Consequences of Absenteeism Temporary Disability

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We can classify the consequences of absenteeism from temporary disability (occupational and common contingencies) in two different types:

Consequences on health

  • Workers need healthcare for their ailments.
  • The company has the obligation to protect and look after the health of workers.

Economic consequences

Temporary disability has a bearing on costs for companies; however, not only on direct costs, but also on indirect costs.

It is essential to measure both kinds of costs in order to know how they affect productivity and to understand the cost level that the company has, which thus makes it possible to determine the level of investment that the company is prepared to accept to reduce absenteeism as well as compare the cost of temporary disability with the final economic results arising from the measures developed.

Direct costs Companies

Social security contributions

During situations of temporary disability, the company is obliged, unless the contract is cancelled, to pay contributions up to a maximum of 545 days.

Salary

The company pays the cost of the day of the medical leave as wage in Work-Related Injuries or Occupational Diseases, as well as the day of the medical leave in the event of relapse. In non-work related injury or illness, the company pays the benefit for Temporary Disability from the 4th to the 15th day of sick leave at 60% of the benefits base.

Voluntary complements to the Temporary Disability benefit

Depending on the provisions of the applicable collective bargaining agreement or, failing that, of the individual agreement with the worker, the employer may have to pay the difference (or a percentage thereof) between the compensation that the worker should receive if he/she were not in a situation of temporary disability and the benefit to which he/she is entitled for this purpose.

There are also economic consequences for workers in the form of a loss of wages which they stop receiving on medical leave if they do not have a voluntary complement). And in common contingencies, the worker does not receive the benefit in the first three days of the medical leave.

Direct costs Mutual Societies and Managing Institutions

Direct costs Mutual Societies / INSS

The benefit is paid through a delegated payment by the companies or through a direct payment by the managing or collaborating institutions of the Social Security Institute. Delegated payment is a form of compulsory collaboration with the Social Security Institute. Later, the company is refunded the amounts paid to its employees for this item, discounting them from the amount of the payments it has to make to deposit the Social Security contributions

The amount of the benefit is different depending on whether the situation of temporary disability is due to occupational or common contingencies: (General Act on Social Security. Legislative Royal Decree 8/2015, of 30 October, articles 169-171) in PDFThis link will open in a pop-up window:

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Indirect costs Companies

Substitution costs

On many occasions (especially in companies with few employees), the beneficiary must be substituted, with everything this involves in terms of costs of selection, basic training, remuneration and social contribution.

Opportunity costs

Although they may be considered difficult to measure, consideration must be given to the importance of costs caused indirectly by the employee's absence, as a result of his/her special relationship with clients or his/her knowledge or specific skills in production.

Late holiday payment costs

In accordance with current law (Royal Decree - Act 3/2012 final first provision) in PDFThis link will open in a pop-up window, the agreed holiday period for employees coincides with a situation of temporary disability due to occupational or common contingencies (in both cases unrelated to pregnancy, birth or natural breastfeeding), once the situation of disability has finished, they will be entitled to have a new holiday period assigned to them, even when the calendar year in which they should have used their holiday leave is over, although limited to the 18 months following the year in which the temporary disability occurs.

Productivity costs

Work absenteeism is undoubtedly one of the most significant causes of the loss of productivity of companies, which leads to drops in competitiveness and, as a result, hinders their expansion and undermines performance, from the lower production of the substitute worker until the learning period is finished to the lower production of the worker on leave after he/she returns to work.

Loss of economic incentives

El Royal Decree 404/2010, of 31 March in PDFThis link will open in a pop-up window, regulates the establishment of a system of incentives for companies that stand out in their effective and provable contribution to reducing accident rates and for conducting effective measures to prevent work-related injuries and occupational diseases, rule developed by Order TIN/1448/2010 of 2 June in PDFThis link will open in a pop-up window.

Overtime costs

The company sometimes needs to request its workers to perform overtime to maintain the production or the service or to conform to scheduling, which entails an extra cost.

Aggravation of the working atmosphere

Absenteeism at the organisation can generate a lack of motivation in the workers present and thus leads to more wage-related complaints, strikes, etc.