Does Your Sick Leave Policy Need a Checkup?

doctor-563428_1280You’ve probably seen the employee with a pile of tissues on the desk, sweating profusely and responding, “I’m fine” when people ask about his or her health.  Then there’s the person who routinely arrives late or leaves early and frequently takes unscheduled days off.

Although federal law does not require payment for time not worked — such as sick days, vacations and holidays — most employers recognize the importance of paid leave programs for employee health and performance.  Effective leave policies also help companies retain top people.  But are your leave policies effective?

Unscheduled employee absenteeism costs some organizations a bundle every year.  Employers generally tolerate the occasional “sick day” that employees take for non-health-related reasons.  Yet they may suffer from sick leave abuse, where employees repeatedly violate the company’s attendance policy — and that translates into lost dollars.

Other employers suffer from the opposite problem.


“Presenteeism” is when employees come to work sick.  One study by the Cornell University Institute for Health and Productivity Studies found that presenteeism might account for between 18 and 60 percent of employers’ health costs.  Although its costs are difficult to determine, presenteeism causes lost productivity, the the spread of contagious infections and possibly longer illnesses, since workers don’t take the time to rest and recuperate.  Another study found that nearly 20 percent of 25,000 workers surveyed had a cold or flu during the study period.

To get the most of your company’s sick leave programs, start by determining how employees use their leave.

To get the most of your company’s sick leave programs, start by determining how employees use their leave.

Is leave usage higher in one department or under a particular supervisor?

Are workplace practices or policies contributing to presenteeism?

Do children’s illnesses lead to staff absenteeism?

Finding the cause of problems allows you to address core issues.  If absences stem from a personal problem, you can recommend counseling or refer the employee to your employee assistance program.

Consider whether the structure of your paid leave programs is working for your firms and its employees. Options include:

  • Traditional plans. For years, employers have provided workers a set number of paid sick leave and vacation days per year.  The amount varies by company and industry, but new employees may get an average of 17 or 18 days off per year, allocated evenly between sick and vacation days.  Professional, long-term employees may accrue 30 or more days off annually.  To learn more about the norms in your industry, check with trade associations or chambers of commerce salary and benefits reports for your area.  This type of leave plan is easy to institute and administer.  Simply decide how many sick and vacation days to give employees per year, put it in writing — your employee manual is a good place to start — and let everyone know.  While this system works well for many companies, alternatives can give your employees more respect and autonomy, without costing your company considerably more.
  • Paid time off programs. Some companies combine different types of leave into one unified bank of “paid time off” (PTO) hours.  One survey of employers with 100 or more employees found that 42 percent of respondents — up from 30 percent in 2000 — offered paid time off banks.  Instead of ten vacation days and five sick days a  year, these employers provide 120 hours of PTO for workers to use as they see fit — for vacation, personal time or illness. A “leave account” means employees won’t feel cheated when they’re not eligible for certain types of leave (for example, childless workers who can’t take advantage of time off for a sick child).  You can build in even more flexibility by allowing employees to redeem unused days off for cash or to accumulate unused sick days from year to year, or match it with a short-term disability program.  PTO banks can reduce unscheduled absences by allowing employees to use paid time off, rather than sick leave, to take care of personal business.
  • Attendance incentives. To encourage employees to use leave programs properly, many organizations structure attendance policies to reward rather than punish.  Some give employees a half-day off for every quarter in which they have perfect attendance and let it accumulate.  Employees who use two days or fewer of sick leave during the year may earn the equivalent of one day’s pay.

A note of caution: Employers considering the establishment of an attendance incentive program should ensure that the program does not violate the Family and Medical Leave Act.

Critics suggest that incentives indirectly punish employees who have legitimate reasons for absence.  Parents of young children may resent the perceived inequity vis-a-vis childless coworkers who don’t need to take time off to care for sick children.

Some people also believe attendance incentives send the wrong message about taking leave, which has become increasingly important in today’s high-stress work environment.  If staff members perceive that using leave is the wrong behavior, employers risk encouraging employees to overwork.  That could even result in serious illness, which could increase health care costs in the long run.


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