From www.peoplemanagement.co.uk website.

Who picks up the tab when 'incapacity' becomes 'fit to work'?

Could employers end up footing the bill if more people, currently receiving incapacity benefit, are moved on to the new employment and support allowance?

Eilidh Wiseman

Publication date: 1 July 2010 

Source: People Management magazine

Page: 28

The government has announced that it intends to press ahead with reassessing people currently receiving incapacity benefit and moving them on to the new employment and support allowance (see “Fit to work” panel, bottom). But could employers end up footing the bill?

Serious doubt has been cast over the accuracy of the employment and support allowance (ESA) scheme’s medical assessments. Since its introduction, about two-thirds of applicants have been found to be fit to work, but figures from the Department for Work and Pensions show that 40 per cent of these medical assessment decisions are being reversed on appeal. Independent charity Citizens Advice says this figure is closer to 70 per cent. Its Scottish division recently published a report condemning the ESA as “deeply flawed” and “unfit for purpose”.

If these results are replicated when the scheme is extended in October to current incapacity benefit recipients, it could lead to a big rise in the number of genuinely sick jobseekers. This could prove costly for employers in several ways. Citizens Advice highlights cases where the results of ESA assessments seem at odds with those made by GPs or others responsible for primary care. So it’s possible that successful candidates could be signed off work by their GPs shortly after getting a job. They may be entitled to company sick pay in such situations, if that’s what their employment contracts specify. Employers will then find themselves having to finance and manage these employees’ sickness absences.

When incapacity benefit recipients join the ESA system, it’s likely that many people who have been out of work for several years will be applying for jobs. This may lead to capability issues for their recruiters – and managing their performance could add further costs.

If more sick people do secure job interviews under the new scheme, many may wish to be open about their health problems. If they are not offered work and believe that this is because of their illness, it may lead to an increase in the number of disability discrimination claims. Employers may be able to defend such claims, but the tribunal process involved is costly and time-consuming.

On the other hand, provisions in the Equality Act 2010 due to come in to force in October banning pre-employment health questionnaires might lead recruiters to not ask disability or health questions before appointing people. Problems will invariably arise if these candidates are not actually fit for work. If they are disabled, the employer will have a duty to make reasonable adjustments under the Disability Discrimination Act 1995, but it is hard to see what adjustments would suffice for someone who is genuinely too ill to work. Again, this could lead to a rise in the number of disability discrimination claims.

An increasingly competitive employment market is likely to see a rise in jobseekers when the large-scale public-sector job cuts on the horizon start taking effect. A recent TUC analysis of jobseekers’ allowance claimants revealed that in the year to April 2010 the number of local authority vacancies had already fallen by half and the number of claimants outnumbered job vacancies five to one on average. This is only set to get worse, and those who have been refused ESA and are competing with fit people for jobs may feel they have nothing to lose by making a discrimination claim against an employer that doesn’t offer them work.

Fit to work
The employment and support allowance (ESA) was introduced in October 2008 to replace incapacity benefit for all new applicants. To receive ESA, an applicant must score 15 points or more at a medical assessment designed to focus on what people can do rather than what they cannot, in line with the new “fit note” philosophy. If applicants score fewer than 15 points, they are deemed to be fit to work and must apply for jobseekers’ allowance, which pays about £30 a week less than the ESA.

The ESA is due to be rolled out to the 2.6 million people currently receiving incapacity benefit. This process is expected to start in October.

Key points
- “Fit for work” health assessments for the new employment and support allowance system have been criticised for pushing too many genuinely sick people on to the jobs market.
- Employers taking on – or not recruiting – genuinely ill job applicants risk capability issues and tribunal claims.
- The situation is likely to worsen when jobs are cut in the public sector and ESA is extended to those on incapacity benefit, because this will push more potentially ill jobseekers on to a flooded market.

Eilidh Wiseman is head of the employment team at Dundas & Wilson