How Much is Employee Absenteeism Affecting Your Bottom Line?

It’s only natural that employees take some days off during a year. They use their leave when possible and have a sick day every now and again – it’s the fact of life. This is expected by employers and is not typically an issue. However, when employees start to take additional time off or show up below their best, the impact on business performance becomes far more apparent.

Not only do these employees get less work done, but they also impact those around them, reducing morale and impacting the business’s bottom line. Employee absenteeism is likely an underappreciated cost to businesses, yet it can be just as important as revenue in many instances. There is a general lack of understanding of absenteeism and how to track the impact it actually has – let’s explore it in some more detail.

How much does employee absenteeism cost employers?

A lot! According to the Australian HR Institute (AHRI), employees take 8.8 unscheduled days off per year. The cost works out to be, on average, $578 per employee per day. Adding it all up equates to a cost to the Aussie economy of at least $44 billion

This cost can be broken down into a few factors, the main ones being:

  • Wages paid to employees or paying other staff to cover their shift.
  • Administration costs associated with managing absenteeism.
  • Reduced levels of customer service.
  • Impacts to revenue and a reduction in the quality of goods and services.
  • Safety problems linked to filling in and shortcuts to ‘catch up.’
  • The impact of poor morale associated with covering for coworkers.

How often does absenteeism occur?

International research suggests that in the average casual workplace, unscheduled absenteeism occurs in between 5% to 10% of the workforce at any one time. That is, that rate of the workforce is missing on that day – the rate changes depending on the industry, with more stressful sectors suffering from higher absenteeism, understandably.

While 80% of Australian employers believe absentee levels can be reduced, only 79% actually record the cost. However, using averages as a guide, a business with 50 hourly employees taking 8.8 unscheduled days off per year at the expense of $578 each equated to up to $254,000!

How to minimise the cost of employee absenteeism

Absenteeism clearly costs employers money. However, it also costs employees money too (especially those shift workers). If employees cannot reconcile their absence to their paycheck, it’s much easier to avoid working. Show your employees in real-time what they are missing out on.

Earned Wage Access (EWA) allows employees to access their earned pay at any point in the pay cycle without having to wait until their next payday. Paytime gives employees real-time access to their earned wages through a convenient mobile app. It’s easily worked into your existing payroll system, avoiding any disruption to your usual processes. 

When an employee wants to access some of their earned income, they will be charged a small, fixed fee (less than the cost of a cup of coffee), and Paytime will deduct the amount from their next paycheck. Because one is accessing their earned wages, it is not a loan, there is no repayments required, and there’s no interest to be paid. Employees are incentivised to increase their attendance, by knowing that they can access their wages straight after completing a shift instead of waiting until the next payday!

If your company wants to reduce the costs of employee absenteeism, contact Paytime today to arrange a free consultation.