The government has pledged to form a new state-funded service which will carry out an independent assessment of employees after four weeks of sickness absence.
The service will provide advice to the employee, employer and GP in a bid to reduce sickness absence and help people return to work.
It will be funded by the abolition of the Percentage Threshold Scheme, which currently reimburses some elements of statutory sick pay, while tax relief will remain on employee assistance programmes.
It is part of the Department for Work and Pensions response to the Sickness Absence Review which Employment Minister Mark Hoban MP said would result in a new strategy which will help people to stay in work, support employers to manage attendance more effectively, and reduce the number of people falling needlessly onto sickness benefits.
"Our response sets out new measures to support employers, employees and healthcare professionals to minimise avoidable absences and keep more people attached to the labour market. We expect this to yield significant benefits for individuals, employers and the state," Hoban said in a ministerial statement.
Hoban added that the Percentage Threshold Scheme "does nothing to encourage employers to reduce it. We agree with the reviewers that existing resources would be better used to support employers to manage sickness absence more effectively".
Tax relief on EAPs will be retained while tax relief on interventions recommended by the new service will also be considered.
A final decision on this will be made in the Budget in March.
Statutory record-keeping requirements for Statutory Sick Pay will also be abolished.
Hoban also revealed that under Universal Credit people would receive appropriate support to assist their return to work from the start of their claim rather than waiting until they have undergone a Work Capability Assessment.
And the Universal Jobmatch system would be utilised to help people who are unable to return to their old job due to health issues to find more suitable employment.
The response also announces measures to strengthen sickness absence management within the public sector, following the progress made by the Civil Service in reducing absence and reviewing the terms of occupational sick pay policies.
"We will continue to work with public sector employers to bring transparency and accountability to the management of sickness absence," Hoban added.
