Manufacturers call for tax relief for medical expenses to get sick staff back to work

A third of manufacturing firms would pay for medical treatment if there was a benefit to the company, the EEF survey found.

Manufacturers have called on the Government to revisit the idea of offering tax breaks for medical treatments as a way of encouraging employers to invest in health, wellbeing and tackling absence.

Such tax breaks would encourage more employers to pay for private treatment for employees and, in turn, ease the burden on an under-pressure NHS, the manufacturers’ organisation EEF has argued.

The call for tax relief for medical expenses has come as EEF has published its annual EEF Sickness Absence Survey, in association with employee benefits firm Jelf. This has concluded:

  • 41% of the 306 companies polled say long-term absence has increased in the past two years, matching the increase reported in the 2015 survey, itself the largest increase in five years. Of the workforce covered in the survey, 5% were off for a period of four weeks or more.
  • Two-fifths of companies still rely exclusively on the NHS as their primary source of treatment to reduce employee absence, with fewer than one-fifth (18%) currently paying for non-NHS treatment.
  • Almost one-third (31%) would pay for medical treatment if there was a benefit to the company, while almost three-fifths (59%) would be most incentivised to pay for the cost of treatment, or workplace adjustment, by some form of employer-allowable business expense.
  • The annual absence rate for manufacturers was 2.3%, or 5.3 days per employee per year – pretty much unchanged for the past six years.
  • Back problems and musculoskeletal disorders remain the main cause of long-term absence, followed by medical tests, investigations and surgery.

The survey also looked at employer attitudes to the fit note and awareness of the new Fit for Work service.

On the fit note, 45% of employers said they felt it was failing to get employees back to work earlier, compared with 35% in 2010.

Only 13% (compared with 24% in 2010) said the fit note had enabled an earlier return to work.

On the Fit for Work service, while there was high awareness of the service, only one-fifth (19%) of employers said they would definitely be willing to pay for medical treatments recommended by it, said EEF.

Three-fifths (59%) were yet to make up their mind, and 18% said they would not use it at all.

The EEF’s main recommendations to Government were:

  • Review the current levels of employer taxation for employer-led health interventions where they are currently taxed as benefits in kind.
  • Carry out sensitivity analysis of different fiscal incentives, such as changes to allowable business expenses, tax credits and tax relief.
  • Treat tax relief for private medical insurance in the same way as the £500 tax exemption for treatments recommended by Fit for Work.
  • Consider tax relief on income protection insurance or group income protection as a means of providing sick pay and rehabilitation support to staff through employers.
  • Provide some form of fiscal incentive to companies who fund treatments as part of rehabilitation that would otherwise have had to be provided by the NHS, or which prevented state Employment and Support Allowance payments.

Terry Woolmer, head of health and safety policy at EEF, said: “Government must now use fiscal incentives to encourage employers to pay for private medical treatment and allow it to be offset in the same way as other business expenses. Not only would this help take the pressure off the NHS but it would allow a speedier return to work.”

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