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What is Employee Absenteeism Really Costing Your Business?

I often hear from clients that managing absenteeism is one of the toughest challenges they face in maintaining a productive workforce.

Employee absenteeism isn't just a small issue. It's a drain on business resources and it needs attention.

So if you want to learn more about absenteeism and what to do about it, keep reading.

Usually, absenteeism relates to personal/carer's leave. This is when an employee takes time off for these reasons:

  • They're not well enough to work because of their own sickness or injury, or

  • They need to care for a family member at home who is sick, injured, or in an emergency.

The minimum personal/carer's leave entitlement is outlined in the National Employment Standards (NES) in the Fair Work Act.

You can read more about employee leave entitlements in my article: Understanding Leave Entitlements in Australia.

The Financial Strain

In Australia, unplanned employee absences come with a hefty price tag. On average, Australian employees take 8.8 unscheduled days off per year. Other studies show that absenteeism costs Australian businesses an average of $578 per employee per day, with some industries, such as healthcare and retail, reporting even higher costs.

When you factor in indirect costs such as reduced productivity and overtime expenses, the financial impact can be much more substantial, affecting the overall profitability and sustainability of your business.

The Emotional Toll

Beyond the financial implications, frequent employee absences take a toll on team morale and workplace dynamics. According to a survey by the Australian Institute of Management (AIM), workplaces with high absenteeism rates often experience lower employee satisfaction and engagement levels. This can lead to a disengaged workforce, impacting company culture and a slow down in long-term growth and success.

A staggering 80% of Australian employees believe that a strong company culture can reduce absenteeism, highlighting the critical link between workplace environment and employee attendance.

Absenteeism is the symptom, not the disease

Practical Measures to Tackle Absenteeism

Keeping a close eye on unplanned employee absences can be crucial in managing the impact of absenteeism on your business operations. By effectively monitoring and managing absenteeism, you can identify patterns and take proactive steps to address any emerging issues before they escalate.

1. Have clear policies in place: Have clear and thorough absence management policies that explain reporting procedures, expectations, and consequences. These policies should be accessible to all your employees and regularly communicated.

2. Leverage your systems: Use the reporting system you already have (for example Xero or Myob etc) to monitor employee absences and identify any trends or patterns. Analyse this data to gain insights into the root causes of absenteeism. This will help you to implement strategies and interventions to address the underlying issues.

3. Communicate, communicate, communicate: Develop a culture of open communication within your business. Encourage employees to feel comfortable discussing any challenges they may be facing. Regularly communicate the importance of attendance and the impact of absenteeism on the team and business objectives. Encourage feedback and suggestions to promote a supportive and engaged workforce.

4. Promoting Work-Life Balance: Encourage a healthy work-life balance to prevent burnout and excessive stress, which contribute to increased absenteeism. Offer flexible work arrangements, such as remote work options, flexible hours, or compressed workweeks. These empower employees to better manage their personal and professional commitments, reducing the likelihood of unplanned absences.

5. Invest in Employee Wellness Programs: Prioritising employee well-being through comprehensive wellness programs can significantly contribute to reducing absenteeism. These programs can include initiatives such as stress management workshops, mental health awareness campaigns, physical fitness activities, and access to health resources. By promoting a holistic approach to well-being, businesses can support their employees in maintaining a healthy work-life balance and overall wellness.

Tackling absenteeism requires clear policies, data analysis, open communication, and a focus on work-life balance and wellness. By addressing these aspects, businesses can effectively manage absenteeism and develop a more engaged and resilient workforce.

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The content provided on this website serves as a general information resource on the subjects discussed, and should not be considered tailored to specific individual circumstances or a replacement for legal counsel. While we exert significant effort to ensure the accuracy of our information, HR Consulting TAS cannot ensure that all content on this website is consistently accurate, exhaustive, or current. Recommendations by HR Consulting TAS and any information acquired from this website should not be regarded as legal advice.

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