Just like pay gripes, workplace sick days are par for the course. Whether they craftily fall on a Friday or reflect serious illness they cause disruption and uncertainty. So would you like a workforce that is almost impervious to absenteeism? Well that may not be as far fetched as it sounds.

Just like pay gripes, workplace sick days are par for the course. Whether they craftily fall on a Friday or reflect serious illness they cause disruption and uncertainty. So would you like a workforce that is almost impervious to absenteeism? Well that may not be as far fetched as it sounds.

“A healthy employer is someone you want to work for, who would attract and retain talent and have a well managed organisation,” says Mike Emmott, employee relations advisor at the CIPD. “It would have flexible working policies, give employees time off when they need it, offer incentives such as gym membership and support the wellbeing of its workforce.”

The Statistics

It sounds obvious but not if the statistics are anything to go by. The latest absence management report from the CIPD revealed that the average level of sickness absence stood at 8.4 days per employee per year. That costs employers in the UK an average of £601 per employee annually and costs Irish Employers €500 per employee. Worse, the CBI claims that long-term sickness costs UK businesses €3.8 billion a year and Irish businesses €1.5 billion.

It puts a new spin on workplace health. Suddenly its not all about lifting boxes correctly. It is about anything that prevents employees from working to their full potential. The results of the latest ‘barometer’ research by investors in People reveal that 80% of respondents thought that a healthy workplace will be a high priority over the next year while 38% say it is already more important than it was a year ago.

The Right Track

One company that considers itself to be on the right track is Toshiba Information Systems UK. Named as the ‘Healthiest Employer’ in the southern counties by the BBC Health Work Awards it has reduced its average employee sickness rate to 3.7 days per year.

“This is a direct result of our efforts,” explains Susan Stevens, HR Director. “We’ve identified pressure areas, reduced work loads, promoted mobile working and put in place several initiatives. We’ve seen absence fall while loyalty and morale has been boosted.”

The company has also given employees access to a helpline and website where they can get advice on health issues and implemented Fruity Fridays where the company gives free fruit to employees each month.

“We ship in the fruit and our employees help themselves,” says Stevens. “When it first arrived there was a stampede to get it. Employees even came into HR to thank us for what we were doing.”

“We are also proud of our flexible benefits scheme where employees can choose what suits their lifestyle.” The company’s flexible benefits scheme is one of the most innovative in the UK. Designed so that employees can pick and mix options it includes dental and health screening, childcare, gym membership and online pensions. Private health care has been made a core feature, though, encouraging employees to get back to work quickly after illness.

Flexible Benefits

Flexible benefits are increasingly popular and the 2005 CIPD reward management survey found that one in ten employers uses comprehensive schemes. They give employees opportunities to improve their health that they may not have been previously available to them. Private medical insurance, dental cover and health screening are high on the list of must-haves although these are supplemented with discounted gym membership, vehicle and cycling schemes, childcare vouchers and pension plans.

Creating a healthy workplace is about more than peppering packages with access to tennis courts and babysitters, though. To make it work you must know what will suit your employees. A workforce unaccustomed to healthy living is more likely to benefit from a few accessible options than a fitness package that even Paula Radcliff would run from.

Yet benefits packages do have a significant impact upon workforce wellbeing. Andy Woolnough is partner director of 4th Contract, a provider of flexible benefits technology. He’s seen the results first hand. “The company found that staff wanted to join a gym,” he says, “so the HR team introduced this into our benefits package. It’s made getting exercise easier. They also encourage intra-company football tournaments and have introduced free flu jabs. It’s built up our team spirit and has boosted motivation. That the benefits are useful to all of us has really helped.”

Creating a healthy workforce isn’t just about benefits, though. More informal incentives and initiatives give employees a taste for a healthier lifestyle. Alerting employees to the importance of physical and mental wellbeing is a process of education and encouragement and for Dave Wallington, Group Safety Advisor at BT, it was also a matter of life and death.

“We found that one of our employees was dying of a heart attack every fortnight,” he says. “There are over 100,000 people in BT and we have an aging male workforce so this was going to occur but it made us focus. We set up Workfit, a sixteen week programme that helped employees change one poor habit a week. At the end of the programme it made a smoking cessation programme too. It’s a simple but effective way of looking after your employees.”

Education

It is also about educating employers. While statistics show that they are switching onto the importance of health, anecdotal evidence suggests that the tide is turning slowly. Unless a culture change comes from the top down progress can falter. Not only will the bottom line suffer as staff find healthier employers or take sick leave but those who remain on the payroll will perform poorly, lose motivation and only give the company a portion of what they are really capable.

For Keith Hatter, CEO of performance coaches K2 Performance Systems, a healthy workplace is all about educating employers too.

“I don’t think that they understand the impact of poor health in their workforce,” he says. “The fact is that employees have greater physical and mental demands than elite athletes. Athletes train for 90% of the time and perform for 10%. But in business employees are expected to perform for 99% of the time. Employers have to understand the impact of this. It is extraordinary that they’ll maintain company cars but not the people who work for them.”

For Hatter, this can be addressed by making small steps and showing employers the simple steps they can take to improve employees’ performance. He suggests making it culturally unusual to use the lift, offering water at meetings, arranging walking meetings or encouraging staff to park at the far end of the car park. He also believes that pouring energy into giving employees benefits when they get sick is putting the cart before the horse.

“The trick is to stop them getting sick in the first place,” he says. “Understands the benefit of healthy employees whose vitality and energy levels match the demands made of them. It’s all about getting ahead of the game.”

Unusual Perks

Benefits can vary from everything from the fairly common, such as pensions and life assurance, to the less common, for example childcare vouchers and retail vouchers. With some benefits the main aim may be to attract and retain staff, either by matching what other companies are offering or by offering that little something extra.

