A review into the UK's sickness absence system will explore "radical" ways of helping people stay in work as the government aims to reduce the annual cost to the economy, estimated at £10bn.
Government health adviser, Dame Carol Black, and Director-General of the British Chambers of Commerce, David Frost, are leading the review, which aims to minimise the impact of sickness absence on business and the economy as a whole.
The government also said there was currently a "vicious cycle" of ill people seeing their health deteriorate the longer they stayed off work.
Under the current system, costs of short-term sickness absence are borne by individual employers. Cost related to longer-term illness are paid for by the government.
Edward Davey, employment relations minister, said: "Managing sickness absence more effectively will be a win-win situation for all - businesses, individuals, the taxpayer and crucially, the economy. It could improve productivity, boost growth and mean that many more people no longer have to rely on taxpayer handouts."
Minister for welfare reform Lord Freud said "failures" in the system had let people fall on to a life on benefits through no fault of their own.
He said: "This isn't fair to the taxpayer but most of all it isn't fair to the individual.
"We all have a stake in reducing sickness absence, but it's not clear who is best placed to take responsibility for this change."