Employee Absenteeism: Main Causes and Cost to Businesses

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.

As we saw a rise in what’s known as “quiet quitting,” many wanted to know how to retain staff during a recession.

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. 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. 51% of employees feel disconnected from, or unstimulated by, their work are more likely to avoid going into the office.
• 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. For US businesses, elderly care costs $25 billion yearly and childcare absence $3 billion. In the UK, elderly care costs businesses £20 billion per year.

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?

They’re quite enormous. As mentioned, in the US general illness’ costs hundreds of billions every year. Common chronic illness’ such as high blood pressure, diabetes, smoking, physical inactivity, and obesity cost $36.4 billion.

In the UK, illness accounts for £18.8 billion of losses to the country. This is split by ill health costing £11.2 billion, while injuries make up £7.6 billion.

We look at some of the other cost figures of absenteeism below.

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. It’s estimated that this has costed UK businesses around £8 billion annually.

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 and Environmental 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.

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. Workplace stress has been reported as costing US businesses around $500 billion every year, and 550 million lost workdays.

Additionally, 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 or disengaged employees and, consequently, high absenteeism.

Disengagement alone amounts to a huge loss for businesses – estimated to be up to $500 billion in the US, and £340 billion in the UK. It’s been calculated that on average a disengaged employee costs a fifth of their salary to the business they work for.

Another common reason for workplace absence is bullying and harassment which leads to 18.9 million lost working days each year in the UK alone, costing more than £18 billion. For US businesses, it’s estimated around $64 billion annually, and $100,000 per year per victim.

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.

Employee Absence Study

We spoke to 50 North American and European businesses about their employee absence in December 2022/January 2023. They told us the main reasons for their employee absence, whether it had increased after the pandemic, and what initiatives they were doing to support those employees.

Here are the findings on the main reasons for employee absence –

While pandemic restrictions may be no more, COVID and long COVID (56%) are still affecting a great number of employees and causing them to miss work or have extended periods of leave to recover. Some of these absences are also related to having to care for family members, often children, who have caught COVID. General sickness – such as colds and flus – are also a contributing factor, although this is generally expected during the winter season.

The second most stated reason is workplace stress/burnout (40%). After pandemic restrictions were lifted, a number of companies noted that their employees found it difficult to return to normal working routine. This can be due to having to commute again as well as having increased workloads since the pandemic. We’ve split workplace stress/burnout from general mental health related issues, as a number of the respondents (26%) specifically stated that mental health issues, including anxiety and depression, had increased since the pandemic.

“Our company/department/team has seen the most absence days due to COVID-related illness, including long COVID. This is expected to increase in the short term as infection rates continue to rise and more individuals become affected by the virus.

We are also seeing an increase in mental health issues and workplace stress/burnout-related absences due to the impacts of the pandemic on work dynamics, remote working, and job security. We have taken measures to address this including providing access to mental health resources and implementing flexible hours where possible.” Greven Carl Manuel – Fash Match

‘Other reasons’ was stated by 36% of the businesses, with the most recurring reason being ‘Family care’ by just over a quarter. This can be due to more flexible working conditions that have allowed employees to take on additional care duties, especially for illness such as long COVID.

More or Less Since the Pandemic?

For the companies that responded to whether there’s been more or less absences since the pandemic (27/50), this was evenly split :

Much of the ‘more’ responses were in relation to those suffering with, or caring for, those with COVID/long COVID. Many of the companies stated that with the introduction of flexible working and work from home initiatives during the pandemic, it helped decrease absenteeism as people were still able to work if able to.

“Our data does not show an increase in days lost to long term sickness absence. It has remained stable. This does not mean there has been less illness, but as our approach to absence management gets better, the pandemic resulted in us improving our Health & Wellbeing processes and how we support employees through times of ill health. 

We take a hands-on approach to supporting employees who are experiencing ill health at MVF. We have a role of Health and Wellbeing Partner which, aside from owning MVF’s Be Well proposition, is also responsible for providing 1:1 support to our most seriously unwell employees working with them on bespoke wellbeing plans and we seek the guidance of Occupational Health. Wellbeing plans include access to supportive benefits provided by MVF as part of the health and wellbeing strategy. 

