The latest CIPD Labour Market Outlook has revealed that employer confidence is at its lowest level since 2020 and that due to rising employment costs, many organisations are looking to scale back recruitment and limit training investment. With this being the case, managing employee absence, especially long-term absence, is as important as ever.
Background
The latest CIPD Labour Market Outlook survey, published on 12 May 2025, has painted a concerning picture for many UK businesses. US tariffs, wars around the globe, increased National Insurance contributions, the uncertainty over the impact the Employment Rights Bill is going to have … the list goes on. There’s a lot going on for UK employers to deal with.
The survey has measured “business confidence” using net employment balance, which is, according to the CIPD, “the score measuring the gap between employers expecting staff increases and those anticipating decreases”. This, it reports, has dropped from +13 to +8 and shows that fewer employers expect to grow their workforce in the next three months.
But what does this have to do with sickness absence? Using vital funds on expensive recruitment and training when things are difficult is not a priority but maintaining an effective workforce is. Sickness absences can have a significant impact by reducing working capacity and putting additional stress on those at work to perform additional tasks when they may already be at capacity. That’s why having measures in place to deal with it are a necessity.
Impact of sickness absence
Recent TUC analysis of data from the Health and Safety Executive shows that work-related ill-health costs the UK economy over £400 million per week, and in 2023, it reduced economic output by £22 billion.
The direct costs of sickness absence are significant, including:
- Contractual or Statutory Sick Pay (SSP) (which cannot be reclaimed by the employer)
- the lost output from the absent employee
- overtime or agency fees paid to others covering the employee.
There’s also the adverse effects employee absence has on productivity, as staff may become resentful at having to regularly cover for absent colleagues. Their own work might suffer as a result and can even lead to stress-related absences for those employees at work. It’s imperative that dealing with sickness absence is not put off to a time when things are less busy — let’s face it, that time might not be coming any time soon. A well-managed process can be beneficial to both the employer and employee, ensuring the employment relationship remains positive and increasing the likelihood of the employee’s return to work.
Sickness policies and procedures
There should be a policy in place for managing absences, which sets out for employees what they can expect if they are absent due to sickness and gives line managers a guide for how they should be managing absent employees, ensuring consistency across the organisation.
The policy should include the following.
- How employees inform the organisation that they are sick.
- The purpose and arrangements for fit notes.
- The arrangements for return to work interviews.
- What absences will trigger the disciplinary procedure, including long-term sickness absence, which should have a system of trigger points for formal review meetings.
- The process to be followed if an employee is off long-term, generally defined as any period lasting for four weeks or more.
Managing long-term sickness
Dealing with long-term sickness should be approached delicately and sympathetically. The impact it has on the organisation is important and should not be forgotten. However, at the same time, absence management processes should not be rushed or cut short. Doing so could be detrimental not only for the employment relationship but also lead to a negative impact on the organisation and even tribunal claims.
Once it becomes apparent that an absence will (or has) become long-term (more than 4 weeks), there are several actions that should be taken into consideration, including:
- frequently keeping in touch with the employee and using a method that is mutually agreeable
- getting the employee to submit regular medical certificates (this should continue even after SSP entitlement comes to an end)
- communicating any decisions about sick pay in good time, eg if the length of the employee’s absence means that they will be reduced to half pay or cease to be paid at all
- meeting with the employee, either on site, at their home or another neutral location, to discuss progress and the possibility of returning to work.
Obtaining up to date and in-depth medical information regarding the employee, their condition and the prognosis for it is a must for any effective absence management process. This can be obtained from the employee’s GP, specialist or from an occupational health assessor appointed by the organisation. Consent must be gained for this to happen.
Having information on the employee’s health enables productive discussions around the possibility of the employee returning to work, what adjustments could be put in place in order to enable them to do so (which may be required under the Equality Act 2010 duty on employers to make reasonable adjustments for disabled employees), or, if appropriate, discussion of other more suitable roles for the employee given their current and likely future state of health.
Ultimately, the conclusion may be that a return to work in the foreseeable future will not be possible and it is no longer possible to keep the employee’s job open. If this happens, dismissal on grounds of capability may be an option. This, however, should only be considered after a thorough assessment of adjustments to the employee’s current role, consideration of alternative roles and of the latest medical report or occupational health assessment that supports the conclusion the employee won’t be able to return to work.
The future of sickness absence
On 10 October 2024, the Government published its Employment Rights Bill, setting out its plans to deliver on the promises made in its pre-election Plan to Make Work Pay. One of the proposals in the Bill was to reform and strengthen SSP.
Under the plans, the lower earnings limit threshold will be removed, with all workers entitled to SSP at a rate of either 80% of weekly earnings, or the flat rate, whichever is lower. The waiting days will be removed so that SSP will be paid from the first missed day of work. These changes will represent an increase in the amount of sick pay paid by employers.
It will become even more important, therefore, for employers to take steps to minimise sickness absence by taking charge of things within their control. This could include:
- keeping a close eye on workload and working conditions to avoid undue stress
- implementing robust measures to prevent employees from feigning sickness
- managing long-term absences to ensure a smooth and swift return to work.
It is estimated that this will bring 1.3 million people into the scope of SSP, costing businesses around £1.07 billion.
The proposals in the Bill will need to go through the usual parliamentary process before becoming law, which is not expected to be until summer 2025, and it’s unlikely they will come into force until 2026.
Conclusion
Long-term sickness absence continues to be an issue for employers and with all the other added pressures on them at the moment, it’s something they need to get to grips with in order to maintain productivity and avoid the cost of dealing with sickness absence or replacing employees.
If you need help with managing long term sickness please contact Carrie without delay!
