The cost of not paying for sick leave

As a business you have a choice to provide your employees with time off for illness known as sick leave. Businesses have the option of providing employees with paid or unpaid time off.This article will look at the costs of providing sick leave for employees then contrast it with the costs associated with not paying for sick leave.

Studies have found that in the United States approximately 56% of medium to large businesses provide paid sick leave for their employees. Of those businesses, additional information was gathered and provides an insight into the costs of providing such a benefit. The average number of annual paid sick leave days ranged from 11.2 days after one year of service and increased to 21.1 days after 25 years of service. The number of sick days used was broken down even further looking at the types of employees using sick leave. The average number of sick days used per year by a salaried exempt employee was found to be 3.8 days. Salaried nonexempt employees were found to use an average of 5.6 days. Non-union hourly employees used an average of 4.8 days and union hourly employees used and average of 5.6 days.

The monetary costs associated with sick leave were found to be approximately $0.19 per hour. This translates to about 0.9 percent of their total compensation per year.Let's look at an example:An employee that works hourly for $7 per hour and a total of 30 hours per week would make $810 per month or $10,080 per year.The total cost of sick leave to the company would total $90.72 per year. The company is paying out approximately 13 free hours per year.For a salaried employee of $70,000 a year the cost to the company would be $630.00 for the year. This is approximately $13 per hour compared to their figured hourly rate of $33.65 per hour. This cost is minimal to the company to keep employees productive, satisfied, and healthy.

Companies that do not provide paid sick leave see an increased number of employees that come in to work while still sick as they stress over the fact that they cannot afford to take days off without income. Those employees become less productive and effective. Companies without paid sick leave experience higher turnover rates which increases the costs of recruitment and training.

In addition to the ineffectiveness and less productive nature of employees companies where paid sick leave is not provided see an increased amount of employee absenteeism.This is due primarily to the fact that as employees come to work sick they bring with them germs and infectious and contagious conditions that can spread throughout the office. So now instead of one employee taking some time off to recuperate you could lose an entire staff to an outbreak of the flu. This not only hurts productivity but can also have a detrimental effect upon your sales and service departments. No one really wants to deal with someone that is sick. Sales can be lost.

For companies that are smaller, providing paid sick leave may cause an undue financial burden, especially when every dollar and cent is reinvested back into the business. However, if you have the financial means the benefits of providing paid sick leave to employees far outweighs the costs or risks of not. Your benefits again include lower turnover rates, a healthier staff, and increased productivity and effectiveness from employees.

Is it worth the time, effort and costs of dealing with continual turnover, absent employees due to illness and the unhealthy and stressful work environment that comes with not providing paid sick leave, especially for the average cost of $0.19 per hour per employee?