- Almost a quarter of firms are seriously hit if employees are ill
- But 1 in 6 firms take no action
New research from Canada Life reveals1 employee illness is regularly impacting small businesses’ productivity, but they don’t necessarily know how to tackle it or where to turn for help.
A sample of 550 HR decision-makers at micro, small and medium-sized enterprises (SMEs) – companies with 1 to 249 employees – were surveyed to understand their approach to sickness absence and attitudes towards insurance-based employee benefits.
One in six (17%) SMEs said they are regularly struggling with employees being ill for long periods and almost one in four (23%) are seriously impacted if employees are ill.
Over a third (35%) of firms also said it creates short-term disruption for them too.
This comes as recent analysis by the Office for National Statistics estimated2 over 2.4 million people in the UK were economically inactive in 2024 as a result of long-term illness or disability.
It also follows a suggestion3 in the discovery phase of the independent Keep Britain Working Review – tasked with recommending actions employers and government could take to help people back into work after illness – that lost output through working age ill-health costs employers and the UK economy £150bn a year.
Just over half of SMEs (51%) have in-house support when employee ill-health is an issue in their business. However, despite the impact that sickness can have on businesses, one in six (17%) SMEs surveyed said they do nothing about employee illness, in most cases believing employee health is the individual’s responsibility, or because they don’t know where to turn for help.
Companies turn first to their private medical insurer for external help, according to 38% of respondents, while:
- 22% consult their employee benefits adviser
- 17% approach their group protection provider, and
- 16% contact their local authority or a local business group.
Employers see why employee benefits matter
Canada Life’s research found a key reason why SME employers offer employee benefits in the first place is to mitigate against the risk and cost of employee sickness absence.
- 47% said it helps manage sickness absence costs and gets people back into work after a period of ill-health absence
- 44% said it was a way of showing employees that they care about their wellbeing
- 39% feel it helps employees stay healthy and productive in the workplace.
Chris Morgan, Head of Product & Proposition Strategy, Protection, at Canada Life, said:
“Sickness absence is clearly a major productivity issue for organisations and it’s vital that employers, whatever size, seek help or look at how they plan to manage it. The reality is many people are living and working longer than in previous years, and employers will need to consider how they encourage them to keep doing so in the future. But that’s not possible if we don’t encourage people to face into their health challenges and help them stay in work.
“SMEs will likely be feeling many pressures on their business, sickness absence being just one. But investing in employee benefits or in services that can help with early intervention when illness occurs will pay forward when employee ill-health strikes.”
-ENDS-
Notes to editors
1 Research conducted by Opinium, March 2025. Sample survey 550 HR decision-makers at companies with 1 to 249 employees
2 Office for National Statistics, 12 March 2025, Annual population survey Jan-Dec 2024 filtered for main health condition and number of health conditions for economically inactive, long-term sick or disabled
3 Oxera report, 17 January 2023, by Robert Catherall titled “The Economic Cost of Ill-health among the Working Age Population”
Enquiries:
Julie Hughes-Edwards,
Canada Life, 07803 249343,
julie.hughes-edwards@canadalife.co.uk
About Canada Life:
Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a Canadian headquartered, international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. Through its subsidiary companies, Great-West Lifeco operates in Canada, the United States, and Europe. Great-West Lifeco trades on the Toronto Stock Exchange under the ticker symbol GWO and is a member of the Power Corporation group of companies.
Canada Life Limited began operations in the United Kingdom (UK) in 1903 and provides UK individuals and businesses with a range of retirement, investment, insurance and wealth solutions. Canada Life offers individual annuities, pension de-risking solutions, home finance, estate planning and investment options, and workplace protection products.
Canada Life Limited (no.973271) is registered in England and Wales, authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Stonehaven UK Limited (no.05487702), trading as Canada Life, is registered in England and Wales and is authorised and regulated by the Financial Conduct Authority. Canada Life International Limited (no.033178C) and CLI Institutional Limited (no.108017C) are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance (Ireland) DAC (no. 440141) and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.
Canada Life Asset Management is the brand for investment management activities undertaken by Canada Life Asset Management Limited (no.3846821), Canada Life Limited and Canada Life European Real Estate Limited (no.03846823). Canada Life Asset Management Limited is authorised and regulated by the Financial Conduct Authority.
Please note that while Canada Life Limited and Canada Life Asset Management Limited are regulated as stated above, property management and the provision of commercial mortgages are not regulated activities.
www.canadalife.co.uk
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