If you’re a business owner, there’s a chance you may have been experiencing heightened financial pressures this year.
Indeed, businesses are struggling due to an increase in employer National Insurance contributions (NICs). The British Chambers of Commerce reveals this has resulted in 82% of firms claiming they will be negatively affected.
To make matters even more challenging, sickness absence might also be affecting the day-to-day operations and production of your business.
According to Canada Life, almost 1 in 4 small or medium-sized enterprises (SMEs) say they’re seriously affected if workers fall ill. A further 1 in 6 claimed they are regularly struggling with employees being ill for long periods.
It appears that this issue is already resulting in considerable financial consequences, with ill health costing employers and the UK government a total of £150 billion each year.
Due to this pressure, it’s no surprise that you might be searching for ways to mitigate costs elsewhere.
Yet, while the effects of employee absences might seem difficult to control, there are some proactive steps you can take to ease the burden – continue reading to discover four ways of doing so.
1. Implement a robust sickness policy
A clear and consistent sickness absence policy might be one of the most straightforward and effective ways to minimise disruption and reduce confusion. This applies to both your employees and the management team.
Your policy should ideally outline:
- How employees will be paid during their absence, and for how long
- How and when employees should let you know if they’re feeling unwell
- If any evidence of illness – such as a letter from the doctor – is required, and when
- How long you will offer Statutory Sick Pay
- Whether the employee should organise cover
- The process for returning to work, such as a catch-up meeting (more on this later).
Having this clear process in place that employees understand could help prevent any unnecessary stress during a difficult time, while also discouraging avoidable absences.
It could also ensure that, when employees do return, they can do so with little disruption, boosting productivity.
It might be worth reviewing your policy regularly to reflect any changes to financial legislation and ensure that it’s applied consistently across all employees.
2. Monitor sickness absence data to identify trends
Absences are often unavoidable, but tracking patterns could help you identify trends and take preventive action before problems escalate.
You might want to use a tool called the “Bradford Factor”, a formula that helps you spot patterns so you can establish when your employees need additional support.
Using this, you can calculate a score based on the number of days someone on your team is absent and the total number of absence periods throughout the year. This gives you a numerical weighting that can be used to identify patterns.
Then, when your employees are given a score, you can properly understand how these absences affect your business.
To work out the Bradford Factor for your employees, you should use the following formula:
- (S x S) x D = Bradford factor
In the above formula:
- “S” represents the number of an individual’s unplanned absence periods in a year
- “D” represents the total number of days the individual was absent in a year.
The Bradford Factor formula provides a benchmark to assess your employees’ absence records. As an example, imagine you have two employees “A” and “B”.
Employee A was absent once for 10 straight days, while employee B was absent on three separate occasions for a total of 10 days.
Using the above formula, your employees’ Bradford scores would look as follows:
- Employee A – 1 (period of absence) x 1 x 10 (total days absent) = Bradford score of 10.
- Employee B – 3 (periods of absence) x 3 x 10 (total days absent) = Bradford score of 90.
As you can see, employee B’s absences would, in theory, be more disruptive to your business than employee A’s.
Used wisely, this data could:
- Reveal trends within departments
- Identify seasonal spikes in absence
- Show recurring reasons for absence, such as stress or back pain.
It’s important to note that this data shouldn’t be used to discriminate against employees. Instead, it could help you identify when you need to step in and support your workers.
3. Provide return-to-work support
Return-to-work interviews can be a valuable way to help you manage absences within your business more effectively, while also supporting your employees in continuing their role without further disruption.
Through these meetings, you could:
- Understand why someone was off
- Offer any necessary changes, such as a phased return to work or a short-term change in responsibilities
- Learn whether any recurring issues require ongoing support.
This kind of structured support might even help reduce the risk of your employee being off ill in the future while showing that you’re committed to their wellbeing, potentially boosting morale and staff retention.
Intervening early is also vital, as the longer someone is absent, the harder it may be for them to return.
As such, maintaining contact during their time away and having a clear plan in place for their return, which should ideally be specified in the aforementioned sickness policy. This can reduce the chances of long-term absences affecting your business.
4. Invest in employee wellbeing
At a time when many businesses across the country are reviewing costs, it’s understandable that you may feel tempted to scale back employee benefits.
In fact, research from Canada Life has suggested that 1 in 8 SMEs may have to cut employee benefits linked to employee health to cover the increased cost of employer NICs alone.
However, reducing investments in wellbeing schemes might actually be unwise.
Indeed, health and wellbeing programmes, such as mental health support or access to virtual GPs, can play an invaluable role in prevention and early intervention.
This may help your employees stay healthy and return to work more quickly if they fall ill suddenly, ultimately boosting productivity.
You may also find that these schemes demonstrate to your employees that you truly care about their needs, which boosts morale and helps you retain talent.
Get in touch
We could help you manage your finances so they’re one less thing to worry about as you manage employee absences or increased employer NICs.
If you’d like to learn more about working with us, please email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
Approved by Best Practice IFA Group Ltd on 12/6/25