The Hidden Costs of Sick Days: A Closer Look at the Financial Impact on Businesses

Sick days are an inevitable part of the workplace, but their financial implications often go unnoticed. When employees call in sick, businesses not only lose their valuable contributions but also incur significant costs to cover their absence. In this blog, we’ll delve into the hidden costs of sick days, using the example of five staff members taking five days off, and explore why addressing this issue is crucial for businesses.

A significant percentage of them are attributed to mental health issues? In fact, studies show that approximately 46% of all sick days are related to mental health concerns such as stress, anxiety, and depression. Addressing these issues not only requires a compassionate approach but also presents an opportunity for businesses to mitigate costs and foster a healthier work environment.

Understanding the Costs

Let’s break down the costs using a hypothetical scenario: a company with five employees earning £12 per hour, working ten hours a day. If each employee takes five sick days, the cost to the company can quickly add up.

1. Lost Productivity: When employees are absent, their work remains unfinished, leading to decreased productivity. With five employees missing five days each, the company loses a total of 200 hours of work.
2. Wages Paid for Absenteeism: While employees are absent, businesses are still obligated to pay them. At £12 per hour, the company incurs costs equivalent to two times the employees’ daily wages for each sick day.
3. Overtime and Temporary Staff: To compensate for the absent employees’ workload, businesses may need to hire temporary staff or ask existing employees to work overtime. These additional expenses further contribute to the financial burden.
4. Reduced Efficiency and Quality: The remaining employees may struggle to maintain the same level of efficiency and quality of work when covering for their absent colleagues. This can lead to errors, delays, and rework, impacting the company’s bottom line.

Calculating the Costs

Now, let’s do the math. With five employees each taking five sick days, the company incurs costs equivalent to 2 times the daily wage per employee for each day of absence. Considering an average of £12 per hour, the total cost per sick day per employee is £240.

For five employees taking five sick days each, the total cost to the company can be calculated as follows:
Total Cost = (10hours x £12)x2 x 5 days x 5 employees
Total Cost = £240 x 5 days x 5 employees
Total Cost = £6,000

That’s an average of £36’000 for a company of 30 members of staff with the same stats as above, and £120’000 for 100!

As demonstrated, the financial impact of sick days on businesses can be substantial, extending far beyond the immediate wage costs. Therefore, it’s essential for businesses to address the root causes of absenteeism and invest in proactive measures to support employee health and wellbeing.

To address mental health-related absenteeism, and other avoidable reasons, businesses can consider proactive measures such as implementing a wellbeing agency. By partnering with a wellbeing agency like Stoic Wellbeing, companies can provide their employees with access to resources, support, and guidance to manage their mental health effectively.

Wellbeing agencies offer a range of services, including mental health workshops, conversation spaces, and mindfulness training, designed to empower employees to prioritise their mental and physical wellbeing. By investing in such initiatives, businesses can reduce the frequency of sick days, improve employee morale, and create a supportive work environment.