The Cost of Absenteeism in the Workplace: Understand it And Calculate it

Rising absenteeism is a real concern: it not only signals employee well-being issues, but it is also extremely costly for employers. Absenteeism generates direct financial expenses while also undermining productivity, employee morale, team cohesion, and employer reputation.

So how much does absenteeism actually cost? And is it even possible to calculate it precisely? Let’s break down the direct and indirect costs of absenteeism to get closer to an accurate calculation—and, more importantly, to understand why fighting absenteeism is a strategic necessity.

What Is Absenteeism?

Absenteeism refers to the tendency of employees to be absent from work involuntarily or unexpectedly. It may include:

• Sick leave,
• Family-related absences,
• Unjustified absences,
• Frequent lateness,
• Early departures.

It is often measured using the absenteeism rate, which represents the percentage of working time lost due to absences compared to the total available working time.

Note: planned, authorized leave—such as vacation, training leave, or family leave covered by collective agreements—is not considered absenteeism.

How Much Does Absenteeism Cost Companies?

Several studies have attempted to estimate the financial cost of absenteeism:

• A 2014 study by Alma Consulting estimated the cost at €60 billion.
• A 2018 study by the Institut Sapiens raised that figure to €107 billion.

On average, absenteeism costs between €3,500 and €4,500 per employee per year.

But how can one absence become so expensive? Because behind a “simple absence” lies a multitude of hidden costs.

The Different Types of Absenteeism Costs

When an employee is absent due to illness, occupational disease, or even an unjustified reason, the financial impact is immediate. Let’s look at both direct and indirect costs.

1. Direct HR Costs

These are the immediate costs linked to the absence itself:

• Salary continuation (full or partial, depending on agreements),
• Compensation during waiting periods, if required by company or industry agreements,
• Pay for temporary replacements,
• Overtime pay for colleagues covering the workload,
• Recruitment costs for temporary hires (job ads, screening, interviews, training),
• Administrative costs of absence management (tracking, HR communication, leave processing),
• Return-to-work programs: reintegration, adjusted roles, or rehabilitation after long absences.

2. Costs Related to Lost Productivity and Output

Absenteeism almost always leads to reduced productivity:

• If the absent employee is not replaced, their workload must be distributed among fewer people, leading to slower progress.
• If they are replaced, productivity still suffers, because:
  • New hires take time to learn processes and ramp up,
  • Training requires investment,
  • Existing employees must spend time onboarding the newcomer instead of focusing on core tasks.

These issues are similar to those caused by high employee turnover.

3. Impact on Social Climate and Employee Mental Health

Absenteeism doesn’t only affect finances—it impacts the work environment:

• Frustration and demotivation among colleagues who must pick up extra work,
• Increased stress and workload pressure,
• Feelings of insecurity about meeting goals and organizational stability,
• Tensions within teams if employees feel resentful toward absent colleagues,
• Loss of trust in management if absenteeism becomes chronic and poorly managed.

All of these can erode morale, engagement, and mental health, creating a vicious cycle where absenteeism breeds more absenteeism.

How to Calculate Absenteeism Costs

Calculating absenteeism is challenging because many costs are indirect or hidden. Still, some useful parameters can help estimate the total impact.

Start with the absenteeism rate: the higher it is, the higher the costs. Then add measurable factors such as:

• Salary costs maintained during absence (including employer social contributions),
• Total overtime costs for replacements,
• Insurance contributions for occupational accidents and illnesses (which depend partly on company records),
• Penalties or delays caused by missed deadlines,
• Training costs for replacement staff,
• Recruitment costs if turnover is involved.

Don’t forget prevention costs: initiatives such as training, ergonomic workstations, or work-life balance policies. These should not be seen as “lost” expenses but as investments.

Effective prevention—through better management, clearer career paths, and improved mental health—can significantly reduce absenteeism and the long-term costs associated with it.

Key Takeaway

Absenteeism costs organizations far more than meets the eye—from direct payroll expenses to hidden productivity losses and deteriorating morale.

By understanding the types of costs and learning how to measure them, HR and leadership can build a strong case for preventive strategies. In the long run, investing in well-being and mental health saves money, strengthens resilience, and boosts competitiveness.