Many things that are seen by staff as a ‘benefit’ may actually be introduced with a different aim in mind, such as cutting absences or driving performance. By recognising what your employees actually view as a bonus you can determine which ones are crucial in helping you attract and retain staff.

Examples:

Benefits can be offered in the form of ones which are paid for by the employer or ones which the employer can choose to buy with their own money, sometimes through salary sacrifice. Thomson’s Online Benefits’ annual Employee Reward Watch survey asked those companies operating a standard benefits system, in the process of implementing flexible benefits and considering flexible benefits which benefits they offered to employees and whether they were a core benefit or voluntary *that employees chose to buy with their own money. Those offered by a total of 50% or more (as a core or voluntary benefit) of respondents with standards schemes included a car allowance (59%), life assurance (82%), pension (96%), private medical insurance (67%), and company car (50%). Less common benefits included childcare vouchers (47%), dental insurance (23%), discounted shopping (29%), loans (30%) and retail vouchers (11%).

Those companies already operating flexible benefits schemes were also asked what benefits they offer and on what basis (percentages that follow are a total of benefits offered as core, flexible or voluntary). Car allowance (40%), pension (92%) and company car (47%) were all slightly less popular with those companies offering flexible benefits as opposed to standard benefits, but life assurance went up from 82% to 92% and private medical insurance made an even bigger jump from 67% to 98%.

Employee benefits generally comprise of one or more of the following:

Pensions - are much in the news currently and are causing considerable political headaches. This mainly concerns the state pension provision to which everyone has to contribute via National Insurance contributions. However, in reality this is only ever likely to provide income at the level of a very basic safety net for anyone but very low earners.

Employer provided schemes will be either defined benefit schemes or money purchase schemes.

Defined Benefit Schemes - promise to pay you a portion of your final salary for every year of employment with that employer. Not so many years ago these were offered by most large employers and rightly regarded as providing the best benefits for employees. Unfortunately, a combination of unfavorable tax changes, government regulation and increased longevity of retirees has been the death knell for a large number of these schemes in the private sector. Nevertheless, these attractive schemes will still be found in the public sector. Typically the retirement income increases in-line with inflation and spouse pensions are included.

Money Purchase Schemes - come with no guarantees or promise as to the benefits you will receive, but the employer agrees to pay a percentage of your salary into the scheme, which will be invested on your behalf. Generally the employer will require you to also make a contribution into the scheme. The benefits you will receive from this type of scheme depend on the level of contributions, investment returns and the annuity rates available when you actually retire. The most important point in all these schemes is simple: how much is the employer going to contribute? Anything less than 5% of your salary is bad, anything more than 8% is reasonable, 10% and above is good news. If you would seriously like the retirement benefits available to public sector workers, think in terms of contributing a total of circa 20% to 26% of your salary each year, hence the importance of the company contribution.

Sick Pay – UK - all employers are obliged to pay statutory sick pay for up to 26 weeks, but at only £70 odd per week, some bills are not going to get paid. If your job offer includes sick pay of 75% of your normal salary (less incapacity benefit) then this is great news. It indicates that the employer has taken on insurance to cover this eventuality and if the scheme is reasonably large you will not even have to prove that you are fit, also you will have no tax liability for the cost of this benefit. Good schemes provide index linked increases in payment and also cover pension contributions and if your ability to work is permanently affected will continue to pay until you reach retirement age. If you were to try and obtain this cover personally, budget for about £1,000 + per year.

Sick Pay – Ireland - in general there is no existing employment law in Ireland on the issue of sick pay or sick leave. Consequently, it is at the discretion of the employer to decide his/her own policy on sick pay and sick leave, subject to the employee’s contract or terms of employment. Under Section 3 of the Terms of Employment Act 1994 and 2001 an employer is obliged to provide an employee with a written statement of terms of employment within two months of the commencement of employment. One of the terms referred to in this Act on which the employer must provide information is the terms or conditions relating to incapacity for work due to sickness or injury.

Where there is an entitlement to sick pay, you as an employer will require your employee to sign over any Disability Benefit payment from the Department of Social and Family Affairs to the employer for as long as the sick pay continues. Often, your contract of employment will place a maximum period of sick pay entitlement in a stated period, for example, one month's sick pay in any 12 month period.

Life Cover - this is another insured benefit, which when arranged by the employer, can often mean you are not required to provide any medical details to gain cover. While it is not likely to be seen as a great benefit for the single, once family responsibilities arrive it is very welcome. The cover is usually 4 times your salary, and should you be the unlucky one, then cash can be paid directly to anyone whom you nominate, thereby thwarting the Inland Revenue’s attempts to get their hands on this amount.

Private Medical Insurance - unlike previous employer arranged benefits you will have to pay income tax on the value of the cost paid by the employer. However the ‘per head’ cost for group schemes is considerably less than when cover is held individually.

Share Options - these will, of course, depend on how well the company performs over a period of time. So if you feel pretty confident about the company, (and if not why are you going there?) then they can be very profitable. There is a range of share option or gift schemes, some government backed, but all usually offer the chance to take gains with a very low liability to tax. It is certainly not unheard of for mortgages to be repaid with the proceeds of share option schemes.

Flexi-packages - these are a fairly recent innovation and are an attempt to combine many of the above benefits, as well as others, in a ‘user chooser’ type of menu. Benefits are given a unit price and you can choose from your budget which to have. Therefore you may be able to forego life cover and have a larger pension contribution etc. The great advantage of most of these schemes is that you can see the actual cost of the benefits provided, which can often be up to 25% of the actual basic salary.

Note: The material in this article is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions.