1. It is estimated that in 2000, total staff costs of £214 million[1] will account for 49% of public sector revenue expenditure (£439 million) for a workforce of approximately 7,350[2] actual employees. The Audit Commission believes that the effective management of absence is essential in maintaining both the productivity of the workforce and therefore the level of staffing in the Public Sector.

2. In 1994, a States Managing Absence Working Party estimated that absence due to sickness for all employees in the public sector had cost £4.6 million during 1993. According to a report produced by the Occupational Health Working Party, it was estimated that this had increased to almost £11.3 million in 1995[3].

3. It is not possible to identify total levels of sickness in the public sector, therefore we are unable to benchmark with other organisations or ascertain whether current levels are reasonable. Our analysis is confined to information on certificated sickness provided by the Employment and Social Security Department (E&SS). We are unable to provide information on uncertificated absence.

4. Therefore it is important to note that the Commission does not make any comment on the levels of sickness absence in the public sector in Jersey as the information is not available to enable to us to make any proper comparisons.

5. The corporate Managing Absence Policy requires that departments record sickness absence. It also says that absence should be monitored and compared to highlight possible problem areas.

6. Most departments record absence in some form. Some departments were able to provide information in some detail and were able to demonstrate that they actively manage and monitor sickness absence. Some, mainly smaller departments, were also able to provide information on uncertificated sickness absence. Others, however, were unable to provide comprehensive information on sickness absence, including the larger employing departments of Education and Health and Social Services (H&SS).

7. There are a number of reasons for this inconsistency:-

· although there is a policy for managing sickness absence, it is written in language more akin to a guideline rather than as a corporate requirement;

· data is not collected in a standard format across the public sector (and sometimes not within departments) i.e. there is no corporate form for recording sickness absence which would include the core data required;

· although the policy highlights uncertificated short term sickness as a possible area for concern, departments are not required to produce information vis a vis certificated and uncertificated absence;

· there is no corporate requirement for monitoring sickness at departmental or corporate level;

· there is a lack of a suitable IT system to record and collate data and produce management reports;

· there is no monitoring of sickness levels or trends by the States Human Resources (HR) Department.

8. It is therefore difficult to confirm whether all sickness absence is recorded in those departments which do not collate and monitor the information, although both Education and H&SS have informed us that they are confident that sickness absence is managed at line-manager level.

9. The length of time taken to implement the promised corporate computerised HR system, which includes absence management, has resulted in frustration in some of the larger departments, although PSD have taken the initiative and, in the absence of a corporate system, developed their own system in-house. The Commission believes that fourteen years is an unacceptable timescale for the implementation of any system.

10. The constraints on employing staff and high staff costs, particularly in the larger departments, means that it is essential that overall productivity is maintained at a high level. Therefore whilst there is no corporate framework for collating information on sickness absence, this should not preclude departments from taking steps to actively manage and monitor absence at a departmental level.

11. We consider that it is the responsibility of Chief Officers to ensure that sickness absence is managed and monitored within their respective departments. We also consider that it is the role of the Human Resources Department to set standards and ensure that those standards are being met by monitoring information at a corporate level and by following up possible areas of concern.

12. In our view, absence management, which includes monitoring, is a key part of resource management. The management and monitoring of sickness absence should be undertaken at a number of levels:-

· managing and monitoring at line-manager level, including reporting absence levels in summary upwards, either to senior managers, or the departmental human resources function;

· monitoring at regular intervals at senior manager/departmental level, including receiving summary information on sickness levels by section/division;

· monitoring at corporate level by the Human Resources Department who should also benchmark with similar worker groups elsewhere;

· through the activity of the Occupational Health Scheme.

13. The risks of not doing so include:-

· immediate line managers will be unaware of the “bigger picture”;

· senior managers may be unaware of any abnormal patterns of sickness absence, possibly indicating other problems e.g. relating to health and safety, causes of stress etc.;

· departments may be unaware of total levels of sickness absence and the associated costs in terms of increased overtime/temporary worker costs and loss of productivity;

· corporate policies and systems will not be based on factual information;

· public sector staffing requirements may be higher due to the reduced productivity;

· the Occupational Health Service may not be effective in reducing sickness levels.

