Absenteeism is a serious problem for many businesses.
Studies suggest that the employee absence accounts for up to 5% of total payroll in the private sector and even higher in the public sector. And in most industries these costs are growing because of various factors: the aging population; rising health and medication costs; and increased diagnoses of mental illness.
Absenteeism: Employees missing part or whole days of work due to personal illness, personal business, or other reasons (excluding paid vacation). These absences may be avoidable or unavoidable.
The direct costs of absence such as basic salary expenditure is relatively easy to calculate, the indirect and absence management costs are more difficult to quantify. Basic calculation:
| Cost per employee for paid absenteeism days | = | Total # of paid absenteeism days per employee | X | Cost of absent employee per work day |
| Total annual cost of paid absenteeism days | = | Sum of all ‘Cost per employee for paid absenteeism’ | | |
To Estimate the basic cost:
| Estimated Total cost of employee absence Yearly | = | Total # of Employee | X | Average # of paid absenteeism days taken yearly/Employee | X | Average pay per workday/Employee |
The following checklist devised by the Institute for Employment Studies can give you an more accurate picture of the overall cost of absenteeism to your business. Click to download
Check list for the direct and indirect costs| Direct costs | Indirect costs | Absence management costs |
|
| Salary costs: | Internal replacement worker: | Line manager costs: |
| annual salary | overtime | arranging cover |
| employer’s Insurance contribution | ‘acting up’ allowance | return-to-work interviews |
| employer’s …. | daily …. | training…. |
| | |
Data Source: Statistics Canada, Government of Ontario, Conference Board of Canada, Government of New Brunswick, the Chartered Institute of Personnel and Development…
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