Small Businesses Struggle With The Cost Of Sick Absence

The Federation of Small Businesses (FSB) has urged the government to act and help small firms to cope with sickness absence costs.

Data gathered through the organisation's Voice of Small Business survey found that last year sickness cost small firms 1,500 on average, with 9% of respondents saying it cost them more than 5,000 in the past 12 months.

Although small businesses appear to be hit by sickness-related absences much less than larger companies, with an average of 2.4 days per employee per year compared to the national average of 7.7 days, the FSB says these companies are struggling to claim back money from the government through the Percentage Threshold Scheme.

It wants the system to be simplified so claiming money back is simpler for small businesses. In addition, the FSB has called for the introduction of a small employer's relief, for companies with an annual National Insurance Contributions bill of less than 45,000, to recover statutory sick pay costs.

John Walker, National Chairman of the FSB, said: "Small firms act like a tight knit family and value the contribution their staff bring to the business, and research shows that staff in smaller firms are more often committed and loyal. However, sickness absence is one of the most complex pieces of employment law they have to deal with. The government must provide a small employers relief for statutory sick pay in the same way they do for statutory maternity pay so those small businesses that experience a member of staff on long-term sickness absence, are not hampered and are given the support they need."

It seems its not only sick absence costs that need actioning, as newly-released data from the Office for National Statistics has highlighted the need for government action over bank lending, too.

Statistics published today show that the number of bank loans approved to small and medium-sized (SMEs) businesses in the UK fell from 88% in 2007 to 65% last year. According to a report by the Financial Times, the figures would seem to go against the argument that lending volumes are down due to a lack of demand from SMEs. The survey found more of the businesses surveyed attempted to get finance last year than they did before the banking crisis 42% in 2010, compared to 35% in 2007.

However, the British Bankers' Association told the FT: "Our figures, which reflect the current position, indicate funds are available for business lending but there remains a lack of demand with customers repaying borrowing rather than taking on new."

Whilst government help is sought after in these areas, nationalised high street lender Northern Rock has altered its mortgage policy for people who are self-employed, to further provide them with help and support.

Changes to the company's lending criteria made in October mean it will now accept mortgage applications from freelancers who have been self-employed for two years. In order to verify their income, applicants will have to provide the lender with either two years' worth of accounts, an accounts certificate, or SA302 forms from HM Revenue & Customs for the past two years.

by: Tim Bisley

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