Staying on the healthy side of Welfare reform

The Government’s desire to move one million claimants off State Incapacity Benefit and back into gainful employment has been well publicised and has potential implications for all UK employers.

From 27 October 2008, an Employment and Support Allowance (ESA) will replace existing State Incapacity Benefits and Income Support. Entitlement to ESA will be assessed after 28 weeks of incapacity, using a 13 week Work Capability Assessment (WCA) period. During this assessment phase, individuals will be eligible for a basic component of the ESA which is equivalent to the Job Seeker’s Allowance.

At the end of the WCA period, claimants will fall in to two categories:

• those assessed as capable of work related activity will be incentivised to cooperate with a prescribed rehabilitation process, to be known as ‘Pathways to Work’ and will receive the Work Related Activity Component (£24 p.w.)
• those unable to perform any work related activity will continue to be entitled to the ESA Basic Allowance (£60.50 p.w.) with an additional Support Component (£29 p.w.)

Key elements of Pathways to Work are:

• one or more mandatory work focused interviews; failure to participate in these interviews or to cooperate with the proposed action may result in reduced benefit entitlement
• access to the Choices work support network
• entitlement to a Return to Work Credit of up to £40 per week for 12 months if annual salary is less than £15,000.

This reinforces employers’ obligations under the Disability Discrimination Act to make necessary adjustments to an employee’s work environment, or duties, to enable continued employment and may (further) undermine the ability for fair dismissal on the grounds of incapability.

Issues to consider

All employers who provide their employees with long-term sickness benefits, either through a pension scheme, via an insurance policy or on a self-funded basis, should review these provisions in the light of these changes. With the change in state provision and the increasing focus on rehabilitation, consideration should be given to some or all of the following:

• the degree and manner of benefit integration with the new ESA provision
• any updates to staff handbooks or contracts of employment (where they refer to the ‘old’ state benefits)
• the adequacies of support services (Occupational Health, Employer Assistance programmes) that may help fulfil employer obligations on rehabilitation
• potential impact on ill-health retirement admissions.

Please contact your usual Buck consultant if you would like to discuss any aspects of your current provisions or if you want further information regarding the broader solutions that are available.

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):

Tel: +44 (0)118 955 7700
Fax: +44 (0)118 955 7701
Email: healthcare@buckconsultants.com
Web: www.buckconsultants.co.uk
Abbot's House, Abbey Street, Reading, Berkshire, RG1 3BD, UK

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