It found each year 11 million employees take sick leave and while most people return to work around 300,000 people go on to claim health-related benefits. In addition, it is costing the taxpayer £13 billion a year and the country as a whole is missing out on £15bn in economic output.
Today the reviewers recommend a new Independent Assessment Service (IAS) that employers and GPs can refer long-term sickness absence cases to for bespoke advice. Employers stand to gain around £100m a year from reductions to sick pay bills from using this service.
The Review recognises that a significant minority of people can work but not in their current job. Currently, the State does not intervene to support job searches until after someone has left work. By then, they are harder to help. The Review recommends that the State introduces a new job brokering service for employees on long-term sickness absence who are unable to return to their current employer. This service could save the State up to £300m a year by reducing the benefits bill.
Although the Review is focussed on job retention, some people will inevitably flow in and out of the benefits system. The Reviewers have observed that the current State benefits system fails claimants with ill-health by directing too many people to Employment and Support Allowance but subsequently declaring most fit for work after a long delay. The Review recommends the removal of the assessment phase for claimants of Employment and Support Allowance. This will allow those claimants who need support to get it sooner and those that can work help to find a job more quickly. It will also save the taxpayer £100m each year.
Frost said: "Evidence clearly shows that the longer you are out of work the harder it becomes to get back in. But in many cases sickness absence is due to health conditions that are nonetheless compatible with work - and can often be improved by work.
"The current certification system does not provide employers with the advice they need to make informed decisions about their employees' capability for work. The establishment of the Independent Assessment Service will provide practical support and help to allow employers to make informed judgements about a return to work for their staff."
Black added: "Sickness absence from work can be unavoidable, but when unduly prolonged it is wasteful and damaging. We believe we have presented an urgent and compelling case to change the current system so that it unashamedly promotes work for those that can.
"If implemented these recommendations will ensure many more people with health conditions are able to enjoy the benefit of work; far fewer will needlessly lose work and fall into long-term benefit dependency."
Edward Davey, Minister for Employment Relations said: "Sickness absence is an issue that affects everybody. The current system lets down individuals, businesses and tax payers which is why this review is such an important piece of work. As part of our efforts in reviewing employment-related law and removing the burdens on business, we have the opportunity to make a real difference - tackling sickness absence properly can increase business confidence, boost growth and help get people back into work. Getting the system right is a potential win-win situation so we will be looking at these proposals with interest."
Commenting on the review, AXA PPP's sales and marketing director James Freeston said: "Our initial impressions are positive and the authors' recommendations, if taken forward, should encourage and enable employers to play a bigger role in managing employees' health and wellbeing.
"We further support the authors' recommendation that employer-funded psychological support services (counselling) to help employees to deal more effectively with the pressures in their lives should not be taxed as a benefit in kind.
"We will be considering the report's findings carefully to see whether they may offer additional opportunities to enable providers such as ourselves to play a bigger role in safeguarding and improving the health of the working age population."
The Society of Occupational Medicine and Faculty of Occupational Medicine joined forces to welcome the findings of the Government's independent review into the sickness absence system.
Henry Goodall, president of the Society of Occupational Medicine, said: "GPs alone cannot be expected to reduce employee absence due to ill health. Occupational health doctors are specialist doctors who are trained to work with employees and employers to rehabilitate people back into work. Just as a GP can refer their patients with other health problems to expert services - they should be able to refer to an occupational health specialist. At present, many people who are out of work for several months, through illness, have a much reduced chance of returning to work. Research shows that many who remain sick for 7-8 months may never work again. Early intervention is the key. This assessment service could provide the support GPs and their patients need."
Diane Buckley, MD of Legal & General Group Protection, said: "Employers often tell us that they need more support to help their staff when they can't work because of illness and today's review shows that the government is taking these issues seriously. It shows how important it is for responsible employers to intervene early to help their staff if they become ill - our experience with workforces up and down the country has shown time and again that prevention is better than cure.
"The Government has also today said that it sees a clear role for experts to deliver early intervention support in the workplace. The review clearly recognises that group income protection providers could play a key role in cutting workplace sickness and absence and delivering better quality support for employees."
And Centre for Mental Health chief executive Sean Duggan added: "We welcome the recommendations from the Sickness Absence Review to help employers support people with continuing and unpredictable conditions to stay in work. Mental ill-health accounts for a large proportion of sickness absence in the UK and one on four GP consultations, and remaining in work has been proven to be an important factor in recovery."
"Provided that the advisors are qualified health professionals and have a suitable understanding of the needs of those with mental, as well as physical health problems then this scheme could help many more people return to work."
"We hope that the Government will take up this recommendation as there is substantial evidence that in the case of people with mental health problems, regular paid work greatly reduces the risk of isolation, improves quality of life and wellbeing, and aids rehabilitation and recovery."
