Employee Time Off Does Cost You

We all know that the cost of training new hires and recruiting new employees is more than just paying new salaries and recruiting fees. However, did you know that your basic employee absence carries a significant cost?

According to a new study by Mercer, the cost of an employee absence averages about 36 percent of base payroll. Mercer surveyed over 450 organizations. It found that direct costs (such as pay provided to an employee for time not worked) and indirect costs (such as replacement labor costs and lost time) of employee absence run almost 36% of base payroll, the majority of which(26.6 percent) are attributed to “planned” absences like vacations. However, “unplanned incidental” absences (like sick days) amount to 6% of payroll.

The study suggests that employer can reduce these costs by having sound benefits and attendance policies; effect absence management and administration; and identifying the underlying causes of employee absence.