The cost of absence

Absence management is now a key business driver. Effective absence management has the potential to save money and create efficiencies. Unauthorised staff absences is now recognised as a wide scale problem that affects more than just payroll.

Calculations based on the CIPD Absence Management Survey 2014


Identify the true cost

The direct costs of absence may be relatively easy to calculate. The indirect costs however are more difficult to identify and quantify. Below are examples of direct and indirect cost that should be considered when determining the cost of absence.

Direct Costs

  • Employee salary/sick pay
  • Employer’s NI contribution
  • Employer’s pension contributions
  • Bonus payments
  • Contracted overtime
  • Employee benefits
  • Holiday entitlements

Indirect Costs 

  • Replacement costs
  • Loss of earnings
  • Reduced effectiveness of replacement
  • Office overheads
  • Supervision for replacement
  • Staff morale
  • Impacts on client relationships