Sick Leave

April 29, 2016

 

Q.  As my company grows, I'm thinking about adding some formal policies. I'd like to know what you think about sick leave policies.
 

A. We are unalterably opposed to sick leave. The reason is very simple. Such policies punish honest employees and reward dishonest employees. Sick leave policies may not be abused when a company is small, say fewer than 25 or 30 employees. If smaller companies have a positive culture, employees may feel an esprit de corps that will cause them to be accountable to each other and prevent abuse. However, as a company grows beyond these numbers, there will inevitably be people who will take advantage of the sick leave policy.

 

We worked with a company that had about 100 employees that had a generous leave policy. New employees received two weeks of vacation and five days of sick leave. Further, there were eight holidays and two personal days that employees could use whenever they wished. By almost any standard, the company’s leave policy was generous.

 

We suspected that some of the employees were abusing the sick leave policy by using sick days as additional vacation. We analyzed five years of data and discovered some interesting findings. Many employees had taken no sick leave at all. About 80 percent of employees had used fewer than the maximum five sick days in at least four of the five years studied. On average, this group used fewer than two sick days per year.

 

Conversely, 20 percent of the employees had used all five sick days in each of the five years studied. Further, for the group that had used all of their sick leave, 90 percent of the sick days taken were adjacent to weekends or holidays. We certainly do not want to suggest that every employee who had used all of his/her sick leave was abusing the policy. Some employees may have had unique circumstances that routinely forced them to use all of their sick leave and even some of their vacation time to help them battle chronic illness. But the statistics around when sick days were taken strongly suggested that there was abuse.

 

Further, a manager in the HR department, who was trusted by the employees, interviewed several of the suspected abusers, promising them anonymity and immunity from punishment. When presented with the evidence of their sick day usage patterns, more than one confessed to using the days as additional vacation. One employee said, “Of course, I use all of my sick time. Why wouldn’t I?”

 

So, how can employers provide their employees with time off to recuperate from illness while not rewarding dishonest employees who abuse the system? The company described above decided to eliminate both vacation and sick leave. Instead, it implemented a system of paid time off (PTO).

 

Employees could have this time off with pay for any reason. Of course, the company did request that PTO be scheduled whenever possible, and most employees complied. The company gave new employees 13 days of PTO, two fewer than 15 combined days they were previously offered. Eighty percent of the employees received more time off than they had previously taken. Twenty percent of the employees received less time off, but the company believed that this group contained many people who had been abusing the policy. Further, the company also allowed employees to carry up to five days of PTO into a subsequent year.

Unfortunately, sick leave rewards dishonest employees who abuse the system. PTO is an alternative that eliminates this problem and rewards honest employees with more time off.

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