The costs associated with providing EAP coverage for your workforce appear to be tumbling, but quality issues may be a concern, says Edmund Tirbutt
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Falling prices is a dominant trend in the employee assistance programme (EAP) marketplace. But this represents something of a double-edged sword.
The average cost per employee of an EAP is currently £17 (compared with £26 per head four years ago) is obviously attractive to employers seeking to keep a tight lid on costs, says the Employee Assistance Professionals Association (EAPA). Nevertheless there is widespread concern among providers that the product is becoming too commoditised in an increasingly competitive marketplace and that employers are paying less attention to quality issues than to price.
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Indeed, some agents and intermediaries are even reported to be passing off stress counselling helplines as EAPs to employers wishing to follow Health & Safety Executive (HSE) guidelines (which recommend that employers have a duty of care to assess and help with the stress levels of their staff). This is despite the fact that, at this stage, there is no case law to back up this claim.
EAPs, unlike mere helplines, offer face-to-face counselling in addition to telephone advice. The more sophisticated versions also offer services such as locating suitable carers for children or the elderly, career planning and, for employers, management consultancy advice which interprets data relating to issues such as stress, bereavement, bullying and absence management.
Melvyn Measures, proposition delivery manager at EAP provider FirstAssist, says: "There is a growing trend to engage an EAP in the proactive prevention of absence and to link it with occupational health. Employers are increasingly demanding that EAPs be integrated with health and wellbeing services so they can help with health/life balance issues and promote a healthy workforce."
A trend for management to be proactive in making referrals to EAPs rather than simply waiting for staff to refer themselves should increase usage. So should the current emphasis be on promoting the service more as a health and wellbeing tool than as a counselling service?
Mike Bryan, head of marketing at EAP provider PPC, says: "In this country we don’t like admitting we have problems, so if the counselling aspect is promoted more as a back-up facility it will result in more people using EAPs. One obvious way in which it can be used as a preventative measure is to help people returning from maternity leave. This is essentially a happy event for which you don’t normally need counsellors, but an EAP can deliver real benefits as a support service and avoid major problems down the line."
The emergence of online services should also have a positive impact on usage rates. Benefits consultants Accor Services, which introduced an online EAP option in November 2003, reports that it is especially popular with young men, who can be reluctant to discuss emotional issues.
A number of EAP providers have developed quantification tools which can demonstrate an employers’ return on investment. This should encourage more employers to buy an EAP. Wolfgang Seidl, EAP director at Accor Services, says: "There is a danger of EAPs being seen as a soft intervention but our tool is able to give a good quantification of their business impact. Independent research published in 2001 found that, according to all available studies, employers which implement EAPs, recoup their outlay and can have returns as high as 13 times [their] original investment."
A trend for insurers to offer EAPs free or inexpensively with group schemes for private medical insurance, income protection and even healthcare cash plans is also helping to expand the market. It can, however, lead to duplication if an employer has more than one group product offering an EAP alongside it. Matthew Kelvie, deputy managing director at benefits consultants Gissings Advisory Services, says: "We are finding that a lot of companies have a number of EAPs and are not aware they are paying extra unnecessarily. As part of our broker facility [when products are up for] renewal, we are seeking to cut out the overlap and achieve greater efficiency." Gissings is also concerned that companies are not currently paying enough attention to the usage they are achieving on their EAPs and it is currently testing a pay-as-you-go option with PPC. It reports that it doesn’t want to keep this as an exclusive if it proves successful because it feels it would be to the benefit of the whole market. Users will be required to pay a retainer of around £200 and from then onwards would be charged at cost price plus 15%.
Such developments are certainly needed for a product which, according to the EAPA, is still only available to around 10% of the working population. Bearing in mind that the HSE reports that work related stress costs organisations £3.8 billion a year and results in 13.4 million British working days a year being lost, such a degree of penetration clearly only represents the tip of the iceberg.
Pay-as-you-go should, in particular, increase appeal to small businesses because many of these clearly cannot afford minimum annual scheme fees of several thousand pounds. But there are also many small- and medium-sized businesses which can afford conventional EAPs but are not yet sufficiently aware of them.
Tim Gillingham, head of employee benefits at independent financial advisers John Scott & Partners, says: "We still find that the majority of our clients don’t have EAPs until we explain the product to them, because few companies other than blue chips actually seem to understand what they are. There is therefore clearly still a huge potential market out there and we are currently approaching all our clients on the subject."
What is an employee assistance programme (EAP)? A 24-hour helpline, backed up with the ability to access a face-to-face counselling service, with a heavy emphasis on stress management but also extending to legal, financial, and other personal and work-related matters. EAPs normally offer management referral and provide employers with management consultancy data on aggregate usage statistics.
What are the origins of the EAPs? EAPs were first provided in the UK in 1981 to combat workplace stress, but date back as far as the 1950s in the US where they focused primarily on alcohol abuse.
Where can employers get more information and advice? The Employee Assistance Professionals Association (EAPA) is the professional body for EAP providers and consultants. The EAPA can be contacted on 0800 783 7616 or by visiting www.eapa.org.uk. There is a list of providers on its website.
What are the costs involved? A full EAP can cost anything between £8 and £25 per employee per annum. Prices will depend both on the head count (with the very lowest end of the cost scale applying to schemes of over 10,000 employees) and on the industry sector. If the industry concerned is undergoing alot of change and has complex issues it can increase costs significantly.
What are the legal implications? Employers which have an EAP in place, which make proactive efforts to publicise it to their workforce and which have a system of management referral may be considered to have exercised a duty of care. But EAPs should be part of an overall approach that includes occupational health, stress audits and absence management so it is incorrect to assume that they guarantee protection against litigation on their own. The more sophisticated EAPs can help employers cope with the new 13 step dismissal procedures introduced in October 2004 (these are the revised ACAS code of practice on disciplinary procedures introduced under The Employment Act 2002 (Dispute Resolutions) Regulations 2004). EAPs can assist in writing procedures to help ensure the regulations are followed.
What are the tax issues? EAPs are normally a tax deductible business expense and do not normally give rise to P11D liabilities for staff – unless they form part of certain employer-paid group health schemes.
What is the annual spend on EAPs? According to the Employee Assistance Programme Association, its 16 registered providers accounted for a total annual spend of £31 million during 2003. This is expected to have risen marginally during 2004.
Which EAP providers have the biggest market share? Most providers and intermediaries acknowledge that the major players are Icas, PPC, Accor Services, FirstAssist and Ceridian Centrefile.
Which EAP providers increased their share the most over the past year? Bupa Wellness, which bought PEC in March 2003, went from providing EAPs to 250 employers, to providing 450 organisations during the last 12 months. Of the others which claim to be fast-growing, only Ceridian Centrefile and PPC (which have grown by 20% and 15% respectively during the last year) volunteer any concrete figures.