14. It is therefore recommended that:-

· the Managing Absence Policy includes a corporate policy on the format, collation and reporting of sickness absence;

· all departments be required to comply with the policy;

· the Human Resources Department monitor all sickness absence at a corporate level;

· the Occupational Health Service be provided with information on sickness absence in each department;

· the Occupational Health Service be required to report on sickness levels and trends in its annual report;

· if appropriate, consideration be given to providing departments with the PSD in-house absence monitoring system until such time as the corporate system is available.

REVIEW OF THE LEVELS OF SICKNESS ABSENCE IN THE PUBLIC SECTOR

BACKGROUND

15. It is estimated that in 2000, total staff costs of £214 million[4] will account for 49% of public sector revenue expenditure (£439 million) for a workforce of approximately 7,350[5] actual employees. The Audit Commission believes that the effective management of absence is essential in maintaining both the productivity of the workforce and therefore the level of staffing in the Public Sector.

16. In 1994, a States Managing Absence Working Party estimated that absence due to sickness for all employees in the public sector had cost £4.6 million during 1993. According to a report produced by the Occupational Health Working Party, it was estimated that this had increased to almost £11.3 million in 1995[6].

17. During 1998 the Audit Commission agreed that, as part of its programme of reviews on the proper conduct of government business, it would review levels of absence in the public sector due to sickness, how levels of sickness are monitored, and, if possible, compare with other organisations.

18. It should be made clear at this point that the Audit Commission makes no suggestion that any sickness absence in the public sector, particularly where certificated, is other than valid.

METHODOLOGY

19. A questionnaire (Appendix A) was sent to all Chief Officers in 1999 requesting information on absence levels due to sickness and related monitoring arrangements for the years 1997 and 1998. The Commission was particularly interested in the breakdown between certificated and uncertificated sickness absence.

20. The then Establishment Committee had just introduced an occupational health service, provided by BMI, based on the recommendations of the Managing Absence Working Party and were also about to issue a “managing absence policy”. The Commission therefore decided to postpone the review and repeat the exercise after 12 months to ascertain what impact the new policy had had on the management and monitoring of absence due to sickness.

21. In addition to the questionnaires, a number of departments were interviewed and their sickness absence monitoring systems reviewed. The Commission is grateful to the following officers for their assistance:-

· Paul Nicolle - Human Resources Department

· Maureen Byron - Human Resources Department

· Patricia Winchester - Human Resources Department

· Kimon Wilkinson - Human Resources Department

· Tania Gartlan - Public Services

· Roger Bass - Health & Social Services

· Gloria Le Lievre - Health & Social Services

· Denise Drieu - Education Department

· Carmel de Sousa - Customs & Excise

· John Le Conte - Fire Service

· Anne Sugden - Police

· Marilyn Weatherall - Airport

· Tom Gales - Employment and Social Security

· Jan Warren - BMI Occupational Health Services

22. The Commission is also grateful to the following Local Authorities for supplying information on the management of sickness absence in their area:-

· Wiltshire County Council

· States of Guernsey

· Northumberland County Council

· Cornwall County Council

FINDINGS

MANAGING ABSENCE POLICY

23. The corporate “Managing Absence Policy”, issued by the Human Resources Department in 1999 recognises that most sickness absence is genuine, but also points out that excessive absence can cause:-

· work schedules to become disrupted;

· a decrease in the quality of service;

· efficiency reductions;

· low staff morale;

· increases in staff costs.

24. The policy outlines the four main areas that departments should concentrate on when managing sickness absence as:

· reporting;

· monitoring;

· controlling;

· managing.

25. The policy identifies three areas of absenteeism which cause particular concern:-

· uncertified and persistent short term absence;

· certificated persistent short term absence;

· long term absence.

