The Impact of Absenteeism:

Absenteeism can negatively impact both employees and employers. The employer runs the risk of lost productivity and labor costs, ultimately affecting the business's bottom line. Additionally, excessive absenteeism contributes to employee turnover, resulting in increased labor and hiring costs when replacement employees need to be brought on board.

If an employee is frequently absent from work, they may not be paid for those days off. In many cases, employees have also been laid off due to habitual absenteeism or faced disciplinary action. This could also impact an employee's chances of obtaining new work.

Types of Absenteeism:

1. Excused absence.

An excused absence refers to when an employee schedules time off in advance with permission from the employer. Most businesses have policies in place that make provision for paid leave under approved circumstances. In most cases, proof of leave comes in the form of a jury duty notice, a doctor’s note, or an obituary.

Approved circumstances generally include the conditions listed in the Family and Medical Leave Act (FMLA). However, it's important to note that while each state has its own regulations, employers are not mandated to provide paid leave.

Common excused absences:

  • Jury duty.
  • Vacation leave.
  • Attendance of a funeral.
  • The birth and care of an employee's newborn, adopted, or foster child.
  • To care for a spouse, child, or parent that has a serious health condition.
  • Medical leave if an employee is sick or has to go for surgery.
  • Emergencies related to a family member’s active military duty.

2. Chronic absence.

Chronic absenteeism refers to when an employee is absent from work on a regular basis without permission from the employer. Chronic absenteeism could start with employees taking regular sick leave, coming late to work often, leaving work early, or taking long breaks.

Chronic absenteeism is considered a violation of an employee’s contract and could result in job suspension or termination. Therefore, it's important that business managers understand the impacts and causes of absenteeism. This will help identify problem areas or provide support to their employees.

Common Reasons for Absenteeism:

  • Harassment.
  • Heavy workload.
  • Chronic illness.
  • Stress.
  • Lack of motivation.
  • Personal issues.
  • Depression.
  • Burnout.
  • Family care.
  • Illness or injuries.

Cost of Absenteeism:

According to a survey conducted by the Gallup-Sharecare Well-Being Index, the total annual costs related to lost productivity due to chronic absenteeism totaled $84 billion. This proves that businesses have a lot to lose when battling chronic absenteeism. Therefore, you need to be able to measure the costs of employee absenteeism in order to gauge the overall impact.

When calculating the costs of absenteeism at your business, you have to look at the direct and indirect costs.

  • Your direct costs are the easiest to calculate and track, as these refer to paid-time-off, accounting for wages or salaries, overtime costs, and if applicable, replacement hiring costs.

  • Your indirect costs refers to the larger impact of absenteeism. For example, the cost of delayed work, lost productivity, and low team morale.

Measuring the Costs of Absenteeism:

There are three common methods of measuring absenteeism:

1. Incidence rate.

The incidence rate measures the number of absences per 100 employees during any given work period. This calculation does not measure the duration of an employee's absence. The formula for the incidence rate is:

Number of incidents of absence x 100 / Number of employees = Total costs.

For example, if a business has 2,500 employees and 150 incidences of absenteeism in one month, the incident rate will be 6%.

2. Inactivity rate.

This option measures the percentage of time that is lost due to absenteeism. The formula for inactivity rate is:

Total hours of absence x 100 / Total hours scheduled to work = Total costs.

For example, your business has 2,500 employees scheduled to work eight hours per day during a 20-day work month. This totals 400,000 work hours scheduled for the month. If the total employee absences during a month equal to 5 days (100,000 work hours lost), the monthly inactivity rate will be 25%.

3. Severity rate.

The severity rate measures the average time lost per absent employee during a specified time period. The formula for the severity rate is:

Average number of hours lost by absent employees x 100 / Average number of hours typically worked by absent employees = Total costs.

For example, if 50 employees lost 1,000 hours during a month due to chronic absenteeism, they averaged 20 hours lost per absent employee. If each of them was scheduled to work 20 days of eight-hour shifts during the month, they averaged 160 hours of time normally worked. The severity rate will total to 12.5%.

NOTE: Absenteeism rates can be determined by department, shift, location, type of employee, and other factors. In addition, calculations can be made on a weekly, monthly, quarterly, semiannual, seasonal, or annual basis.

How to Deal With Absenteeism Issues:

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A step-by-step guide on reducing absenteeism in the workplace.


Create an official employee attendance policy.


Outline your policy inclusions and exclusions.

Outline your policy inclusions and exclusions.

Your employee attendance policy should detail how various scenarios such as tardiness, chronic absenteeism, scheduled absences, unscheduled absences, and tardiness will be managed. An attendance policy should mainly include an overview of the policy, calculation of attendance infractions, an overview of disciplinary action, and a detailed list of excused absences.


Decide which issues require disciplinary action.

Decide which issues require disciplinary action.

