Individual Absence Cost Formula
Learn how an employee's absence rate and estimated absence cost are calculated from pay, scheduled days, on-costs, and cover costs.
This calculation estimates the cost of one employee's paid absence by finding the daily salary cost of missed work and adding estimated employer on-costs and cover or productivity costs. It also shows the share of scheduled working time that was lost.
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Total Estimated Absence Cost
Where:
First calculate the employee's daily pay, then multiply it by absence days. Add the chosen percentages for employer on-costs and cover or lost productivity.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| annualSalary - Annual salary | The employee's gross annual salary before deductions. | currency |
| workingDays - Working days per year | The scheduled working days in the year or assessment period. | days |
| absenceDays - Absence days | Working days missed through the absence being assessed. | days |
| employerOnCostRate - Employer on-cost rate | Estimated payroll-related employer costs as a percentage of the salary cost. | percent |
| coverCostRate - Cover or productivity cost rate | Estimated temporary cover, overtime, or lost productivity cost as a percentage of salary cost. | percent |
Step-by-Step Calculation
Calculate daily pay cost
Divide annual salary by scheduled working days to estimate the salary value of one workday.
dailyPay = annualSalary / workingDays
Calculate the absence rate
Divide absence days by scheduled working days and convert the result to a percentage.
absenceRate = (absenceDays / workingDays) * 100
Calculate salary cost of absence
Multiply daily pay cost by the number of missed working days.
lostPay = dailyPay * absenceDays
Calculate employer on-costs
Apply the selected employer on-cost percentage to the salary cost of absence.
employerCosts = lostPay * (employerOnCostRate / 100)
Calculate cover or productivity cost
Apply the selected cover or productivity percentage to the salary cost of absence.
coverCost = lostPay * (coverCostRate / 100)
Add all estimated costs
Combine salary cost, employer on-costs, and cover or productivity cost.
totalAbsenceCost = lostPay + employerCosts + coverCost
Example: Eight paid absence days
Daily pay cost
£50,000 ÷ 260
£192.31 per day
Absence rate
(8 ÷ 260) × 100
3.1%
Salary cost of absence
£192.31 × 8
£1,538.46
Employer on-costs
£1,538.46 × 20%
£307.69
Cover or productivity cost
£1,538.46 × 25%
£384.62
Total estimated absence cost
£1,538.46 + £307.69 + £384.62
£2,230.77
Final Result
An absence rate of 3.1% produces an estimated total absence cost of £2,231.
Assumptions
- ✓Annual salary is spread evenly across the scheduled working days entered.
- ✓The absence days entered are paid working days.
- ✓Employer on-costs and cover costs can be reasonably estimated as percentages of lost salary cost.
- ✓The calculation assesses one employee and one selected year or period.
Limitations
- !Actual sick pay may be lower or higher than the daily salary value used here.
- !The estimate does not automatically include management time, recruitment costs, insurance recoveries, or service-level effects.
- !Cover costs can vary substantially depending on whether work is deferred, shared, paid as overtime, or covered by a temporary worker.
- !Different work patterns may require scheduled days to be adjusted before using the calculation.
Common Mistakes to Avoid
Using calendar days instead of scheduled working days.
Including planned holiday in absence days.
Entering take-home pay instead of gross annual salary.
Applying on-cost and cover percentages to annual salary rather than the salary cost of absence.
Using a cover rate without considering whether the work was actually covered or deferred.
Related Formulas
Frequently Asked Questions
How do you calculate an individual absence rate?
Divide absence days by scheduled working days and multiply by 100. For example, 8 absence days out of 260 working days equals about 3.1%.
How is the cost of employee absence calculated?
The calculator multiplies daily salary cost by absence days, then adds estimated employer on-costs and cover or productivity costs.
What is included in employer on-costs?
They can include employer payroll taxes, pension contributions, and benefits-related costs. The appropriate items and percentage vary by employer and location.
Should absence cost include cover costs?
It can. Include a cover or productivity rate when temporary staff, overtime, redistributed work, delays, or reduced output create an additional estimated cost.
Can this formula be used for part-time employees?
Yes, if annual salary and scheduled working days both relate to the employee's part-time work pattern.
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