22 September 2008

Unusually for this time of year, there are only a few imminent changes in employment law. However, Government proposals to transform the welfare state and reduce the number of people on incapacity benefits by 1 million will start to take shape next month. New measures being introduced will affect employees on long term sick leave and could have an impact on employers, as the emphasis shifts away from what people cannot do to what they can do.

The Welfare Reform Act 2007 received Royal Assent on 3 May 2007, which enabled the Government to introduce regulations to replace Incapacity Benefit and Income Support paid to claimants on grounds of incapacity. The Employment and Support Allowance Regulations 2008 introduce the new benefit of Employment and Support Allowance (ESA), for claimants assessed as having “limited capability for work” because of a health condition or disability. ESA will apply to all new claims to start from 27 October 2008.

Employees on sick leave are, as a minimum, entitled to Statutory Sick Pay (SSP). SSP is normally payable from the fourth day of absence for a period of 28 weeks. Employees on long term sick who are advised that their SSP entitlement will end on or after 27 October 2008 will be eligible to apply for ESA. The new benefit has been designed to consider what an individual is capable of doing and what help is needed to manage their return to work. It involves a Work Capability Assessment to determine an individual’s entitlement, which may lead to a requirement to take steps towards returning to work.

The Work Capability Assessment explores how an individual’s illness or disability affects their ability to work and carry out day-to-day activity. It will be carried out by specially trained healthcare professionals, not the individual’s own GP, and will normally be conducted by a face to face interview. The assessment consists of up to 3 stages:

• The ‘assessment of limited capability for work’ will determine whether or not the individual qualifies for ESA
• The ‘assessment of limited capability for work-related activity’ identifies the appropriate nature of the assistance and the level of benefit payable.  Claimants will fall into one of two categories:
• the Work Related Activity Group for those who are capable of undertaking some from of work related activity; or
• the Support Group for those with the most severe limitations arising from their illness or disability. 
• Individuals in the Work Related Activity Group will also have a ‘work-focused health-related assessment’ to identify any health related support such as treatments or workplace adjustments, that may be needed to enable a return to work.

As a condition of receiving ESA, individuals in the Work-Related Activity Group will be required to attend Work Focused Interviews at their local Jobcentre Plus office to prepare for a return to work. Claimants in the Support Group will not be required to participate but may do so on a voluntary basis.   During these interviews the claimant and their personal adviser will explore what steps the claimant can take to move towards work. This will involve discussing factors preventing them from finding work or limiting the work they can do, then helping them to overcome these barriers. Individuals may be required to draw up an action plan and/or undertake activities that increase the likelihood of getting a job. The amount of ESA will be reduced, where a claimant fails to attend or take part in a work focused interview without good cause. 

Through the on-going claim assessment process claimants will be advised on adjustments that can be made to facilitate a return to work and, undoubtedly, will be more conscious of their rights. As a result employers can expect to face more demands from employees seeking a return to work and from job applicants looking for employment prospects. Although entitlement to ESA is not confirmation that an individual is disabled for the purposes of the Disability Discrimination Act, it is indicative. Employers will need to consider carefully requests that are made to accommodate an individual’s health condition as they may be under a duty to make reasonable adjustments. Failing to do so, could entitle the claimant to bring a claim for an unlimited amount of compensation.

It is anticipated that fewer individuals will be entitled to state incapacity benefits and those who are entitled will get a reduced amount. Consequently, provisions for company sick pay and/or income protection in the event of incapacity are expected to become more attractive in the market place. Employers should review the benefits they offer and the level of protection provided to employees in these circumstances. Any existing Group Income Protection schemes should be reviewed to take into account the new incapacity benefit levels. Schemes which integrate state benefits will need to recalculate their formula or may be amended to provide cover at a flat percentage of salary, without the need to offset the benefits payable against any allowance from the State.

Other than ESA, October seems relatively quiet, with only the increase in the national minimum wage and changes to the maternity provisions to comply with. However, don’t get complacent. In another 28 weeks employers will need to have prepared for the new legislation coming into force in April 2009. This is expected to include a repeal of the statutory procedures, an extension of the right to request flexible working and the introduction of the right to request time off for training.