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The impact of sickness absence on small businesses

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By Mike Davis, Head of SME Direct, AXA PPP healthcare

Although sickness absence is challenging for businesses of all sizes, it’s often something that’s felt more acutely for small businesses. As time and resource is often scarce, having a key member of staff off work due to ill health can have a big impact on everyone in the business.

In 2017, 131.2 million working days were lost due to sickness absence according to data from the Office for National Statistics1. Of these days, 34.3 million were due to minor illnesses such as coughs and colds and 28.2 million were due to musculoskeletal problems (issues affecting the bones, muscles and joints) [1].  

Despite the number of working days that are lost due to ill health, more than half (55%) of business owners don’t know or don’t record the percentage of payroll represented by sickness absence cost per annum [2]. As small businesses are often fast-paced by nature, it might come as little surprise that many small business owners aren’t recording sickness absence rates within their company. However, this can make it difficult to understand the impact that sickness absence could be having on your business.

The cost of sickness absence for small businesses

Having a key member of the team off work can impact all areas of a business, including the rest of the team as well as the business itself. 

The costs that can be associated with sickness absence can include:

• The monetary cost of paying the employee in question in accordance with your sick pay policy while they’re not able to work due to ill health.
• The costs that can be associated with finding a temporary replacement for the employee while they aren’t able to work, including recruitment and training costs.
• Workloads of other members of the team increasing as a result of having to cover the workload of the team member who is off sick. This can mean that they have less time to focus on their own tasks and responsibilities.
• There could also be a risk to the customer/client relationships that the employee in question has built up, particularly if a replacement for the employee can’t be found in the interim.

The cost of presenteeism

While it can be a common misconception to think that employees being absent due to ill health may have the biggest impact on a small business, there’s research to show that this may not be the case. According to one report, for every £1 cost to business of absenteeism, there is estimated to be an additional cost of £2.50 due to presenteeism [3].

Presenteeism occurs when employees turn up to work despite being unwell. While employees may think that being present at work is more beneficial to the business and their colleagues than if they stayed at home to rest and recuperate, the opposite may actually be the case. It’s likely that they won’t be able to perform at their best while they’re feeling unwell meaning that their productivity may suffer as a result. Presenteeism appears to be becoming more prevalent in organisations, with a recent CIPD report revealing that 86% of respondents had observed presenteeism within their organisation over the last 12 months, compared with 72% in 2017 and 26% in 2010 [4]. 

Can sickness absence be reduced?

While a certain level of sickness absence is unavoidable, there are steps that business owners can take to invest in the health of their employees and boost wellbeing within the workplace. These include:

• You could consider offering private healthcare cover to your employees. Private health insurance can help to get you and your team back to work quickly through prompt access to diagnosis and eligible treatment. They’ll be able to skip the NHS waiting lists and receive eligible treatment at a time and place that suits them, minimising the impact that it can have on their personal and working lives.
• Review the workplace culture within your business. Are people regularly staying in the office long into the evening when they should have left at 5pm? Likewise, do you notice that people are regularly skipping breaks and choosing to eat lunch at their desks? This might indicate a poor work-life balance, or that employees are struggling to cope with workloads. 

• If a member of your team is on long-term sick leave, it’s important to stay in regular contact with them, handled sensitively. This can help to reinforce that you’re on their side and are helping to support them through it. Regular contact can also help to make their return to work feel less daunting as they’ll still feel that they’re a valued member of the team.  
• Ensure that you’re keeping track of sickness absence. This can help you to identify if there are any patterns in absences, and can also help you to identify if there are any particular members of the team who may be struggling with their health and wellbeing.
• Giving employees the opportunity to work flexible hours, or work remotely from home, may help overall wellbeing within the business. This might be particularly useful for employees who have a long commute to work, or who struggle to find childcare during working hours.

Sickness absence can be particularly difficult to manage in small businesses where time and resource is limited. However, this limited resource can mean that it’s even more important to invest in employees’ health and wellbeing as each member of the team is such a vital part of the business. 

AXA PPP healthcare cover

At AXA PPP healthcare, our small business health insurance aims to minimise the amount of time that you and your team need to be away from work through prompt access to diagnosis and eligible treatment. All of our small business healthcare plans come with unlimited access* to our online GP service, Doctor@Hand (provided by Doctor Care Anywhere), meaning you and your team can have a GP appointment at a time and place that suits – 24/7, 365 days a year**.

Should your GP recommend that you see a specialist, our Fast Track Appointments team will find you an appointment at a time and place that’s most convenient for you so you don’t need to worry about being placed on an NHS waiting list in order to receive eligible treatment.

Find out more about our small business health insurance, including what we do and don’t cover, and get a quote today.
*Fair usage policy applies
**Subject to appointment availability

Sources and references

1 Office for National Statistics, 2017.
2 Employee Benefits, 2018.
3 Health at Work Economic Evidence Report, 2016.
4 CIPD, 2018