Quantifying the True Cost of Workplace Absenteeism and Its Hidden Financial Drain

Workplace absenteeism refers to the habitual or unexpected absence of an employee from work. It can be caused by various factors such as illness, personal reasons, family responsibilities, or other obligations. Absenteeism can have significant implications for employers, including decreased productivity, disruptions to workflow, and especially increased costs. In fact, a recent report by the Centers for Disease Control shows US companies lose a total of $225 billion annually due to absenteeism. The CDC also found that the average US employee was absent 4-5 days a year before the pandemic, and this number only increased during it.  

Types of absenteeism

There is authorized absenteeism when an employee is absent from work with prior approval from their supervisor or manager. Authorized absences may include vacation days, sick leave, personal leave, or other types of approved time off.

On the other hand, unexcused absenteeism refers to instances where an employee is absent from work without obtaining permission or approval from their employer. If it becomes excessive, it can result in disciplinary action, including warnings, suspension, or termination of employment, depending on the company’s policies.

In most cases, it’s unreasonable to terminate an employee immediately, especially if they have a valid reason to be absent, like poor health. At the same time, employers bear high costs. High absenteeism rates can drain a company financially. For example, a business would lose $12,000 a year if an employee making $60,000 was absent 20% of the time. Now, imagine five employees – you’re looking at a startling drain of $60,000. Absenteeism costs US companies $3,600 per staff member annually. 

Absenteeism vs. Presenteeism 

If absenteeism weren’t enough of a problem, there’s also the burden of presenteeism, where the employee is only physically present. Data from the World Health Organization show that companies lose around 58 days a year to presenteeism compared to just 4-5 to absenteeism. In fact, the cost of absenteeism is ten times lower than presenteeism.

Solutions to absenteeism 

When the absentee rate starts to exceed the norm for a specific industry, it signals bigger problems in the workplace culture or environment. In 2024, over a third of all companies use outdated time tracking systems. In the US, 38% of companies still use punch cards and paper timesheets to track employee attendance. 80% of businesses using paper tracking systems report having to correct 80% of the timesheets.  

Companies can also reduce absenteeism by promoting exercise and other basic health measures. It’s crucial to build a company culture that values dedication and hard work. 

Another approach to discourage absenteeism is to reschedule rather than redistribute work. If an employee is ill, you could pause their projects rather than transfer them to that person’s coworkers. Let them know they can continue working on the projects once they return. This will deter them from taking leave without a valid reason and reduce stress on other employees.


How do you deal with absenteeism in the workplace?

Record absences and consider the causes. The person might have a legitimate reason to be habitually absent from work. If that’s the case, try to be more flexible and accommodating and always remain approachable. Check the company’s absence policy and proceed to discipline them if they are consistently violating it. 

How can managers reduce absenteeism?

  • Review the absence management strategy
  • Support mental health and wellbeing at work
  • Schedule return-to-work interviews, including to check wellbeing
  • Explore more flexible working options
  • Provide support for inclusion

How can you increase employee motivation to reduce absenteeism?

Make employees feel like they have a stake in the company. You could implement a company-wide, fair, and relevant employee award program.

How does stress cause absenteeism?

If the employee perceives their work as low in autonomy and control, they will experience more stress, which causes absenteeism.

What are the risks of absenteeism for individuals?

High rates of absenteeism may mean disciplinary measures and a loss of pay. When the person comes back, and the work environment is less familiar, accidents may happen. They will start perceiving their job differently, usually more negatively, if they develop a justification or reason for their absence.

Sophia Anderson

Sophia Anderson is a blogger and a freelance writer. She is passionate about covering topics on money, business, careers, self-improvement, motivation and others. She believes in the driving force of positive attitude and constant development.