Employee Absenteeism: Main Causes and Cost to Businesses

Payroll

What is the true cause and cost of employee absenteeism? This article explains it all…


COVID impacted businesses in many ways. Employees were furloughed, meetings went virtual, and revenue took a hit, but it also affected the workforce – both physically and mentally.

This has caused a surge in absenteeism, which describes an employee’s habitual absence from work – beyond the accepted number of legitimate days away and usually without good reason.

According to the U.S. Bureau of Labor Statistics, 7.8 million workers had an illness-related absence from work in January 2022, up 110% from the 3.7 million from the previous year. For UK businesses, the sickness rate in 2021 rose to 2.2% from a record low of 1.8% in 2020.

Absenteeism is on the rise, but at what cost to businesses? Quite a steep one, actually. Research from e-days collated data from over 5,000 UK businesses and revealed that absenteeism costs UK businesses £20bn per year.

Meanwhile, Public Health England claims the total costs related to employee absenteeism are around £100 billion.

And according to the CDC, absenteeism costs businesses $225.8 billion annually in the United States, or $1,685 per employee.

Whether COVID-related or not, absenteeism is becoming an issue for businesses in the US and UK, with more employees missing work in 2022 than pre-COVID.

This page will explain the causes of absenteeism and its cost to businesses, exploring how and why this trend has changed over the years.

Main Reasons for Employee Absence

Absences are normal. Illnesses, vacations and personal matters are all legitimate reasons for missing work. However, there are some illegitimate reasons to look out for. Below, we’ve broken down into categories some of the main causes of employee absenteeism:

Health-related reasons

  • COVID – the pandemic’s ongoing effects cause employees to fall sick all-year round, especially those suffering with Long COVID. It’s reported that 7.5% of US adults and 2 million people in the UK (3.1% total population) have long COVID.
  • Illness – absences spike during the cold and flu season, while the most commonly reported reason for missing work is having a medical appointment, though it’s not always the true reason.
  • Mental health – according to the Center for Disease Control, depression causes an estimated 200 million lost work days each year, costing between $17 billion to $44 billion to businesses.
  • Injuries and poor health – whether work-related or not, accidents and injuries are a common cause of absenteeism. Chronic issues, such as neck or back pain, are some of the most common reported reasons.

Workplace-related reasons

  • Burnout and stress – stressful tasks and heavy workloads can cause employees to avoid going to work, while a lack of appreciation can lead to low morale or burnout. You also have to consider personal stress-triggers from outside the office. About one million Americans miss work each day due to stress.
  • Disengagement – employees who feel disconnected from, or unstimulated by, their work are more likely to avoid going into the office, simply because they don’t have the motivation to commute or socialize with colleagues.
  • Bullying and harassment – workplace bullying and harassment is a common reason for employees to avoid coming into work.

Dependents-related reasons

  • Childcare and eldercare – employees with dependents might have to miss periods of work in order to take care of children or elderly people, especially if their babysitters or carers become ill or unavailable. Also, last minute school day cancellations may force employees to stay at home.

Other reasons

  • Job-seeking and interviewing – rather than use up a vacation day, employees will usually call in sick in order to attend interviews, or to meet with a headhunter.
  • Partial shifts – employees with part-time shifts may leave the office early, arrive late, or take longer breaks, which are considered types of absenteeism, affecting productivity and incurring costs to businesses.

Cost of Absenteeism to Businesses

Workplace absenteeism directly impacts productivity, which naturally affects the company’s bottom line. If employees aren’t working, they can’t help boost revenue.

In a Moorepay report, 70% of UK SMEs said absenteeism was affecting their profitability, and that absenteeism costs the private sector an average of £568 per employee each year.

Employee absence is even more costly to businesses if there are no colleagues to fill in the gap. In reality, it’s a catch-22. Even if someone picks up the slack, they’re adding to their own workload and creating a costly backlog.

So, what’s the cost of absenteeism in monetary figures?

Long COVID-related costs of absenteeism

According to the Census Bureau 2022 report, approximately 16 million working-age Americans have long COVID today.

Of those with long COVID, as many as 4 million are likely out of work, resulting in an annual wage loss of  $170 billion per year, and potentially as high as $230 billion.

There’s a similar landscape in the UK. The UK’s Trades Union Congress (TUC) found that 20% of people with long COVID weren’t working, and an additional 16% were working reduced hours.

Meanwhile, official data from the UK shows that one-quarter of UK companies cite long COVID as one of the main causes of long-term employee absenteeism.

employee absenteeism and sickness rates in the UK

Key stats:

  • 16 million working-age Americans have long COVID
  • Long COVID costs US businesses $170 billion to $230 billion per year
  • 20% of UK workers with long COVID aren’t working

Mental health-related costs of absenteeism

The sad truth is that mental health is costly to employees and employers. According to the CDC, depression is estimated to cause 200 million lost workdays each year, costing employers between $17 billion and $44 billion.

To make matters worse, half the employees with depression are untreated. With little help offered by employers, mental health-related absenteeism is expected to continue, if not rise. Depression obviously impacts productivity and motivation at work, causing employees to avoid work altogether.

Of course, the causes for employee depression may come from outside work. However, a study from the October 2018 issue of International Archives of Occupational andEnvironmental Health revealed the most common job stressors included demanding job requests, loss or little control over tasks, unexpected increase in workloads, and a lack of friends at work.

