Employee absence resulting from sick leave generates costs for the employer. The estimation of such costs is often understated, being limited to direct costs, while indirect costs incurred by employers are also onerous.
One of the obvious direct costs is the need to pay remuneration for an employee who does not work. During the first 33 days of sick leave, the employer is obliged to pay remuneration for the period of inability to work. Following this period, the obligation to pay the sickness benefit rests with the Social Insurance Institution. Since there are 251 working days in 2018, 33 days of absence due to sick leave amount to 13.15% of the total annual working time.
In addition, sickness certificates require administrative handling. HR employees devote time to managing sick leave formalities, while they could use that time to perform other duties. This is on of the indirect cost that employer incurs.
Other direct costs of sick leave are related to the replacement of a sick employee. An employer, in order to ensure business continuity, must hire a replacement employee or distribute work among other employees. These solutions generate costs related to the recruitment of a temporary employee and training them. The employer pays salary to a temporary employee as well as to the employee on sick leave. If, on the other hand, the duties are performed by other employees, the employer is obliged to cover the overtime costs. Managers of departments are burdened with additional stress and logistical issues related to continuity and liquidity of the business.
People closely cooperating with a person on sick leave must often take over at least a portion of their duties and, as a consequence, are burdened with additional tasks. Motivation in such situations usually decreases, and the atmosphere at work may deteriorate. Such situations, although difficult to valuate, are indirect costs.
All of the above factors may translate into poor quality of the work performed and result in dissatisfied customers.
Due to the complexity of the problem of sickness absence, not all costs incurred by employers are immediately visible. Only the analysis of individual factors shows that the employers’ costs related to sick leave are much higher than the remuneration paid for the period of inability to work.
Qualitime will be happy to identify factors affecting the number and length of sick leaves and will propose solutions permanently reducing the sickness absence rate.