Income insurance could replace sick pay for employees

Posted 14/03/2011

The government is considering proposals which would see traditional sick pay for employees replaced by income protection insurance.

A national review of sickness absence is currently being carried out by Dame Carol Black, the government’s national director for health and work, and David Frost, director general of the British Chambers of Commerce, in a bid to reduce the annual cost of days off through illness.

Under the new proposals, employers would be required to take out income protection policies for their staff, with insurers then responsible for paying out when people are off work sick.

It is hoped that this would give insurers incentives to improve conditions at work to ensure that people return to work quickly and are less inclined to take time off ill in the first place.

Chief executive of financial protection provider Unum UK Jack McGarry said: “The government needs to look at ways to save money on the welfare bill while also making sure people have a decent income if they fall ill and can’t work.”

According to the Office for National Statistics, 2.5 per cent of employees had a spell of sickness absence during the final quarter of 2010.