Costs: Part 4 - On a sick note

The familiar business burdens of VAT, business rates and, now, pensions, have been joined by a new kid on the block: statutory sick pay (SSP).

In the past two years, small and medium-sized businesses have been hit by a system which now requires them to foot the bill for staff sick leave, with some of them paying out tens of thousands of pounds for long-term sickness.

Last October, Liz Swatton, principal at Meadows Pre-School, London, told Nursery World the outlay ‘almost made us go bankrupt’. ‘We had a part-time member of staff who was off work for three-and-a-half months, from December to March last year. Not only did we have to pay her sick pay and holiday entitlement that accrued while she was absent, we also had to pay for staff cover. The final cost was over £7,500 plus National Insurance and tax,’ she said.

Many nurseries want to show they care about their employees’ health and well-being, but just haven't got sufficient funds to pay for healthcare schemes. Changes to SSP are also restricting their ability to offer pay increases, maintain pay differentials and support and reward professional development – making the promotion of well-being all the more challenging. So what can nurseries do?

CURRENT ENTITLEMENTS

Big changes were introduced in April 2014, when employers were no longer able to reclaim statutory sick pay, at £88.45 per week, for up to 28 weeks. Under the old Percentage Threshold scheme, mainly smaller employers were compensated for high rates of sickness absence by being able to reclaim any amount of statutory sick pay which exceeded 13 per cent of their National Insurance contributions each month.

Amid outrage at the loss of relief on statutory sick pay, the Government advised nurseries to claim Employment Allowance, a reduction in their Employer's National Insurance contributions of up to £3,000 per year. Employment Allowance was implemented in 2014 (initially at a rate of £2,000 a year) in order to help stimulate economic growth and encourage small businesses to take on more employees.

By using it, a company can write off the first £3,000 of its annual National Insurance bill for employees who are paid £155 or more a week and who are under state pension age.

Employers can also receive tax exemption on expenditure up to £500 on medical treatments recommended by the referral service Fit for Work, or any employer-arranged occupational health service. This targeted tax relief is designed to encourage employers to fund what the Government hopes will be around 110,000 health-related interventions, and end a perceived sick-note culture.

SSP is only paid from the fourth day an employee is off sick, while you can't count a day as a sick day if an employee has worked for a minute or more before they go home sick.

Claire Schofield, director of membership, policy and communication at the National Day Nurseries Association, says, ‘If a nursery is lucky and doesn't have a lot of sickness among its staff, they could be better off. Realistically, particularly for larger nurseries or groups receiving the one allowance of £3,000, this could easily be wiped out by statutory sick pay for one or more staff members and they would be worse off than under the previous arrangements. The £500 tax relief is a potentially useful contribution towards treatments or adjustments and we recommend nurseries make sure they are aware of their entitlement and use it.’

FIT FOR PURPOSE?

Fully rolled out in September 2015, Fit for Work is a health and work assessment advisory website and telephone service providing occupational health expertise to businesses. Referrals to the service can be made by GPs or employers, but they are not mandatory. After a telephone assessment, a case manager prepares a ‘Return to work plan’ which suggests what the employer needs to do to assist the employee in returning to work.

While the Government has not evaluated the effectiveness of Fit for Work, feedback from nurseries suggests that awareness, and take-up, are low. And that's not just in the early years sector: a survey from health insurance company Cigna last year found that more than 60 per cent of GPs weren't aware of it, while nurseries who are have identified its limitations.

At the outstanding Old School House Nursery in Suffolk, managing director Linda Baston-Pitt says, ‘I agree with its overarching aims although there seem to be many misunderstandings and misconceptions from both the GP and employer perspective. A key challenge for the early years sector is that tailored advice only kicks in after the employee has been off for four weeks or more.

‘The scheme is still in its infancy but it won't work as intended unless there is a joined up approach, supporting training for both health professionals and employers, ideally together.’

Health Management Ltd, which runs Fit for Work, has said there has been a ‘slow roll out’ of this service, but told Nursery World that take-up of the service has been significant, with ‘several thousand referrals from all types of employers’.

Some settings have indicated it could be useful in cases of mild depression or even stress in cases where work can be therapy. Health Management's marketing director Philip Kerr says, ‘For most people, their work is a key determinant of self-worth, family esteem, identity and standing within the community, besides, of course, material progress and a means of social participation and fulfilment. Part of Fit for Work's aim is to support employees back into work without always requiring 100 per cent fitness to achieve this.’

HEALTHY TEAMS

One strategy to combat lost days is to create strong, motivated teams who understand the importance of working together. This is corroborated by Sarah Steel, managing director of The Old Station Nursery group.

‘We have worked hard to make staff realise how much they all rely on each other, so if someone has a high level of absence, it has a real impact on everyone else,’ she says. She reports that return-to-work interviews are carried out even after a one-day absence. ‘This means staff understand they have to explain their absence. We try and manage ongoing sickness quite tightly, so if someone becomes a repeat offender, we speak to them quickly and make them aware that we are monitoring it.’

At Jenniflowers Childcare in London, owner Jennifer McQuillan reports that good working conditions and generous staff ratios keep absence low among her 24 staff.

She says, ‘Maintaining staff ratios which are higher than those prescribed has a positive impact on employees’ workloads and job satisfaction. If a staff member is unwell – or away for any other reason – we can still operate comfortably within Ofsted ratios. I think this contributes to my staff being sick less often, and in the last year I have only had one member of staff on statutory sick pay.’

She adds, ‘Tighter ratios would suit my pocket better, but in terms of quality of service, staff well-being, parent confidence and children's happiness, high ratios are absolutely key. It adds sustainability to my business because I have a low staff turnover and parents appreciate the continuity of care.’

IN GOOD SHAPE

With staff well-being a priority, many good nurseries will invest in the most support they can afford. This can include contractual sick pay agreements, providing employees with full, or a percentage of, pay for a set period. Many also offer well-being assistance, with occupational health services, and telephone counselling and advice. Bright Kids, which operates four nurseries and seven out-of-school clubs, employs a well-being development and coaching executive to provide support to individuals across the company.

For Ms Baston-Pitt, whose setting has staff absence of under 2 per cent, ‘One of the challenges for many providers is where to start in developing a well-being strategy. First and foremost it is crucial to understand the drivers of staff health and well-being, so that interventions are targeted and meaningful.’

She adds, ‘We have created, and use, a number of diagnostics and surveys that are built into staff meetings and training sessions to help us gauge and respond to the needs of our people.’

Making staff feel cared for is important. The six-strong Old Station Nursery has established a well-being programme that suits its budget. ‘We use a company called Sovereign Healthcare and as a company we pay a set amount per employer per month,’ says Ms Steel. ‘This means they can claim back a set amount each year to pay for eye checks, dental treatment and other medical appointments. They also have free access to a support helpline and access to counselling for stress.’

She adds, ‘We can't afford a full healthcare package, but this is a nice option and hopefully makes our staff feel cared for.’

FURTHER INFORMATION

http://fitforwork.org

https://www.gov.uk/employers-sick-pay/entitlement

INVESTING IN STAFF HEALTH

Staff benefits provided by the Old School House Nursery:

Paid-for healthcare scheme providing contributions towards dental care, optician bills, specialist treatments and consultations, phone helpline

Large staff room facilities and staff shower

Monthly well-being workshops, seminars on mindfulness, yoga, strength-building and healthy eating

Investing in technology to support job roles

Free fruit, smoothies, mineral water, tea, coffee

Sabbaticals

Access to individual pedometers

Flexible working hours and study leave

Annual Learning at Work Month

Fun days and social events