Managing employee absenteeism: the importance of prioritising employee well-being and the cost of ignoring it

June 14, 2023

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Last year, Sedgwick acquired Direct Health Solutions (DHS), a leading specialist provider of employer-based telehealth solutions in Australia. In this blog, we are joined by Karen Samuel, acting general manager, DHS who weighs in on the importance of prioritising employee well-being and the cost of ignoring it.

In light of the recent pandemic and increased emphasis on employee well-being and mental health in the workplace, there has been a shift in the way companies manage employee absenteeism. With the rise in popularity of remote and hybrid work environments, telehealth services have emerged as a critical tool to support organisations in managing absence and improving the mental and physical well-being of all employees.

Prioritising employee mental and physical well-being not only reduces an organisation’s overall absence rate — it also helps avoid the associated costs of absenteeism.

Why it matters

Managing employee absenteeism should be a priority for any company as it plays a major role in maintaining a productive organisation. Studies have shown the happier an employee is, the more likely they will be able to perform at their best both professionally and personally.

Workforce absenteeism is costing businesses billions and, left unchecked, it can have adverse impacts across a business. It can also signal wider problems, such as workplace health and safety, culture, or stress and mental health issues, to name a few.

When it comes to managing employee absenteeism, the centralisation of absence-related data, effective monitoring and tracking of issues, and the delivery of on-demand employee health support will provide human resource departments with more clarity and control over their workforce.

An employee absenteeism study

Direct Health Solutions (DHS), a Sedgwick business, is a leading specialist provider of employer-based telehealth solutions and absence and injury management programs in Australia. As one of the largest tele-triage organisations in the country, DHS averages more than 500,000 absence and injury calls per year and has a dedicated 24/7 telehealth centre driving their absence management programs.

DHS undertakes an annual employee absence management and well-being survey to provide benchmark data and key trends for employers to use when managing employee absenteeism in Australia. In the newly released 12th edition of this report, absenteeism levels were recorded from 1 January 2022 to 31 December 2022 using data provided by 132 companies across Australia who collectively employ over half a million employees. Respondents were asked to provide data based on all unplanned absenteeism, including personal leave, workers’ compensation leave and unauthorised leave, both paid and unpaid.

What the data says

According to the data collected from this survey, overall employee absenteeism increased by just over two and a half days (23%) from 2019 — employees took an average of 13.8 days’ sick leave in 2022. Of the companies who took part in the survey, 58% believed their absenteeism increased over the 12-month period.

Most common reasons for absenteeism

According to the survey results, the three most common reasons for employee absence were carer’s leave, coronavirus-related leave and non-genuine sick leave, or ‘chucking a sickie’.

Given the period in which the survey was conducted, it is no surprise to see that COVID-19 had a significant impact on employee absence. COVID led to increased periods of leave throughout 2022, as Australian’s contracted the disease, and took time away from work either while they were sick or supporting family members. Some organisations had an absence rate at 20% or higher during COVID’s peak in January 2022. Overall, 80% of employers indicated that COVID-19 led to increased absences in 2022.

In addition, public health initiatives led to increased awareness of staying home when sick to stop the spread. This could lead to employees being more likely to take a day off for genuine short-term illnesses such as colds, flus, and infections.

The high number of COVID-related absences, combined with the increased public health awareness, also drives an increase in the amount of carer’s leave taken, an assumption being employees may have taken carer’s leave to care for a family member suffering from COVID-19, or alternatively schools and day-care centres are insisting that sick kids remain home when unwell. This further drives an increase in carer’s leave in 2022.

Non-genuine sick leave was reported by 43% of employers as having increased in 2022. True non-genuine leave is primarily driven by low motivation in the employee and may be increased by low resilience and poor coping and planning skills in the employee. If managers can find out the underlying cause for the time off, or the factors that are leading to low motivation, they are in a good position to support employees and improve the attendance.

Mental health concerns are also driving an increase in personal leave. 57% of employers reported that absences due to mental health issues have increased over the last 12 months, with the top three drivers being workload, non-work factors, and personal illness. The ADP People at Work Survey found one in five Australians (21%) have taken time off in the last 12 months due to poor mental health, and this number rose to 46% for those employees who considered their workplace mentally unhealthy. The most common cause of stress cited in that report was increased responsibility since the pandemic, and longer working hours.1 The State of Workplace Mental Health in Australia Report found almost half of employees say their work is suffering due to poor mental health, and this rose to 56% when looking solely at millennials.2

The high number of employees taking sick leave is exactly why companies need to better manage their employee absenteeism and invest in employee well-being. With effective tools and management strategies in place, companies can better understand the reason behind these absences and work with employees to reduce the number of days taken, while offering guidance to improve and support the employee’s overall well-being.

Effects on productivity and profitability

Employee absenteeism is costly and becoming costlier, with the survey data revealing the average direct cost of absence per employee per annum increased from $3,395 to $4,025. The impacts of COVID-19 and the increasing cost of living have put a strain on the mental health of many Australians. 80% of companies surveyed in the 2022 absence management and employee well-being survey conducted by DHS said that COVID-19 restrictions have led to increased absences.

The data revealed that absenteeism in contact centres remains higher than for non-contact centre roles. Contact centres are often considered stressful, which can be attributed to environmental factors such as stressful phone calls, a high volume of phone calls and dealing with highly emotional and/or aggravated customers. These centres also often have higher staff turnover when compared with non-contact centres. As a result, more employees may be more inclined to take time off work to help manage their stress levels, which may be why absence rates within call centres are higher. Call centre employees may also experience less flexibility during work hours, such as flexibility around when, where and how they do their work. This restricts the employee’s ability to manage their personal and work life commitments.

For most businesses, unplanned absenteeism is costly. When an employee is repeatedly away for extended periods of time with no prior warning, their workload is shifted to their colleagues. Those employees are then at risk of becoming overworked, potentially disgruntled and stressed to a point they too need time off work — it can be quite costly depending on the roles and responsibilities of the absent employees.

Effectively managing employee absenteeism

According to the DHS 2023 absence management and well-being survey report, the three most effective methods of managing absence are:

  • Escalation to senior management
  • Return to work interviews
  • Formal trigger review points in place to review absences

These results highlight just how important it is for companies to effectively manage employee absenteeism — and the cost to them when it’s not managed effectively. By prioritising employee physical and mental health, along with well-being — especially considering the lingering effects and changes in mentality post-COVID-19 — employers can create a workplace culture that values and supports its employees.

Since acquiring DHS, Sedgwick is better equipped than ever to offer a combination of services covering any scenario where people are taking time away from work. Our clients count on us to support and improve the health and productivity of their workforce in a way that is cost-effective, efficient and compliant. With our software solutions, employers can manage compliance with complex federal and state regulations regarding leave of absence and job accommodation. We also offer a range of specialised HR services and safety software platforms in Australia. Our absence management solutions complement our developing injury management, employee productivity and workers’ compensation solutions in Australia, providing our clients — including some of the largest and most innovative corporations in the country — the added support of Sedgwick’s global resources and expertise.

This content was originally published by DHS, a Sedgwick business.

Learn more > Download a copy of our 2023 Absence management and well-being report and explore DHS solutions.

Tags: aus, Australia, Employee, Employee engagement, employee experience, employee health, Employee stress, employee wellness, Employees, Wellbeing, Wellness, workplace