Start by listing the different attendance issues, then decide any necessary disciplinary steps for each scenario. Your policy should be clear and concise, leaving no room for misinterpretation. Avoid overcomplicating the policy by only focusing on what each type of absence means to the employer and employee.


Make sure your policy complies employment laws.

Make sure your policy complies employment laws.

Laws to consider when creating your policy include:

  • Wage and hour laws.
  • Paid sick leave laws.
  • Family and medical leave laws.
  • Military leave laws.
  • Workers' compensation laws.
  • Disability discrimination laws.
  • Unemployment compensation.
  • Equal employment opportunity laws.

Enforce your policy.

Enforce your policy.

Consistently enforce your attendance policy. While it may depend on when you introduce your attendance policy, it's important to enforce your attendance policy consistently, including every time an employee violates the policy. This way, employees will get the message that this type of absenteeism is not tolerated and against company policy.


Show empathy and compromise in certain situations.

Show empathy and compromise in certain situations.

Continue to show empathy or your willingness to compromise in emergency situations. Try to grow from these situations by adding them to your policy. However, be sure to track how many times each employee uses these emergency excuses and determine how many times you're willing to overlook absenteeism.


Reducing absenteeism with when a policy has been established.


Keep track of employee absenteeism.

Keep track of employee absenteeism.

When dealing with employee absenteeism, ensuring you have verifiable records of an employee's actions is of utmost importance. Generally, businesses opt for the time clock solution, which allows you to track employees clock in and clock out times. This option helps remove any room for manual error as employees are responsible for ensuring they clock-in and clock-out on time.

Make a note of every time an absence occurs. You can either do this on your time tracking app or create a spreadsheet with each employee's schedule. Whatever strategy you choose to use, ensure your tracking system works well for you and any other supervisor that might need to enforce the attendance policy.

Look for patterns. An employee showing up late for work or taking long breaks once or twice may not be an issue you need to address. However, you need to stay on the lookout for patterns. For instance, an employee that continuously calls in sick the Monday after pay weekend can be seen as a pattern. In these scenarios, it's wise to set a limit. If you let an employee off the hook just once, the second or third time can be seen as a violation.


Immediately address unplanned absenteeism.

Immediately address unplanned absenteeism.

Your business will naturally experience unplanned and planned absenteeism. However, if you start noticing a pattern, address the issue before it becomes a regular occurrence. Avoid letting too much time or another unplanned absence pass before you approach the employee with records.

Sit down and discuss the frequent absences with your employee. Depending on your attendance policy, this meeting could be seen as a formal or informal conversation. During this meeting, ask what happened, provide proof, and discuss what’s expected of them moving forward. If their actions warrant disciplinary action, make this known to the employee.


Identify the root cause.

Identify the root cause.

While discussing frequent absences with your employee, try to address the underlining cause. This process can reveal there are other things outside of work affecting your employee’s attendance and leading to excessive absences. For instance, there may be roadworks that affect traveling time in the morning or your employee may have recently moved further away from work.

Address the issues in your control. If you've identified that your employee is under a lot of stress, facing workplace harassment, or is close to burnout, discuss how both of you can resolve these issues. You could start by creating a performance improvement plan, updating employee availability forms, or readjusting employees' schedules where possible.

Disciplinary Action:

The type of disciplinary action you enforce will largely depend on the severity and nature of the absenteeism. For instance, employees who inform management about their frequent absences may require minimal disciplinary action, depending on their reasons. However, if you're dealing with an employee that's consistently absent without cause, you may need to resort to more severe disciplinary action.

Create a disciplinary policy. Your disciplinary policy is an official document that details how an employer will respond to problems with employee performance or behavior. The policy should include an overview, a section of at-will employment, a description of each disciplinary step, and the right to appeal.

Common disciplinary action steps include:

  1. A verbal warning.
  2. Formal written warning in the form of an official employee write up form.
  3. Formal disciplinary meeting.
  4. Suspension or loss of privileges.
  5. Termination. This can be in the form of an official employee termination letter.


What is absenteeism in the workplace?

Absenteeism in the workplace refers to when an employee is habitually absent from work without a valid reason.

What are the main causes of absenteeism?

  • Harassment.
  • Chronic illness.
  • Lack of motivation.
  • Burnout.
  • Family care.
  • Illness or injuries.

What are the effects of absenteeism?

Chronic absenteeism in the workplace can negatively impact team morale, productivity, and company costs.

How can we reduce absenteeism?

How you reduce absenteeism depends on how you manage and measure absenteeism in the workplace. Once these metrics are clear, you can start by introducing performance improvement plans, conducting performance reviews, establishing a clear employee attendance policy, and creating incentive plans.

How do you terminate an employee for absenteeism?

  • Make sure you keep records of the employees' absenteeism.
  • Follow the disciplinary action steps listed in your disciplinary policy.
  • Issue an official employee termination letter.

What are the different types of absenteeism?

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