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Excessive sick leave and how to deal with it

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The average small business lost 31 days last year to dubious sickness claims by staff members, according to a survey of more than 1,000 SMEs, published by the Forum of Private Business (FPB).

According to the report, sick leave – legitimate or otherwise – had a “serious impact” on 27% of smaller companies in 2001. Just over one in 10 employees took leave lasting seven days in row. Of these, 9.5% had been ill for a week on more than one occasion.

Nick Goulding, FPB chief executive said: “Obviously the most common cause of absence is minor illness such as colds or flu as was found in over a third of cases. But, physical illnesses – back strain, fractures, etc. – accounted for very nearly as much. Of greater concern is that over 40% of employers felt that their employee’s sickness may not have been genuine.”

The average annual period of sick leave taken by owner managers was just 3.3 days in 2001, compared with about 10 days taken by less senior employees.

At the moment, employees can be off work for up to a week before they are required to prove that they are really ill, by producing a doctor’s medical certificate. But many doctors say that patients should be allowed to call in sick for a month before needing a sick note. They claim that the current system is burdensome and restricts the number of serious cases they can treat. Opponents of the proposal argue that it would encourage workers to take longer breaks, even if they felt well enough to go to work.

Mike Delaney, a specialist in employment law at Matthew Arnold & Baldwin (MAB), says: “Employers lose out to malingerers from bogus sick leave claims when they don’t have adequate contracts of employment with employees or a decent employees’ handbook outlining the level of contractual sick pay due. In many instances employers have habitually paid their staff whilst off sick without making clear the basis upon which payment has been made. This runs the risk of creating a precedent that sickness absence is always payable.

“In the absence of these, businesses effectively have to give indefinite statutory sick pay. However, it is quite normal for terms to be inserted into contracts providing that any enhanced sick pay is paid at the discretion of the employer and stating that such payments can be discontinued at any time. Alternatively a contractual sick pay policy can state a period after which sick pay will be stopped. In the event of regular absences the company may wish to obtain a report from an independent medical practitioner and threaten disciplinary action in the event of the absence not being justified.

“In my experience, whilst employment regulations have proliferated like stinging nettles over recent years, those businesses that take the time to ensure there are proper contracts of employment or put in place proper policies with their workers are those which are not disadvantaged by any abuse.

“However, the converse is also true and those without policies fare the worst. In a recent case a small business running three shops failed to have in place any contractual documentation, notwithstanding advice. It has been taken to a tribunal on two occasions in the past six months for employment violations and has had to settle claims costing the business several thousand pounds.”

Mike Delaney added: “Recently a member of staff telephoned in demanding to know whether she would be paid whilst off sick. The proprietor feeling disgruntled about having to pay out on two claims indicated that he was only willing to pay statutory sick pay, whereupon the employee claimed that she had always been paid in the past and has resigned claiming breach of contract.

“No doubt a third claim against this misfortunate business will follow and profits for the hardworking owner ever more depleted. The new Employment Act makes proper contracts of employment and procedures mandatory for all businesses, with uplifts in Tribunal awards for breaches – so I strongly advise businesses to start considering what they will cover in a contract and how to introduce them.”
Appendix – copy of news release from Forum of Private Businesses issues 31 July 2002

One Response

  1. why are there no standard terms for employment contracts?
    If you buy or sell a property, the chances are that the contract you enter into will be based largely on the Law Society’s standard terms for such contracts. These have been impartially devised to be fair to both parties in the transaction, and are revised from time to time to keep them up-to-date. In any given instance, the standard terms may be modified through the specific exclusion of certain clauses, or by the or addition of extra clauses, all of which are agreed between the parties.

    Why is this same principle not available for contracts of employment? For a government that increasingly regulates in just about every aspect of the employer/employee relationship, this simple measure would massively assist small employers who cannot afford human resources departments or in-house lawyers. It should also save vast sums in tribunal hearings once a body of tribunal decisions had been built up around the standard terms.

    Following consultation, the standard terms could be modified as necessary to take account of changing work practices and changes in legislation.

    It would be possible to include a clause providing for such changes to apply to all existing contracts of employment after a period of say 6 months from their introduction. This would allow both sides adequate time to serve notice on the other in the event of them being unwilling to accept a particular change.

    This process would provide a seamless and hopefully non-contentious means of keeping the employment contracts of longer serving employees in step with current practice and legislation.

    An officially sponsored (but not mandatory) scheme of this type would set a benchmark standard in employment contracts, which would greatly assist prospective employees in identifying the ‘bad’ employers who were not willing to offer ‘standard’ terms. It would also give good employers confidence that the bad employee would find it much more difficult to take them to the cleaners.

    It may however be expecting a lot from this government to introduce such a scheme given its well established preference for control rather assistance in its dealings with the private sector, and in certain cases the appalling service conditions it imposes on certain public sector employees. Ironically, it would appear that the employment service has historically been one of the worst offenders!

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