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HR Update: Counting The Cost Of Sickness Absence



Sickness absence, a steep cost for business

Depending on how you calculate it, the cost of sickness absence to the UK could be as much as 312 billion a year – that’s the figure quoted on the government’s own Health & Safety Executive website, while the Telegraph newspaper quotes the cost to the private sector as being over £3 billion. But do individual organizations know how much they’re spending on sick leave?

Research into the cost of sickness absence among organizations

A leading HR consultancy firm last year published a study into various issues surrounding sickness absence, with the results indicating that around a third of organizations are unclear as to the extent to which employee sick leave is costing the company.  The research also indicated that a large number of businesses are not correctly or fully monitoring the cost of employee sick days.

The benefits and trends survey conducted by the consultancy comprised 185 respondents – all employers – who collectively were responsible for around 650,000 employees worldwide.  The survey results strongly suggested that there’s room for improvement when it comes to tracking and understanding employee sickness, and additionally to help improve employee wellbeing and further reduce the cost of sickness overall.

Around a third of the organizations surveyed were unable to give the total number of employee sick days taken by their workforce, while the rest were able to provide rough numbers, but with no real certainty as to their accuracy.

Additionally, a large number of the companies who took part in the survey were unsure of how much the occurrence of sickness absence was costing their business.  More than 50% of respondents didn’t measure the total cost to the company of employee sick days.  A small fraction of the sample was unclear whether this was something their business measured on an ongoing basis.

In terms of measuring this cost, there appeared to be an underestimation of the total cost of health.  Most of those surveyed estimated the amount at £1000 per employee for total healthcare, which according to the survey authors is significantly less than the average.

Importance of measuring absence

The report authors recommended that any organization not currently measuring sickness absence should endeavor to do so as soon as they can, in order to bring down the costs where there is a high level of sickness absence, saying that only a ‘moderate degree of intervention’ is necessary to lower sickness rates.