Businesses urged to prepare for welfare reform act

More than half of UK businesses are unprepared for the major overhaul of the welfare state later this year.

A survey by PMI Health Group, the UKís largest independently-owned specialist provider of employee healthcare and risk management services, revealed a surprising 56 per cent of companies are still unaware the Welfare Reform Act, which promises to be the biggest shake up to the benefits system in nearly 40 years, launches on October 27 this autumn.

Even among those who have heard of it, 64 per cent do not fully understand what the potential impact will be on UK employers.

The act will transform the way Incapacity Benefit and Income Support is awarded in a bid to encourage people with health conditions to return to work. Currently, individuals are assessed on a lack of ability to perform work-related tasks, whereas the new system focuses on tasks that can be carried out.

Employers may need to review their Group Income Protection policies, which cover part of an employeeís salary if they are absent through illness or injury, to ensure they reflect the future changes in state benefit provision.

With the government aiming to reduce the number of people claiming Incapacity Benefit by one million, businesses could also be obliged to make return-to-work adjustments to cater for the corresponding increase in the number of disabled people returning to work, such as agreeing to more flexible working hours or adapting office equipment, to satisfy the Disability Discrimination Act.

Of the companies who knew about Welfare Reform, 75 per cent welcomed it, with 70 per cent claiming that they planned to make workplace adjustments in anticipation of more disabled employees. Forty-six per cent would agree to home working, 60 per cent to job sharing and 80 per cent to providing special equipment where necessary.

However, the study revealed that more than half (54 per cent) were not aware that companies would need to review their Group Income Protection policies.

PMI Health Group managing director Richard Munro said: ìThe Welfare Reform Act will have a significant impact on employers and working practices. As well as checking their DDA compliance, companies should also be reviewing their income protection cover to make sure that the promised benefits still hold true.

ìEmployees could suffer financially if they are not properly covered against illness or injury. We would advise any business to seek professional advice to ensure their cover still meets their contractual obligations.î