5 Ways Employee Absences Cost Businesses Money

Posted on

February 2nd, 2021


Employee absences are an unavoidable aspect of running a company. While employees rate vacation time, sick leave, and paid time off (PTO), these absences have direct and indirect costs. Businesses need to account for these costs when planning their budget, but absence-related expenses can be difficult to calculate. The following breaks down the most common costs associated with employee absences:

  1. Payroll. When employees take time off for vacation, illness, bereavement, and so on, they still pull a paycheck. While employers calculate their employees’ salaries into their budget, they may not account for the loss of work while employees use their paid leave.
  2. Overtime. When employees take time off, particularly if there is little notice, other employees may have to work overtime to bridge the labor gap. For non-exempt employees, businesses pay time and a half the employee’s hourly rate for every hour worked over 40 hours.
  3. Temporary workers. When businesses want to avoid overworking existing employees and the associated cost of overtime, they may use temporary workers to cover absent employee’s duties. These part-time temp workers may cost less than paying overtime, but it’s an expense that affects a business’s bottom line.
  4. Loss of productivity. Whether a business opts to pay existing employees overtime or rely on temporary workers, productivity often decreases. Coworkers aren’t as familiar with the absent employee’s job, which typically means it takes longer to complete. It also stresses employees who have to take on the additional work on top of their existing job, which can lead to burnout. While temporary workers don’t have the burden of juggling two jobs, they’re unlikely to know the minutiae of the work. Their unfamiliarity slows productivity.
  5. Unplanned absences. While some leave is easy to plan for, such as vacation time, emergencies and life situations can force employees to take leave with little notice. The hidden costs of repetitive unplanned absences are numerous. They can hurt morale, stress the remaining staff, lower work quality, disrupt projects, and more.

While some employee absences are unavoidable, businesses need to know the associated costs. Without a robust absence management system, it’s easy to miss attendance problems and absenteeism. Contact the experts at Actec to learn how our absence tracking mobile app can improve absence reporting and management for your business.