Average large employer spends over £600,000 a year on long-term sick leave

First research on cost of long-term absence alone

Long-term sick leave is costing the average UK business £620,000 a year, according to research carried out by the Centre for Economics and Business Research (Cebr).

Cebr says the research, commissioned by Unum, shows for the first time the cost to the economy of sickness absence lasting for six months or more, as opposed to all sick leave.

When calculating the cost to businesses with more than 500 staff, researchers took into account occupational sick pay paid to the absent employee, salaries of replacement staff, recruitment and training costs associated with replacement staff, loss in productivity, and absence management.

Oliver Hogan, head of microeconomics at Cebr, said: “Much research has been conducted into the cost of sick leave to the UK economy but this is the first time research has been commissioned specifically to examine the cost of long-term absence. 

“Our research reveals that group income protection can deliver net benefits to businesses in the long term as part of their cost control measures and is a worthy consideration in these straitened times.”

Modelling by Cebr shows that for every £100 an employer spends on group income protection, they receive an average ‘payback’ of £48, based on direct savings such as not having to pay the employee occupational sick pay and indirect savings, such as outsourced absence management.

Peter O’Donnell, chief financial officer at Unum UK, said most employers go above and beyond their statutory requirements by offering occupational sick pay to those on long-term leave, but argued that doing so can result in unpredictable costs which can have a significant impact on their bottom line.

He said: “Income protection reduces this cost volatility, helping financial directors to have more accurate visibility of costs for the coming year.”

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