reducing State provision will increase costs so plans will need to be reviewed with your consultant.
In future issues, we will be giving information on the latest product innovation and cost-effective GIP plans now available from insurers.
THE INFORMATION CONTAINED IN THIS DOCUMENT IS OF A GENERAL NATURE ONLY AND SHOULD NOT BE RELIED UPON AS ADVICE IN ANY SPECIFIC SITUATION
For further information, please telephone your usual contact at Buck Consultants (Healthcare):
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Email: healthcare@buckconsultants.com
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