EEF says a survey on sickness absence, conducted with insurance and employee benefits consultancy Jelf, found that 41% of companies say long term absence has increased in the last two years.

This matches the increase reported in the 2015 survey which was the largest increase in five years. Of the workforce covered in the survey of over 300 companies, 5% were off for a period of four weeks or more. EEF says manufacturers pay out £600m in sick pay annually, the equivalent of £211 per employee.

Terry Woolmer, head of health and safety policy at EEF said: ‘Currently we have long term absence on the increase and an under pressure NHS which is struggling to deal with the issue. Given this situation is only going to get worse with an ageing population radical action is now required.

‘Government must now use fiscal incentives to encourage employers to pay for private medical treatment and allow it to be offset in the same way as other business expenses. Not only would this help take the pressure off the NHS but it would allow a speedier return to work. This would be a win win for government, the employee and employers.’

EEF is calling on the government to review the current levels of employer taxation for employer led health interventions where they are currently taxed as benefits in kind.

It also wants to see tax relief for Private Medical Insurance (PMI) treated in the same way as the £500 tax exemption for treatments recommended by the Fit for Work service.

In addition, EEF says the government should consider tax relief on income protection insurance or group income protection (GIP) as a means of providing sick pay and rehabilitation support to employees through employers.

There should also be some form of fiscal incentive to companies who fund treatments as part of rehabilitation which would otherwise have had to be provided by the NHS, or which prevented state Employment and Support Allowance (ESA) payments, the industry body says.

The survey suggests two fifths of companies still rely exclusively on the NHS as the primary source of treatment to reduce absence with less than a fifth (18%) currently paying for non NHS treatment. However almost a third (31%) would pay for medical treatment if there was a benefit to the company while 59% report they would be most incentivised to pay for the cost of treatment or, workplace adjustment, by some form of employer allowable business expense.

Iain Laws, managing director, UK healthcare and group risk at Jelf, said: ‘Healthy employees can be up to three times as productive as those in poor health. They experience fewer motivational problems are more resilient to change and are more likely to be engaged with the business priorities.

‘It is essential that companies have systems in place which recognise this and which place employee health provision at their heart.’