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Penalties proposed to encourage wellness take-up

May 2008 News

Employers who do not implement measures to protect the health and wellbeing of their staff should be penalised, one of Britain’s largest health insurers has suggested.

In its response to Dame Carol Black’s review into the health of the working age population, AXA PPP healthcare said the Treasury should develop fiscal incentives that reward good employers for safeguarding the health and wellbeing of their employees. Those who offer no support, however, should be penalised.

Dudley Lusted, head of corporate business at AXA PPP, said: “If there was a flat rate of national insurance contributions of 12%, employers who put in place health and wellness programmes could have a reduction on that rate, whereas those who do not could be charged maybe 1% more.”

Lusted said that unless the Treasury introduces incentives and penalties, smaller employers are unlikely to follow Dame Carol’s recommendations. He said many SMEs do not invest in occupational health (OH) and wellbeing programmes because of financial constraints and a lack of awareness of the value of such services.

“In an ideal world there would be tax incentives for employers who implemented programmes and it would not cost the others. That would be great but it is not how the Treasury works,” Lusted added.

However, Matthew Lawrence, head of the risk practice at Aon Consulting, said a formal penalty would not be needed because employers who do not take up OH and rehabilitation services are already at a disadvantage.

“The expectation from the government that employers do more in this area is clear and I would argue that the penalty for employers that do not recognise this is the fact that they will not benefit from the potential financial returns effective health and wellness programmes could deliver,” he explained. “When one considers the estimated cost of sickness absence and worklessness noted in Dame Carol’s report this could be a fairly significant penalty.”

Similarly, Nadine Middleton, public policy manager at Norwich Union Healthcare, suggested demonstrating the value of investing in employee wellbeing and encouraging employers to take up OH services would be a better way forward.

“We would rather encourage employers to put health and wellbeing measures in place than penalise them,” she said. “If you go down the penalty route then it is not a partnership.”

Middleton added that the industry needs to do more to help small employers take up health and wellbeing services by developing products that are more relevant and accessible for them.