Employee income protection provides continuing income if illness or injury prevents an employee from working, or if he or she has to work reduced hours for a prolonged period of time.
The benefit is paid to the employer, who then passes the benefit to the employee through the PAYE tax system. The income is liable for tax and National Insurance in the normal way.
The level of benefit is determined by the employer and is usually based on a percentage of salary at the date of incapacity. Pension contributions and employer’s National Insurance contributions can also be covered, and the benefit can escalate once payments have started.
The employer sets the deferred period (the waiting time before any benefit becomes payable) and the payment term – which can be to the earlier of death or retirement, or for a fixed period.
An Employee Assistance Programme (EAP) is often provided alongside a group income protection scheme at no additional cost. This offers free, confidential support to employees to help them deal with issues at home or work which could affect their job performance, health and wellbeing.
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