Small-Medium Business (SME)

Can Sick Employees In-Office Cost You Money?

Which has a greater adverse impact on your company's bottom line–employee sick absenteeism or presenteeism? We weigh the costs of both to find out.

Even the healthiest employees can fall victim to a bug from time-to-time. For employees with paid sick leave, this means spending a day or two snuggled up under the duvet at home, recuperating back to full health–without financial worries. For employers, however, productivity loss due to employee sickness absenteeism can prove to be a significant financial burden. Nonetheless, it's worth noting that "presenteeism," the practice of your employee coming into work despite sickness, may also impact your business's bottom line. This article compares the costs of employees staying home versus coming into work when they're sick to determine which is more damaging to your business.

Employee Absence Leads to Lost Productivity

Unfortunately, employers bear the burden of paying for their employees' full sick days. According to Data.gov.sg, an average employee in Singapore takes 3 days of outpatient sick leave annually. Given that the average hourly rate in Singapore is S$49/hour, just a day's sick leave (8hrs) can cost you S$392. Accordingly, the annual cost of paying for an employee’s sick leave is S$1,176, which is nearly 1/5 of an average employee’s monthly take-home pay. In addition to the sick pay, you also need to factor in the associated medical claim costs. According to a 2017 report by Mercer, an average employee's medical expenses can set your company back by S$946 annually, driving your total annual absenteeism costs up to S$2,122 for one sick employee. Costs scale proportionally to the number of employees within the company.

Table on the Total Costs of Absenteeism by Company Size

Having a sick employee out of office also puts extra pressure on the other members of the office and can lead to them having to put in overtime work. This then entitles them to overtime pay, which is 1.5 times their hourly basic rate. This can also lead to the possibility of paying additional HR costs, as the department will be responsible for finding a temporary replacement for the day or working with the relevant departmental manager to reassign existing employees to cover the load. The impact of sick absenteeism can also extend beyond calculable financial implications. Over time, this constant reshuffling of work priorities can adversely affect morale, productivity, and employee engagement in the office.

Presenteeism and Its Many Hidden Costs

Many Singaporeans are hard workers, which has led to the increasing perception of presenteeism as a display of positive conduct and commendable work attitude–by both employers and employees. Unfortunately, compared to sick absenteeism, the adverse impact of presenteeism on productivity and profitability is even more severe. Without adequate rest and leave, employees may suffer from prolonged periods of ill health. Not to mention, they could also be contagious and spread their illness to colleagues.

Sick employees at work can spread their illness to others

Worryingly, according to research by Virgin Pulse, presenteeism can lead to 57.5 "lost days" where employees are not working at full productivity–compared to 3 days off, on average, to absenteeism. In fact, research conducted by the Duke-NUS Medical School in Singapore found that presenteeism can cost employers S$12.1 billion per year.

A Healthy Working Environment Is a Productive One

Ultimately, as an employer, it's crucial to acknowledge that presenteeism is a severe problem that affects your bottom line–perhaps more so than sick absenteeism. To reverse this damaging presenteeism culture, employers may want to focus on the delivery of results, instead of prioritising face-time. It’s imperative to have regular, open conversations with employees and debunk any perceptions that sick leave shouldn’t be taken. In addition to having open discussions, offering flexible work hours or remote working possibilities can encourage staff to pursue the work styles and hours best fit to them in times of need. In fact, research shows that shortening the work day can actually boost productivity overall. Ultimately, a healthy workforce is a productive–and profitable–one.

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