In the UK, mental health research from Deloitte revealed that, in 2020-21, poor mental health cost businesses roughly £56 billion compared to £45 billion in 2019. 

According to Deloitte, this increase in costs is due to higher staff turnover, with 61% of survey respondents who said they’re planning to leave their jobs in 2022 saying it was due to poor mental health.

With more employees looking to leave their jobs, we can assume there is higher employee absenteeism at those companies.

Key stats:

  • Depression costs businesses between $17 billion and $44 billion per year
  • In the UK, poor mental health costs businesses £56 billion per year
  • Depression causes 200 million lost workdays in the US each year

Burnout-related costs of absenteeism

The World Health Organization (WHO) defines burnout as an “occupational phenomenon…resulting from chronic workplace stress that has not been successfully managed.”  While not a medical condition, burnout is one of the most common reasons for employee absenteeism.

In a 2020 Spring Health survey, 76% of American workers reported experiencing burnout. This comes at high cost. A Harvard Business Review estimated that workplace burnout costs between $125 billion and $190 billion per year in healthcare spending in the US.

Burnout can lead to feelings of depletion and a mental distance from tasks, and in some cases physical ailments. This goes to show that companies with poor management structures are more likely to have burnt-out employees and, consequently, high absenteeism.

In the same Deloitte survey mentioned above, Elizabeth Hampson, Deloitte director, said this:

Burnout among employees, such as feelings of exhaustion, mental distance from the job and reduced job performance, have been more evident during the pandemic. Measures by employers to improve mental wellbeing should not only benefit employees themselves but should also reduce employment costs such as recruitment costs and provide broader societal benefits.

But there is a potential way out of this. The Deloitte survey also claims that businesses would return £5 for every £1 spent on wellbeing support, which should lead to healthier employees and lower rates of absenteeism.

This leads us nicely to the next section where we discuss the most effective solutions to employee absenteeism.

Key stats:

  • 76% of Americans experience burnout
  • Burnout costs $125 billion and $190 billion per year in healthcare spending
  • Businesses could return £5 for every £1 spent on mental wellbeing

How to Support Absent Employees

It can be difficult for businesses to address absenteeism when some causes are legitimate, and some aren’t. Tracking absences altogether can prove challenging, especially without HR and project management software in place.

Let’s say an employee calls in sick. If their manager feels it’s an illegitimate excuse, or it’s happened many times before, they can’t force them into the office and risk getting the whole department sick. This would only deplete the team further and add to the costs of absenteeism.

Meanwhile, setting a clear attendance policy may help set expectations, but will it discourage absenteeism completely? Or keep employees motivated or happy at work? Not always.

To that end, it’s important that businesses be proactive in preventing employee absenteeism. They can offer support, or put policies in place to ensure staff are happy, motivated, and feel safe to talk about their work-related issues.

Remember, businesses could return £5 for every £1 spent on wellbeing support, proving that it pays – in more ways than one – to invest in mental wellbeing for employees.

Here are three ways businesses can support absent employees…

Leave of Absence Protocols

Unlike paid time off or vacation, a leave of absence enables employees who are experiencing particular circumstances to take time off work. Common reasons include child birth, elderly care, military leave, and serious health conditions.

Anyone, even directors, can experience things outside work that affect productivity, which is why it’s important for businesses to include leave of absence protocols. In the US, there are two types of leave: mandatory and voluntary.

Mandatory leave

Mandatory leave is governed at the federal level, and may entitle employees up to 12 weeks off without pay. Circumstances that qualify for mandatory leave include military caregiver leave, childbirth, serious health conditions, adoption or foster care, and caring for a sick immediate family member.

Naturally, these circumstances would massively impact productivity, so it’s a good idea to support staff with mandatory leave should these unfortunate situations come up.

Voluntary leave

Unlike mandatory leave, voluntary leave is an employee perk and is up to the employer’s discretion. Common circumstances qualifying for voluntary leave include bereavement, sabbaticals, divorce, moving house, and pursuing higher education.

To create a positive working environment, businesses need to balance legal obligations with employee benefits, ensuring absence policies are understood by all parties, including managers, employees and HR staff. That way, workloads and stress levels should come down.

Immediately Address unscheduled absences

Research from Citrushr shows that return-to-work interviews positively impact absence rates. Rather than stressing the employee, these meetings simply prove that the business takes employee behavior seriously.

These meetings can be informal chats in the kitchen, asking what happened and explaining what’s expected going forward. Of course, lengthy absences will require a more formal approach.

If the employee explains legitimate reasons, i.e. mental health-related issues, then the employer should use these meetings to offer support, whether it’s a leave of absence or a meeting with HR.

Occupational health assessments

In the UK, the Equality Act of 2010 changed the way employers are allowed to communicate with employees about absences – in order to prevent discrimination. This is where occupational health assessments came from.

These assessments are independent and objective, designed to make the employees’ lives easier at work, which should help reduce rates of unscheduled absenteeism. These types of assessments are also used to assess health concerns, issues and future goals for the employee.

If poor health is affecting someone’s work, these types of assessments can help both the employer and employee understand the most effective and moral way to overcome this issue.


Written by:

Dan’s a Senior Writer at Expert Market, specialising in digital marketing, web design, and photocopiers, amongst other topics.