26. The policy sets out responsibilities for managers which include that:

· all absence is reported;

· information is recorded and forwarded as appropriate;

· employees are interviewed on their return to work at which time a record of discussions and any actions should be noted.

The policy also details how this should be undertaken, including the calculation of “Bradford Factors”[7]. In the case of long term absence, the policy states that if an employee is absent for “over 40 continuous working days, managers should consider seeking advice and support from the Occupational Health Service”.

27. At the time the policy was introduced, the Human Resources Department provided training courses for managers and supervisors to ensure that best practice was understood.

28. On the subject of analysis, the policy states:-

“One reason for measuring absence is to ensure that there is a consistent way of comparing figures across different groups of employees to highlight possible problem areas.” The policy includes a detailed appendix of how this should be undertaken. We assume that such analysis could only be undertaken at corporate and department level, although the policy is not explicit, referring only to “managers”.

29. Whilst setting out the responsibilities of the immediate line manager, the policy does not set out what monitoring should be undertaken at departmental level, or whether there are any corporate requirements. It also does not set out a standard/consistent format for the collection of data which would allow information to be easily collated and compared across the public sector.

30. It is worth noting that Civil Service rules[8] require that, each month, heads of department should make a return of departmental sick leave to the States Treasurer (later amended to the States Personnel Department) in a format prescribed in the rules, including information on:-

· sickness absence details for each member of staff;

· class of sick pay;

· total sick leave in the 12 months to date.

We are informed that this was discontinued at the time of the introduction of the Managing Absence Policy as the information was not being collated or used by the States Personnel Department.

31. Whilst it is accepted that HR management was devolved to departments by the Human Resources Department, no information on sickness absence is collected corporately, and indeed, the States HR Department could not provide any information on sickness levels relating to the public sector as a whole for the years covered by this review.

32. All of the UK Local Authorities contacted had standard forms for recording absence. An example from Wiltshire County Council is attached at Appendix B. This is not the case in the Jersey public sector where, whilst the policy says that “records must be maintained of all employees’ sickness absence” and then goes on to describe the information that should be included, it does not suggest a standard format.

33. We are informed that the States HR Department, in conjunction with departmental HR managers, are in the process of developing a number of performance indicators for the HR function across the States, including % of time lost through sickness. However, these have yet to be issued to departments as a target.

34. The policy is a useful tool to assist departments in managing absence. Our main concern is that it is written in language akin to guidelines and therefore does not appear to be a mandatory requirement. We are told by the HR Department that this was the format agreed with unions as the most appropriate, given that the policy was a new initiative.

LEVELS OF SICKNESS IN DEPARTMENTS

35. The ability to respond to the questions posed by the Commission varied between departments. The majority of departments record information on absence due to sickness, and many collate and monitor the information at senior management/ departmental level. However, there are some, particularly the larger departments, who do not collate the information or review overall statistics at departmental level and could not provide overall information on sickness levels in their departments. This inconsistency is exacerbated by the lack of clear central policies on reporting and monitoring sickness absence.

36. Our analysis of the responses to the questionnaire (Appendix C) shows that of the 32 States Departments, 19 departments were able to provide information on sickness absence, although not all in the detail requested. Included in the departments who were unable to provide departmental information on absence were two of the largest employing departments i.e. Education and H&SS. The main reason given for not collating the information is the lack of a corporate HR computer system, the introduction of which has been planned for some years and is discussed later in this report.

37. It is also the case that each department “does its own thing” with regard to producing information. Only some of the smaller departments were able to provide information broken down into certificated and uncertificated absence as requested, even though both are highlighted as potential issues in the Managing Absence Policy.

38. We compare below the procedures in place in the three largest employing departments of Public Services (PSD), Education, and H&SS. Diagrams of the process for each of the departments are attached at Appendix D.

