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• The Cost of Sickness Absence
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“Firstly, thank you very much for your help so far, Alasdair has been extremely accommodating in turning round our requests extremely quickly.”
HR Director, International Charity

The Cost of Sickness Absence

Occupational health is a medical discipline that concentrates on the relationship between health and work, and how one affects the other. In short, it is about identifying and managing the health risks and issues affecting your employees, so your business is affected as little as possible. Occupational health schemes are ideal for any organisation interested in reducing business interruption through illness, as well as keeping costs under control.

An occupational health provider focuses on reducing the cost of absence caused by ill health, stress, mental health problems and workplace injuries. According to the Confederation of British Industry more than £11 billion is lost to UK business each year through employee sickness. Research by The Chartered Institute of Personnel and Development shows that on average sickness absence costs businesses £567 per employee per year. The appropriate management of occupational health issues within your organisation can lead to savings many times greater than the modest investment needed to achieve this.

The national average is about 3% or 7 days lost per employee per year. Below is a simple table to help you calculate your cost of absence. This assumes that there are 230 working days and that the cost of a lost day is £82 (equivalent to a salary of £19,000).

 

Average days lost per employee per annum		Number of employees within the organisation
		50	200	1000	5000
2%	5 days	£18,860	£75,440	£377,200	£1,886,000
2.5%	6 days	£23,575	£94,300	£471,500	£2,357,500
3%	7 days	£28,290	£113,160	£565,800	£2,829,000
3.5%	8 days	£33,005	£132,020	£660,100	£3,300,500
4%	9 days	£37,720	£150,880	£754,400	£3,772,000

By using a professional occupational health service such as ours an organisation can:

• Reduce the cost of staff absence and sickness (both direct and indirect costs)
• Gain a positive return on investment
• Give staff a professional approach to managing sickness and absence
• Help managers handle employee sickness issues they might not be comfortable with, or qualified to deal with
• Reduce staff turnover by improving retention
• Comply with Health & Safety legislation and the Disability Discrimination Act
• See real rewards for the organisation’s investment in personnel management
• Boost staff morale through effective management of malingerers

Working Days Lost

Days lost through absence will vary depending on a range of factors, such as size of your organisation and type of work carried out. The following table illustrates the variation of median days lost across sectors.

These median rates tend to increase by 1-2 days per year as the size of a business increases. For example, a business with over 5,000 employee have a median number of days lost as high as 9.6 days per year.

Medium and Long Term Absence

Although instances of long term absence are less frequent (about 5% of absence cases), they account for a significant part of lost working time. We would expect that at least 30% of lost days are attributable to medium and long term absence, ie. greater than four weeks.

The longer a patient is away from work, the less likely they are to return. 60% of employees who are off work due to illness for more than five weeks will not return to work. It is particularly in the area of medium and long term absence, where an occupational health service can help you make a big difference.

A proactive occupational health service

Ill health is not the only cause of absence, but an effective occupational health service can provide you with an important control in your management of sickness absence.

The best performing companies achieve rates as low as 3.0 lost days (for non manual) or 5.0 lost days (for manual), and these are usuall achieved by using a combination of:

• Training of line management
• Effective monitoring and identification
• Timely and relevant clinical service

Health Management supports business in each of these three areas in order to provide you with a cost effective and tailored approach to reducing your sickness absence rates.

Further information

The Health and Safety Executive provide an on line calculator of the costs of ill health at work. This takes into account your own absence rates (if known), staff turnover, industry sector etc and provides you with an estimated total cost of absence. Their web site is also a useful source for information on other illness and accident studies.

Their website can be accessed by clicking on the following link: www.hse.gov.uk/costs/

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