Sickness absence costing small businesses £1,500

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Government must introduce a small employer’s relief for the recovery of statutory sick pay (SSP), as new figures from the Federation of Small Businesses (FSB) show that sickness absence costs small businesses on average £1,500 per year.

The FSB said long-term sickness absence does not affect the smallest of businesses frequently, but when it does it has a big impact and the costs can be high. The FSB’s ‘Voice of Small Business’ survey panel shows that on average small businesses only experience 2.4 days sickness absence per employee each year – much lower than the national average 7.7 days per employee. 25% said they experienced no sickness absence at all and 81% said that they were not at all affected by long-term sickness absence.

However, in the last 12 months sickness absence cost firms on average £1,500, but for 9% it cost more than £5,000.

The FSB said some small businesses can feel confused by the Percentage Threshold Scheme – the current system used to calculate how much SSP an employer can claim back. This means many small businesses either have to spend time doing difficult calculations or they have to spend money on buying in help.

With 40% of small business employers claiming that dealing with holiday entitlement and sickness absence was one of the most difficult aspects of employment law, the FSB believes recovery needs to be simplified so micro firms can reclaim all SSP costs more easily to stop them from being hampered at such a difficult time.

The FSB is calling on the government to introduce a small employer’s relief for all firms with an annual National Insurance Contributions bill of less than £45,000 to recover SSP, to ease the administrative burden and help businesses manage sickness absence better. It should look at improving the way the Fit Note – which introduced the ‘Sick Note’ last year – is used by making it electronic and increasing the training which GPs are given on how to use it.

The FSB said small businesses also need better access to free occupational health advice either through GPs or via the national occupational health phone line to make this issue easier to manage.

John Walker, FSB national chairman, said: “Small firms act like a tight knit family and value the contribution their staff bring to the business. And research shows staff in smaller firms are more often committed and loyal.

But sickness absence is one of the most complex pieces of employment law they have to deal with.

“The Government must provide a small employers relief for statutory sick pay in the same way they do for statutory maternity pay so those small businesses which experience a member of staff on long-term sickness absence, are not hampered and are given the support they need.”