NCPA - National Center for Policy Analysis

Employee Time-Off Costs Plenty

June 28, 2002

The total cost of employee time-off and disability programs is substantial. The replacement cost of absentee employees is so significant that the number of firms indicating they will begin tracking programs has risen from around one in five to almost two-thirds. One method employers use to deal with this problem is vacation and paid-time off plans (PTO). This works because employees have a bank of time from which to choose vacation as well as sick days. Those taking more days off for illness will have fewer to use for vacations.

The findings are telling:

  • On average, 14.6 percent of payroll is spent on absentee costs.
  • However, absentee costs were only 8.7 percent at companies with PTO plans.
  • Incidental sick days for all companies averaged 4.6 to 5.2 per year.

Around 80 percent of firms use additional incentives -- such as progressive disciplinary attendance policy or reflecting attendance in performance evaluations -- to combat abuse of sick days.

Source: "Employees' Time-Off and Disability Programs," Medical Benefits, June 30, 2002.


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