PSD	Education	H&SS
Guidelines on managing absence issued to all managers. Supervisory staff trained in managing absence.	Guidelines on managing absence issued to all managers.	Guidelines on managing absence issued to all managers. Supervisory staff trained in managing absence.
Sickness recorded at supervisor/section level	Sickness recorded at school level on standard form and forwarded to payroll section	Sickness recorded at supervisor/division level. No standard form/method.
Data entered into PSD (Access) system	Data recorded on manual cards by managers and forwarded to the payroll section	Data recorded on individual manual records by managers
Management information available on-line to managers	Excessive absence flagged by payroll section and/or Headteacher/section manager	Information on sickness sent to HR Section on request.
Reports on all absence, including sickness, produced and information presented to management team/ Committee/Audit Committee and compared with CBI/BUPA	Information on sickness not collated or reviewed. No management information is produced for review at HR or departmental level. (Overtime levels low)	Information on sickness not collated or reviewed. No management information is produced for review at HR or departmental level (although detailed overtime reporting is reviewed) .
Full range of Occupational Health services used. Excessive or suspect absence referred to Occupational Health Service	Excessive or suspect absence referred to Occupational Health Service	A range of Occupational Health services used. We are told that excessive or suspect absence referred to Occupational Health Service

39. The lack of regular and consistent monitoring at a senior level at Education and H&SS is a concern as these departments employ 1,621 and 2,558 employees respectively. We acknowledge that H&SS closely monitor and report overtime at all levels and use this as a basis for identifying any high levels of overtime caused by sickness absence, although it should be noted that overtime is only one method of covering for sickness absence. Both departments have informed us that they are confident that absence is actively managed at line-manager level. We also acknowledge that both Education and H&SS did attempt to pilot the proposed computerised HR system for a time until it was withdrawn.

40. However, by not monitoring and reviewing overall sickness absence details, there is a risk in any department that absence levels may be higher than necessary and that there may be other factors requiring attention which, at individual manager level, may not be apparent. The information would assist senior managers in highlighting potential problem areas. Senior management should also be in a position to review information to ensure that individual managers are indeed managing absence as required, as opposed to just recording information. Several departments, including H&SS and Education, have expressed frustration at the lack of a functional corporate HR system (including absence management) which has been promised for some years. Both H&SS and Education also say that, because of the size of their departments, it is not possible to provide consistent overall management information on sickness levels without a fully computerised system.

41. Also, high levels of unnecessary sickness absence may lead to higher levels of staffing than might otherwise be necessary. For example, an analysis of certificated sickness absence attached at Appendix E shows that in 1999 H&SS lost 3,002 working days through stress/depression etc., which is the equivalent of 12 full time equivalent (fte) staff[9], with an average cost in lost productivity of £354,000. For Education this was 1,147 days (4 fte’s) at a cost of £135,000. Whilst the Commission reiterates that it does not question the validity of any certificated absence, it nevertheless believes that good management information and monitoring procedures would help to ensure that any problem areas were dealt with.

Uncertificated Absence

42. Whilst we were able to ascertain levels of uncertificated sickness absence in several of the smaller departments (16), we were unable to ascertain levels overall, or even for the majority of the public sector workforce. In 1996 the Occupational Health Working Party estimated the costs of uncertificated absence at £1.3 million (based on an estimated average staff cost of £140 per day*). Based on the 1997 public sector headcount, this equates to an average of 1.3 days of uncertificated absence per employee. There is insufficient information for us to make any informed comment on the validity of these estimates, or to assess current levels of uncertificated sickness absence.

Certificated Absence

43. *In 1995, the Managing Absence Working Party calculated the average daily payroll cost per employee at £140 which, we are told by the HR Department, was based on a CBI formula. If this figure is extrapolated by the annual pay increases, the figure would have risen to £163 per day in 1999. However, we have decided to base our calculations on actual payroll costs which results in a significantly lower figure than the earlier calculation. Whichever calculation is used, an average cannot be considered an accurate reflection of actual cost and must therefore be treated with caution.

