The Hidden Costs of Absenteeism: Protect Your Organisation Against Compliance Risks and Financial Loss

Absenteeism is more than just an operational inconvenience – it has a direct impact on the bottom line. Failure to manage absenteeism effectively can lead to compliance risks, Workplace Relations Commission claims, distraction from core management tasks and ultimately financial loss. Without a well-defined and properly implemented absence management strategy, Organisations risk lost productivity, increased costs, and potential legal repercussions.

The Many Costs of Absence

Direct costs of absence can include but are not limited to:

• Statutory and/or contractual sick pay benefits
• replacement costs for if a replacement Employee is required
• costs of medical referrals and occupational health fees
• overtime costs to cover and absent Employee
• operational disruption costs caused by absence.

Indirect costs of Employee absence include:

• the administration costs of recording, managing and monitoring absence
• impact on Employee morale
• lower productivity
• failure to meet targeted output.

Essentially, if absence is not managed properly, it is likely to have a negative influence on key HR metrics like Employee turnover and productivity which have a direct impact on the Organisation’s bottom line.

The Compliance Risks of Poor Absenteeism Management

Employees have rights under a number of statutes to take leave at short notice. The following summary sets out the most common leave requests and the maximum entitlements:

• Statutory sick leave – 5 days paid sick pay per annum, January to December
• Force majeure leave – 3 days in 12 consecutive months and 5 days over 36 consecutive months, paid
• Serious medical care leave – 5 days in 12 consecutive months
• Unpaid Domestic violence leave – 5 days in 12 consecutive months, paid

Common legal compliance risks for failing to adhere to these statutory entitlements include:

• Failure to meet statutory sick pay obligations – non-compliance may result in WRC claims, financial penalties and reputational damage.
• Inconsistent application of policies – treating similar cases differently or inconsistently can expose Organisations to allegations of unfair treatment and discrimination claims.
• Lack of clear documentation – inadequate records of absence management can weaken an Employer’s defence should a dispute arise and lead to further penalties for failing to keep proper records as required under various statutes.
• Workplace Relations Commission claims – Employees who feel they have been unfairly treated over either a short-term or long-term absence may escalate their complaint and seek the assistance of the WRC to resolve it.

The Importance of a Robust Absenteeism Policy

To mitigate these risks, Organisations must ensure they have clear, fair, and legally compliant absence management policies that are consistently implemented. Key elements of an effective absence management policy include:

• Legal Compliance – ensuring alignment with the Sick Leave Act and other relevant legislation.
• Consistent Application – training managers to apply policies fairly and consistently to avoid discrimination claims.
• Effective Monitoring & Documentation – keeping accurate records to track absence trends and support decision-making.
• Proactive Absence Management – implementing return-to-work interviews and wellbeing initiatives to reduce unnecessary absences.

Short-term and Long-term Absences

Absence management policies should address the differences between short-term and long-term absence. Short-term absences should be recorded and monitored. Policies will typically require Employees to notify their managers promptly on the day of their absence and provide an estimated absence duration as well as regular medical certification if the absence is illness-related. A return-to-work interview on the Employee’s return to the workplace helps to establish any underlying issues and discuss any absence patterns that might be developing. If an Employee’s absence rate is too high, disciplinary or competency procedures may be necessary.

There is no statutory definition of what constitutes long-term absence though many Organisations use four consecutive weeks as a benchmark. Medical or family reasons are common reasons for long-term absences, and it is important to establish what the reason for the Employee’s absence is before deciding how to proceed. To avoid allegations of unfair treatment, it is important to remain consistent with the Organisation’s absence policy when managing long-term absences.

The Benefits of Keeping Clear Records

A strong record keeping culture protects Organisations against compliance risks and provides an effective way to manage attendance issues in an objective and systematic way. A high emphasis on record keeping creates a culture of accountability regarding timekeeping. Organisations with clear attendance records are also in a stronger position to defend Employee claims that there is no problematic absence pattern or that management are targeting the Employee for alleged timekeeping or working time issues (a common Employee defence). Strong records will be invaluable should a dispute over attendance arise.

Equip Your Organisation to Handle Absenteeism Effectively

From the recording of absence to the ongoing management of absence, it is vital to have clear policies and procedures in place. Managing absenteeism effectively protects an Organisation against compliance risks, financial loss, and operational inefficiency. A structured, legally compliant approach to absence management helps Organisations minimise risk while ensuring fair treatment and promoting a positive workplace culture that supports Employee wellbeing.

To help Organisations navigate absence management challenges, Adare’s “How to Manage Absenteeism” training workshop provides HR professionals, managers, and business owners with the tools and knowledge to confidently manage absenteeism, reduce financial and compliance risks, and maintain positive Employee relations.

Don’t wait until absenteeism becomes a costly issue – ensure your Organisation is prepared!

How to Manage Absenteeism: Legal Considerations, Policy and Application

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