The costly truth of employee unplanned absences and PTO abuse

At some point in any organization, the excesses of employee tardiness, absenteeism and paid time off can become dangerously costly. From a human capital management standpoint, effort should be made to have a standard PTO policy in place to avoid unplanned absences. When this policy is communicated to employees and enforced by the management team, it can effectively save the company HR budget for other worthwhile programs. Yet, very often it can seem like an uphill battle when a handful of employees begin to abuse the system or seasonal illnesses start to reduce the team one-by-one.

When absences happen – are there good reasons?

It’s important to understand that tardiness and absences come in many forms. These can include:

  • Employee physical or mental illness, substance abuse, or off-site injuries
  • Government or civic-duty related leaves (jury duty for example)
  • Disengaged workers due to burn-out, stress, or seeking other employment due to poor compensation
  • Family emergencies, childcare or eldercare problems, or medical leaves that occur suddenly

In some cases, these missed work shifts are not preventable, but with a clear policy on how to schedule and report an absence to supervisor, the costs can be better managed. Unfortunately, employees may either not understand PTO policies or they may choose to ignore them all together. When absenteeism becomes habitual or intentional, there is a real problem that needs to be addressed immediately by the HR team.

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The costs of unscheduled employee absences and PTO abuse are high

Absenteeism: The Bottom-Line Killer, a white paper published by Circadian Technologies, a workforce solution company, advises that unplanned absenteeism can cost an estimated $3,600 per year for each hourly worker and up to $2,650 per year for every salaried employee. These costs include payroll burdens as well as revenues lost as a result of employees not being present. Over time, costs to employers can add up significantly if there is no control put into place. But the costs of PTO abuse and excessive absenteeism don’t stop there.

Other costs to the business can include:

  • Low employee morale and building resentment from the staffers who are left behind to pick up the lost employee’s slack.
  • Breakdown of team collaboration and project management when deadlines are looming and employees are not present.
  • Safety issues creating hazards for understaffed departments, and managers spending too much time focused on missing employees.
  • Poor customer service and product quality management due to stress caused by extra work tasks and knowledge gaps when key employees are absent.
  • Limited productivity because of a low employee headcount and overwhelming work burdens places on the backs of remaining employees.
  • Breakdown in respect for all company policies when employees are allowed to habitually abuse PTO and coming into work late or not at all.

Stopping paid time off and absenteeism abuse in its tracks

Fortunately, there are some ways to combat excessive absenteeism and paid time off abuse, before it costs your company too much.

  1. Have a clearly written paid time off policy. The first way to combat PTO abuse is to have an official policy that all employees have access to when it comes to taking time off. Place this policy in a central employee area where it can be read often as a reminder that your organization doesn’t tolerate abuse. Provide time off request forms in the same spots so employees are encouraged to schedule their time off.
  2. Make the PTO policy enforceable by all managers. Not only do you want to keep employees educated about the PTO policy, but you want to enable your management team to take action if an employee spots a problem. Oftentimes, an employee will go to a supervisor with issues that could result in the need to take time off beforehand. Ask your management team to explain the PTO policy and point out the consequences for not following the rules.
  3. Hold employees accountable for their work and missed days. Each workplace needs a human resource management system that tracks attendance well. Reports can be generated from this system that quickly point out those who are taking more than the normal amount of time off. Invite the employee and his or her manager to meet with you to discuss ways to better manage work time and tasks to avoid absenteeism and PTO abuse.
  4. Create a disciplinary process to deal with offenders. A policy on paid time off is only as good as the company’s ability to enforce it. Include the disciplinary steps in your written policy up to and including termination of employment for those who habitually call out. Have a way for managers to work with employees who are experiencing stress either on the job or at home that is affecting their ability to arrive at work on time.
  5. Reward employees who honor the PTO policy correctly. No attendance policy can be truly effective as one that includes some basic incentives for employees who follow it. Offer an extra paid vacation day for employees who use less than one unscheduled paid day off per year. You may also want to include a floating holiday once a year so that all employees can take a day off to experience better work life balance.

Overall, the costs of unplanned absences and paid time off can be controlled if your organization makes it a priority to create a time off policy, document incidents and stop abuse of the system. It takes a concerted effort between your HR department and the management team to stop PTO abuse. Eliminating some stressors, dealing with absences head on, and making the workplace a more productive environment can help reduce this from costing your business too much.

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3 Comments on "The costly truth of employee unplanned absences and PTO abuse"

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Can someone please explain how to calculate the lost productivity for an employee who was in unscheduled absence. Let’s say that average salary is 900 $, and the employee was absent for 3 days during the month and will receive 810$. The company will not pay and amount of 90$ but how much these 3 days will cost to the company, is it 90$ or more.. ?

Thanks for your support.



In response to you’re comment, It’s completely dependant on what kind of work the employee would be doing/ his or her average production rates/ profit margins on the products produced, and cost of materials used if not counted in the profit margin (i.e. sharpening tools or knives used, fuel for fork lifts etc). If the employee does a task that is a service (I.e. The employee that cleans your storage areas but doesn’t make an item or product you sell) its basically incalculable without putting a value on that person. I hope this helps.


Work for a company that now says if you use your PTO days they will hold that against you on your annual review subsequently affecting pay raises. Is this lawful since these are your personal days?