44. In an attempt to ascertain certificated sickness levels, E&SS provided statistics on claims made by the public sector. These statistics are produced by E&SS for their own purposes and are not normally supplied to outside organisations, e.g. States departments, Occupational Health Service, as a matter of course (although the HR Department have received the information since 1994 and used it to support the case for an Occupational Health Service). The information is collated by payroll, therefore our analysis has had to be limited to overall statistics and those departments which operate their own payroll. We have used this information to calculate:-

· the total number of working days lost through certificated absence;

· the average notional cost of certificated absence in terms of lost productivity;

· the incidence and average notional cost of the two most common reasons for certificated absence across selected departments.

45. The analysis, attached at Appendix E, details certificated sickness levels for the years 1997, 1998, and 1999 (data for 2000 is not yet available). It shows that in 1999, the average cost per employee per day was £118. The total cost of certificated sickness absence, in terms of lost productivity, was £6.3 million (3%). The average number of days lost per employee was 7. The total number of days lost was 53,693 (3%) which is the equivalent of 206 fte posts.

46. A survey by the Chartered Institute of Personnel Development (CIPD) published in May 2000[10] shows that the average level of total sickness absence is 4.3% in UK Central/Local Government and 4.9% in the Health Sector, compared with 4.1% in other organisations. This survey also found that the most common causes of sickness absence among both manual and non-manual employees is minor complaints such as colds or headaches. The second most common reason for non-manual worker absence is stress. In the case of manual workers, back pain is the second most common cause of absence. A similar survey by the CBI, published in June 2000, also reports total sickness absence levels in the U.K. public sector as 4.3%, with an average of 9.9 days lost per employee per annum in 1999. Of course, these figures represent overall sickness absence which we are unable to measure for the Jersey public sector. Both the CIPD and CBI show “minor illnesses” as the major cause of sickness absence in the U.K.. The CIPD report also showed that 18% of respondents to the questionnaire did not record sickness absence. However, “these are concentrated in the private sector especially hotels, restaurants and leisure, retail and wholesale. In contrast, only 8% of health employers, 6% of local authorities and one central government department did not retrieve data on levels of sickness absence.”

47. Analysis of absence due to backache and stress/depression/anxiety (as tabulated by E&SS) during 1999 shows that costs, in terms of lost productivity, were £546,000 (4,600 days or 18 fte staff) and £875,000 (7,400 days or 28 fte staff) respectively.

48. Few departments undertake any form of benchmarking of sickness levels, either internally, or with statistics produced by organisations such as the CIPD and CBI[11]. Public Services, Police, Fire, Income Tax, HR, and Airport are examples of departments who do benchmark in this way. The States Human Resources Department does not compare sickness levels across departments.

INFORMATION SYSTEMS

49. Several departments, particularly the larger employers, have complained that they have been awaiting the implementation of a corporate HR system which would, amongst other things, record absence and provide management information. Of the other Local Authorities which provided information for this review, all but Guernsey had HR systems which produced comprehensive management information on sickness absence.

50. A decision was taken by the Establishment Committee in 1989 to introduce a corporate payroll/human resources system. To this end, the Cyborg payroll system was purchased as a complete package. A decision was taken in 1994 to customise the HR module to reflect the existing States of Jersey practices. However, the HR module was never fully implemented to the satisfaction of the users and any further major developments were stopped in 1995. A review by PricewaterhouseCoopers in 1996 confirmed that the system was not meeting user requirements. Education and H&SS have been the only departments to continue to use some basic elements of the system. In addition H&SS did attempt to use the absence system for a period of time.

51. In 1996, States Personnel (now Human Resources) applied for funds from the Central Computer Vote to purchase an alternative system. This was rejected through the decision conferencing process. Funding was finally granted in 1997 following which reports have been produced detailing the HR requirements of the various States Departments. In 1999, in a process facilitated by the Hunter Group (now Renaissance), a system produced by Peoplesoft was selected from three tenders. Peoplesoft were considered one of the major producers at the leading edge of HR systems. However, following a further detailed analysis it was determined that the product, although providing a comprehensive and up to date HR system, would not be suitable due to the difficulties it would encounter in interfacing with the unique and diverse nature of the individual States’ payrolls running on the existing Cyborg payroll system.

