Financial impact of absence

Author: Matthew Haswell, James Kirk (

Categories: Employees, Research
Tags: payroll, people, productivity, sick pay, staff, training
The financial impact of employee sickness has more factors than the cost of salary cover. In this TV show Matthew Haswell discusses the high cost of absence.

Quantifying the financial impact of employee sickness

Various studies and research has been conducted on trying to quantify the cost of absence, it’s very difficult to quantify the cost of absence but a couple of pieces of research have been done by the CIPD, the confederation of British industry, various insurance companies and companies that are dealing in health and wellbeing, as a very broad brush cost perhaps up to three billion pounds a year is lost by UK business in terms of sickness absence. Now when you break that down across the employees in the country that works out at about £600 per employee per year, so if you’ve got 1500 employees, £600 per year is likely to be your cost to you as an employer for sickness and absence. Now those costs aren’t just the cost of paying sick pay, because those costs, depending on contracts for employment and sick pay policies, won’t necessarily be particularly onerous, but in conjunction with other factors and other costs associated costs, I mean if someone goes off sick, particularly if they’re off long term sick, their work doesn’t disappear, you have to have someone to actually fill that gap, especially if they’re a, I don’t know, a senior person in IT or a sales person, there’s loss of productivity, there’s if you want to get short term staff to come in and do their work, there’s a salary cost to them, disruption of the business, training, time, people committing time to actually train new people and find their way. And also there’s a lag of course as well because a new person won’t just pick up and run with someone’s work who’s off sick. So the cost isn’t just necessarily the payroll cost or the salary cost of all of the sickness absence cost, it’s the associated business cost as well

Browse Inside Finance TV for more detailed examples of common issues that can have a considerable financial impact on a business.

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