A sample of 550 HR decision-makers at micro, small and medium-sized enterprises (SMEs) – companies with 1 to 249 employees – were surveyed to understand their approach to sickness absence and attitudes towards insurance-based employee benefits.
One in six (17%) SMEs said they are regularly struggling with employees being ill for long periods and almost one in four (23%) are seriously impacted if employees are ill.
Over a third (35%) of firms also said it creates short-term disruption for them too.
This comes as recent analysis by the Office for National Statistics estimated over 2.4 million people in the UK were economically inactive in 2024 as a result of long-term illness or disability.
It also follows a suggestion in the Discovery phase of the independent Keep Britain Working Review – tasked with recommending actions employers and government could take to help people back into work after illness – that lost output through working age ill-health costs employers and the UK economy £150bn a year.
Just over half of SMEs (51%) have in-house support when employee ill-health is an issue in their business. However, despite the impact that sickness can have on businesses, one in six (17%) SMEs surveyed said they do nothing about employee illness, in most cases believing employee health is the individual’s responsibility, or because they don’t know where to turn for help.
Companies turn first to their private medical insurer for external help, according to 38% of respondents, while:
• 22% consult their employee benefits adviser
• 17% approach their group protection provider, and
• 16% contact their local authority or a local business group.
Employers see why employee benefits matter
Canada Life’s research found a key reason why SME employers offer employee benefits in the first place is to mitigate against the risk and cost of employee sickness absence.
• 47% said it helps manage sickness absence costs and gets people back into work after a periods of ill-health absence
• 44% said it was a way of showing employees that they care about their wellbeing
• 39% feel it helps employees stay healthy and productive in the workplace.
Chris Morgan, Head of Proposition & Product Strategy, Protection, at Canada Life, said: “Sickness absence is clearly a major productivity issue for organisations and it’s vital that employers, whatever size, seek help or look at how they plan to manage it. The reality is many people are living and working longer than in previous years, and employers will need to consider how they encourage them to keep doing so in the future. But that’s not possible if we don’t encourage people to face into their health challenges and help them stay in work. “SMEs will likely be feeling many pressures on their business, sickness absence being just one. But investing in employee benefits or in services that can help with early intervention when illness occurs will pay forward when employee ill-health strikes.”
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