52. In July 1999, the Human Resources Department decided to revert to a now upgraded version of the Cyborg HR system. A template HR model, covering employee and post information, has been developed and tested in PSD, and is now running in both States Human Resources and the States Treasury. The template model developed for PSD does not include the absence management functionality. It is planned to include absence following (i) the implementation of the template model in all States Departments and (ii) the release of the advanced absence module which is still being tested in the U.K. Due to resourcing issues this implementation is not scheduled for implementation until 2003 at the earliest, some 14 years after the decision was first taken to implement an HR system. In the meantime, departments have been left to their own devices.

53. During this period, PSD have developed a comprehensive absence management system, and whilst it is not able to provide information broken down between certificated and uncertificated absence, all other information is present, is collated and reviewed at section and departmental level and reported to both the PSD Committee and Audit Committee. This system was developed “in house” because PSD felt that the effective management of staff resources was a high priority given the size of their workforce.

OCCUPATIONAL HEALTH SCHEME

54. In 1996, the then Establishment Committee, supported by the Finance and Economics Committee, approved the introduction of an occupational health service to the public sector with the key objective of “supporting the organisation’s health and safety policy by advising management and employees, by promoting their physical, psychological and social well-being, and a safe and healthy working environment”. The service provided by BMI commenced in March 1998 for an initial period of three years. The contract was renewed in October 2000.

55. The original report in support of the scheme suggested its objectives could be met in a number of ways, including the “management of sickness absence” by:

· pre-employment screening of public sector employees;

· workplace assessments, actively preventing illness or injury;

· rehabilitation or early return to work;

· prompt and effective ill-health retirement procedure.

39. It was suggested that savings in sickness absence were potentially 10% of certificated sickness and 20% of uncertificated sickness, totalling £1.3 million [Calculations were based on £140* per day. The equivalent saving based on our calculations would be nearer £1 million per annum] Our analysis shows that since 1997, whilst the total number of employees has increased by 9.8%, the number of staff with certificated absence has increased by 11%. However, the total number of days has increased by only 5%. More importantly, the number of days lost through backache has reduced by 2% and depression/stress etc. by 11%. It is early days to ascertain whether this is a downward trend. Any meaningful analysis of trends would require information from a number of indicators to be taken into account, including the impact of long-term sickness absence. We have been provided with only two years data on long term absence (over 40 days) which is also too short a time to draw any conclusions on trends.

40. BMI do not believe that all absences of more than 40 days are reported to them in a timely manner, as required by the Managing Absence Policy. In fact, we are told by States HR that good practice has recently been revised to report absences of more than 20 days. Delays in reporting long-term absences to the Occupational Health Service will reduce their effectiveness in reducing sickness absence levels.

41. We have been unable to obtain any corporate data on uncertificated absence.

59. We believe that if information on sickness absence was made available to BMI, they could be more effective in advising departments and targeting potential problem areas. BMI should also report details of their performance in terms of reducing sickness levels as part of their Annual Report, along with any other performance criteria agreed when the scheme was approved.

CONCLUSIONS AND RECOMMENDATIONS

60. It is not possible to identify total levels of sickness in the public sector, therefore we are unable to benchmark with other organisations or ascertain whether current levels are reasonable. The Commission does not make any comment on the levels of sickness absence in the public sector because the information is not available to enable us to make any comparisons.

61. Most departments record absence in some form and some of these e.g. PSD, Fire Service, Airport, HR, Postal amongst others, were able to provide information in some detail and were able to demonstrate that they actively manage and monitor sickness absence. Some, mainly smaller departments, were able to provide information on uncertificated sickness absence. Others, however, were unable to provide the information required.

62. There are a number of reasons for this inconsistency:-

· although there i