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23 May 2012
Warren Dickson, managing director, Fish Insurance

Who bears the risk burden of personal budgets?

John has multiple sclerosis, mobility issues and respiratory disease. He employs three personal assistants, each contracted to provide him with different hours of care but, following a care review, his personal assistant (PA) budget has been cut by almost 30%.

Warren DicksonThis means he must reduce his combined hours from 42 to 30, which could lead to him having to cut all his PAs’ hours, or making one redundant.  Whatever his decision, he will still need to have support at specific times to fulfill his care needs, so changes to his PAs’ work patterns are inevitable.

Should John - or his advocate – know about, let alone understand, the responsibilities he faces under the Employment Rights Act 1996? What if, in ignorance, he cut the hours of all his PAs without their agreement? Potentially each could take him to tribunal for breach of contract or unfair or constructive dismissal.

John’s case is far from isolated. Every month our Employment Advice Line receives upwards of 900 calls from worried direct payment recipients, each with their own specific employment issue, to relate.

In John’s case, a possible tribunal was avoided as our advisers suggested he discuss his situation and options with all three PAs and gave him guidance on handling those discussions. As a result, he spoke to all his PAs to see if any were able to reduce their hours without suffering financially. He was advised to raise these issues in an initial discussion and let them consider the situation before holding a second meeting a few days later to see if a solution could be jointly agreed. This proved successful as the PAs each agreed a reduction in their own hours, without ending up financially disadvantaged.

But how many people receive poor quality or no advice on such? There are an estimated 120,000 people using direct payments but no figures for how many employ their own personal assistants and, of those that do, how many are insured against breaching employment legislation?

Legally, service users need only the standard employment and public liability insurance but, with the vast majority having no experience as employers, they really also need protection against breaching legislation. Without knowledge of their responsibilities under various discrimination, health, safety and myriad other employment laws, can it be safely assumed they will comply with them?

The scale of demand for advice and support is clear from the fact that we have 2,500 cases active at any one time – like a a policyholder who has to make a PA redundant – and we open 260 new cases a month.

People call us about issues such as employee sickness, maternity rules, redundancy and resignation but by far the hottest topic is conduct and disciplinary procedures. These require sensitive handling for fear of escalating into costly and debilitating tribunal cases. A typical tribunal cost of defending an employment tribunal is around £8,5000 whilst awards made under discrimination legislation can be unlimited: one service user we encountered faced a £25,000 award for sexual discrimination.

In addition, there are largely no checks in place to ensure service users even have in place the insurance they are required to hold by law – employment and public liability. That’s an issue not just for service users but PAs who are exposed by lack of cover.

Personalisation remains a staple of the government’s social care provision but the cuts and removal of ringfenced funding is placing great strains on the system. The tightening of eligibility criteria has been much publicised but there are other, perhaps less obvious, tensions at play. Care providers and local authorities face funding squeezes, for example, whilst elements of care packages may be scrutinised for short term cost benefit over longer term benefit and value.

With less resources, councils and care providers may struggle to assist with key issues such as an individual’s legal responsibilities when they employ their own care staff. At the same time penny-pinching might deny those same people the extensive insurance cover (extensive cover offers a wider safety net and advice, as opposed to “essential cover” which is limited to employers’ liability and public liability) they may need to prevent, minimise and deal with employment disputes.

Local authorities, for example, are pretty good at the basics. They routinely advise the use of template employment contracts. But with the best will in the world they cannot be expected to advise on complex issues of law, although sometimes they try. We are acutely aware of this as we frequently receive requests for advice from them.

Insurance is funded by a local authority as part of a care package but that funding may be capped, limiting the options available. In addition, unless a local authority demands proof that it been acquired, there is no guarantee that the funding allocated has been spent on insurance. Another concern is that different authorities adopt different policies so a service user in one area may be funded for our full cover policy, but someone in another area is not. It becomes that dreaded beast, the postcode lottery.

So where does this leave the service user? Vulnerable. This situation led us to create a policy that included not just the statutory cover but, among other specific benefits, around-the-clock access to professional human resources and employment law advice.

Critics will argue that we, as insurers, are of course bound to argue for more people to take out policies. But the wider argument – that access to high quality advice and support must be provided and those in receipt of care be protected – cannot be ignored. Can we really those who may already be vulnerable to overnight take on onerous legal responsibilities simply because they now control their care budget? It’s a huge transfer of risk from a corporate entity to the individual, as we have warned in the past.

It’s an issue which undermines the personalisation agenda and, ultimately, could help derail it. We are already witnessing growing use of managed budgets. They’re easier but are they really in the spirit of personalisation? And how many people reject direct payments precisely because of the responsibilities they bring, responsibilities for which it seems there is less and less support and advice available?

The issues I mention here are being kicked into the long grass. We work closely with local authorities and care organisation, providing training sessions which alert them to key issues and trends. But with fewer funds and resources available it can be difficult for them to address those issues.

We’re ignoring the reality of the complexity employment law at our peril but it seems there’s little appetite, especially in the current financial climate, to tackle it.

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