Our Be Well programme includes a range of proactive and preventative tools for employees to engage with to support their health and wellbeing but we also provide a number of benefits that are there to give financial security when employees need it most.”  Andy Mulder – Head of People MVF Global

New Initiatives

We also asked what new initiatives companies had introduced in order to help their employees with short or long term absences. Here’s what the companies that responded (43/50) stated:

The most mentioned initiative to aid absent employees has been implementing flexible/remote working (48%). It’s unsurprising that this has been the most popular. According to our Workplace Communications study, flexible/remote work has been a great aid to employees’ lifestyles aiding work output, wellbeing, and a better work/life balance. Empowering employees to work from wherever they like means that many of them are more comfortable to do some work while absent or in recovery from an illness. Removing the stress and fatigue of having to commute in and out of an office also helps employees recover faster.

The companies we spoke to also expressed mental health/wellness programs (34%) being a key way to aid absent employees. The conditions resulting from the COVID pandemic took a toll on mental health, so it’s encouraging to see companies focus on improving the mental wellbeing of employees. Other initiatives that support mental health include mental health days (7%) and employee surveys (2%). 

Another key way was paid leave/support (34%) for employees. Helping employees financially when absent or unwell also helps ease stress and improve mental wellbeing. A few companies also found that additional training and education (9%) – around managing stress and mental health – as well as supplying new tech (5%) assisted employees with their absence.

“We have seen an increase in mental health issues, workplace stress/burnout, and adult/childcare-related absences. We have implemented several strategies to help support our employees through prolonged absence periods including flexible/remote work arrangements, and vacation time accommodations. 

Our Employee Assistance Program provides counselling services and other resources to ensure our employees can access the support they need. Additionally, we have implemented a number of initiatives to reduce workplace stress and burnout, such as wellness days and educational sessions on managing stress.” Ryan Bolling CEO of Bolling Behavioral Consulting

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 software 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.

Reducing the Impact of Absenteeism on Business

Unavoidable absences are often just that – unavoidable. But achieving a reduced rate of absence is done through the proper knowledge and understanding of why these absences occur. Having a way to track ongoing work through a project management software, which can help visualise productivity rates, work goals, and KPIs with the use of Gantt charts, timelines, etc, can be useful.

They’re able to pinpoint what being worked on by certain employees, how far along a project might be, and when it’s due for, which helps things like scheduling, time management, and resource allocation. With this knowledge, it’s possible for businesses to see how they can work towards a suitable strategy that works best for them. 

So, following that, the question remains: What are some of the key ways to help businesses reduce the impact of absenteeism?

Here are six ways to reduce the impact:

Clear Attendance Policy

Having a clear attendance policy is a fundamental part of a business. Making sure all employees have a good understanding of when they need to turn up, how to report absences (and explain them) using best practices, and what procedures are in place to ensure these policies are adhered to, are all things that set the standard. Additionally, ensuring consequences in regards to contempt for attendance are dealt with promptly helps to establish consistency. 

Understanding the Problem

Understanding why an employee is absent for any reason is essential. After all, you can’t provide a solution if you don’t understand the problem. By finding any common underlying causes, such as burnout, stress, low engagement and job satisfaction levels, or simply a lack of communication, you can begin to work on a way to best address these issues. 

Rewarding Good Attendance

Of course, it’s not all about consequences. Giving employees an incentive to want to come to work via small reward schemes can be a great way to boost morale, and to see an increase in an improved work-life culture and teamwork. 

Training and Development

Providing opportunities for personal growth and development is a core motivation for employees. If an employee feels their own personal growth is supported, they’re more likely to stick around and upskill in an environment that encourages it, which creates better equipped and multi-talented employees in the process.

Wellness Programs

In a similarly supporting vein, wellness programs work to tackle some of the issues surrounding mental wellbeing. As mentioned previously, stress, burnout, bullying, and mental health days are some of the key factors that can impact absenteeism. Implementing wellness programs helps take better care of staff, and leads to increased productivity levels in the office. Additionally, it increases trust in the business, as it shows the needs and worries of their employees are being listened to.

Communication

Naturally, none of the above can be achieved without good communication. It’s crucial for managers to clearly stipulate business policy and what employees are entitled to in terms of sick days, holiday, etc, and to provide somewhere this information can be easily found in the workplace.