An all too familiar scenario plays out in countless workplaces every day – the dreaded 6:00 AM text message from an employee saying they are unwell and won’t be able to work, and the panic to try and fill the shift with the least amount of disruption to the department as possible.  While an isolated incident is nothing to cause panic, repeated (and often systematic) absence can cause a major impact on an organization’s bottom-line result. 

According to HubSpot, the cost of absenteeism is somewhere between 7% – 8% of total payroll costs when direct wages and indirect costs are included.  In addition, the impact on operations, service levels, productivity, and increased workload for other staff can cause far-reaching and wide-ranging issues for Australian businesses. 


What is Employee Absenteeism?

Employee absenteeism is when an employee is away from the workplace for their scheduled shift. This may involve half days, whole days, or even up to weeks at a time.  An employee’s absence from the workplace impacts their team’s performance, ability to meet deadlines, productivity, engagement, and overall morale.  

When an employee misses work regularly it is bound to impact their personal performance including their quantity and quality of work, as well as their relationships with co-workers in the workplace.

Chronic absenteeism is when an employee is away from work for an extended period or when they are regularly taking time off work. This can often be an indicator of a heavy and unmanageable workload, a medical condition, lack of job commitment, job searching, or family circumstances. Most of the time an employee will state the reason for their absence is due to their health with the most common reasons being the flu, back pain, injury, and mental health.


Direct Cost of Employee Absenteeism

Employee absenteeism bears a significant cost to employers. Not only is there the cost of the employees’ wage for the absenteeism period, but employers may incur additional financial burdens when an employee is absent from work. Direct costs can include but not be limited to: 

  • Cost of wages paid to the absent employee;
  • Cost of the temporary cover of a casual worker i.e. a recruitment agency casual or a casual employee;
  • Cost of Overtime other employees may be required to work to replace lost hours.


Indirect Costs of Employee Absenteeism

The employer also carries the indirect costs to employee absenteeism which is hard to quantify in an exact dollar amount.  We can sometimes forget about these costs as we are consumed by the direct costs of absenteeism. 

Employers also need to remember that these costs are also carried by other employees in the business such as co-workers and managers of the employee that is on leave. Indirect costs can include but not be limited to: 

  • Reduced productivity and ability to meet deadlines;
  • Culture, engagement, and morale issues;
  • Burnout and exhaustion from other employees;
  • Increased workload to employee’s manager to deal with the absenteeism;
  • Safety issues if the replacement employee is not aware of how to work the equipment or if the team is rushing to complete work;
  • Reduced quality and quantity of work;
  • Work performance.


What are the Reasons that Employees are Absent From Work?

There are many reasons that employees are absent from work. When an employee is on unplanned leave, they may not be truthful in their reasons for being absent from work as they don’t want their boss to know the real reasons.

Typically unplanned leave is very last minute and gives the employer little time to make alternative arrangements. Typically planned leave comes with more notice, therefore, giving the employer more time to cover the employee’s role. Reasons for leave can include: 


Unplanned Leave

  • Personal or family member illness;
  • Family or personal emergency;
  • Disengagement in the workplace;
  • Burnout;
  • Conflict or grievance in the workplace;
  • Workplace stress or pressure;
  • Caring responsibilities – including for children and parents;
  • Lack of support and encouragement;
  • Job interviews;
  • Study commitments;
  • Compassionate reasons
  • Family Violence.


Planned Leave

  • Annual Leave;
  • Long Service Leave;
  • Rostered Days Off;
  • Jury Duty;
  • Maternity, Paternity or Adoption Leave;
  • Days in Lieu;
  • Public Holidays;
  • Office Shutdowns.


The Benefits of Measuring Absenteeism

Measuring absenteeism supports the health needs of the employees whilst highlighting any misuse of leave entitlements.  If you are feeling as though absenteeism is becoming an issue in your business, the best way to tackle this is by accurately measuring the absenteeism rate in your organisation. For example, many businesses include planned absenteeism in their rates such as Annual leave and RDOs, whilst other organisations only include unplanned leave such as Personal Leave, Lateness, Carer’s leave.  By accurately measuring leave, it will give your business a true indicator of how serious the problem really is.


Calculating Absenteeism

There are many ways to measure absenteeism rates for your business. A great example is to measure the absenteeism rate based on days: Absence hours/rostered hours * 100.  You can use this formula to measure a particular employee’s absenteeism rate, a department’s absenteeism rate, or even the whole organisation.  You may prefer to measure specific hours instead of days in which you would calculate: Number of hours lost due to absenteeism/ number to rostered hours * 100.  Recording this data monthly gives you the opportunity to reflect over a 12-month period and will highlight specific months of concern.


How can we Reduce Absenteeism in the Workplace?

  • Offer flexible workplace arrangements – if an employee is struggling to get to work on time or any a particular day can you offer flexible work arrangements to support the employee and minimize absenteeism;
  • Provide rewards and recognition – create a supportive and positive culture in which employees feel valued at work increasing their engagement;
  • Complete pulse surveys – complete monthly happiness surveys and complete quarterly or biannual pulse surveys to get an idea of how your employees are feeling and how engaged they are;
  • Talk to employees who take leave – when an employee takes leave have a supportive conversation with the employee and work with the employee to come up with productive solutions;
  • Find options that work for both parties – speak with your employees to find a solution that works for everyone i.e. instead of an employee working 9:00 am – 5:00 pm can they work 8:00 am – 4:00 pm or can the employee work from home;
  • Keep track of absenteeism – keep records of employee absenteeism to see if there are any trends that are worth talking to your employee about;
  • EAP service – Offer employees access to your EAP service.  If you don’t have an EAP service, offer employee services such as Lifeline and Beyond Blue;
  • Grievances – Resolve grievances in the workplace quickly to minimize the risk of grievances escalating;
  • Wellbeing initiatives – there is a very clear link between managing health and productivity. Offer initiatives to your employees such as gym discounts, healthy lunches, meditation classes, etc;
  • Communication – work together with your employees to keep absenteeism levels as low as possible.


Employee absenteeism is not something that can be eliminated from the workplace, however, with communication, support to your employees and positive working culture absenteeism can be significantly reduced to manageable levels. If you do identify that absenteeism is high in a particular department or your business, it is best to address this as soon as possible to mitigate the risk of the problem escalating.



About Employment Innovations

Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.



The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.