What's the Best Approach for Sick Leave Policies?

Recently, paid sick leave -- or rather the absence of it -- has been getting a fair amount of media attention.  It turns out that many essential and front-line workers, who are unable to work from home, do not have any paid sick leave and so are unable to stay home when ill.  Generally, employers want employees to stay home when they’re too sick to come to work, in order to get better of course, but also to prevent spreading whatever they’ve got around the workplace.    

But this is not so easy when sick days are unpaid, which creates economic stress for employees and their families and, during the current pandemic, has the potential for turning their workplaces into COVID-19 super-spreader locations.  So, from a public health standpoint, we want employees to be paid sick leave to help contain the spread of the virus.  But a paid sick leave policy can be surprisingly counterintuitive and often ends up hurting -- not helping -- those who need it most.  In this article I will be discussing the main approaches for providing paid sick days for full time employees.

A Comprehensive Solution

It’s probably a good idea to define terms before I go much further.  There are three types of sick leave policies that we should keep in mind, as outlined in the example below.  To provide the best protection for employees, companies need all three.

Depending on the length of continuous absence from work, employees would from left to right in the table above.  While doing so, employees have economic protection for the duration of their absence to a maximum of two years.  Both short-term and long-term disability insurance coverage are generally for a percentage of the employee’s wage, perhaps 60%, while coverage for incidental absences is generally at 100% of an employee’s wages.

In the current situation it’s the incidental absences that are at issue for many essential and front-line workers.  By ‘incidental’ I mean minor and short term and for not related.  (It’s important to note that repeated absences due to a single underlying or recurring cause are not considered ‘incidental’ here.)

There are two main ways of providing paid sick leave for incidental absences:

1. Paid sick days to an annual maximum (perhaps 3, or 5, or even 10 days per year); and
2. Paid sick days for all incidental absences during the year.

The first method is known as a policy with an annual cap or limit, and I’ll deal with it first.  The idea is simple: when employees are sick within this limit, they are paid for the days they miss.  When the limit is reached, subsequent absences, genuine or not, are unpaid.  The thinking here is that the annual limit will discourage both trivial absences and flat-out malingering, the latter being the real target.  Employees are thus encouraged to not fritter away their sick days on the sniffles or a day at the ballpark and come to work unless it’s quite serious.

That’s the idea, anyway.  But depending on how small the cap is, or how much of it they have already used, employees might choose to come to work when they really shouldn’t and unwittingly spread their illness around.  Even with judicious use of their sick days, employees might easily exceed a small allotment.  Now a bout of Covid-19 imposes real economic hardships. These employees are not malingering, they haven’t frittered away their sick time, they’ve just had a bit of bad luck.  So while targeting malingerers, the policy’s strict allotment is economically punitive to those who don’t deserve it.  That’s is a pretty good definition of poor policy.

(Incidentally, some companies combine an allotment of sick days with vacation entitlement to create a set number of annual ‘personal days’ for use as needed.  The effect remains the same, though: once paid sick days are exhausted, employees must use vacation entitlement.  If they want a vacation later, they’ll need to take some of it as unpaid or go without.  If they’ve already taken vacation, they’re back to unpaid sick days.)

Buehler?  Buehler?

But it gets worse.  You might think that providing employees more than a small allotment of sick days will fix the collateral damage.  It will help, no doubt, but at the expense of creating what I think of as the Ferris Buehler problem: it will encourage those inclined to malinger to creatively take every one of their available sick days.

The greater the limit on the number of annual sick days, the more likely the days will be seen as an entitlement, not as a limit.  As in, “I get 10 sick days this year and I’m taking every single one.”  If this becomes the norm at the company, the average number of paid sick days taken per employee will soon equal the annual limit, hardly the result anyone (but Ferris) is after.  (This is all but guaranteed in the personal days approach, where a nominal sick days’ limit immediately becomes a personal days’ entitlement.)

OK, you say, to thwart Ferris and his ilk, let’s add the requirement that a doctor’s note is required for every absence, even a single day.   That makes taking a day off to see a ball game much more difficult.  Faking out parents is one thing, but doctors quite another.

However, we’ve now created a different type of collateral damage to the genuinely ill.  Now they have to haul themselves into a doctor’s office, when they’re genuinely ill remember, and often pay for the privilege of proving that they’re really sick.  Again, trustworthy employees pay a price created by the untrustworthy malingerers.

The fundamental problem with the annual limit approach is that it assumes that all employees are abusers and focuses solely on abuse deterrence.  Employees hit with a bit of bad luck are simply collateral damage in the war on malingering.  For trustworthy employees, your best employees, this approach just adds an economic burden to their illness.  

A Better Approach

But it doesn’t need to be this way.  Sick leave policies should punish only those who demonstrate excessive absenteeism, without imposing hardships on those who don’t.  So a good policy should start with the assumption that employees are trustworthy and will come to work unless they’re genuinely sick.   And that leads us to the second type of policy, one that pays for all days missed due to incidental absences.

Under this approach, an annual allotment of sick days simply isn’t required.  The number of sick days required by an employee who doesn’t get sick is, well, zero.  The corollary of the first principle -- stay home if you’re too sick to come to work – is this: you’re expected at work every day unless you’re too sick.  But when you are genuinely too ill to come in to work, stay home and you will be paid for the days you miss.  In other words, employees have no limit or entitlement, but they can take what they need if they’re sick.

In my experience this simple idea of an open-ended incidental absenteeism policy is mildly alarming for most executives.  I’m usually met with blank stares of incredulity.  How can a company operate without some safeguard or cap, they ask?  There are safeguards, but they don’t involve a hall-monitor approach.  Rather, this approach focuses only on those employees who first demonstrate a pattern of excessive or unexplained absences, and only then does the company step in to address the problem, case by case.  And when illnesses are genuine, both short-term and long-term disability programs step in to cap the employer’s liability while maintaining ongoing economic protection for employees.  

Guarding Against Abuse

Let’s look at how this second approach works.  First off, employers shouldn’t get too fussed when an employee is ill for a day; that’s not a pattern.  Just make sure all employees notify their manager as soon as they are aware they can’t make it to work and provide a subsequent update every day that they’re away until they return.  Generally, these incidental absences resolve on their own quite quickly.

But if a pattern of absences develops -- more frequent, regular, or excessive than other employees -- then the manager needs to find out why.  That’s when a doctor’s note should be requested.  This isn’t just proof of illness, though, it’s also proof of treatment.  If an employee has excessive absences, make sure they are getting medical attention they need.  You aren’t entitled and don’t need to know anything about the medical reasons, just that the doctor recommends that the employee stay home, is providing care, and can estimate the employee’s return date.  If it’s malingering, there won’t be a note of course.

When excessive absences are truly incidental, you should expect that the situation will resolve fairly quickly after it gets the manager’s attention.  However, if the employee’s incidental absences don’t show a prompt, sharp, and sustained reduction, then the next step isn’t to stop paying the employee for any additional absences, it’s to stop paying the employee altogether.

If excessive incidental absenteeism persists, then the company should conclude that this particular employee simply doesn’t have what it takes to be available for work and employment should end.  Companies shouldn’t be focusing their scarce management time on employees who can’t meet the minimum expectations of simple attendance.  Good judgment is required here to determine when the limits of tolerance have been reached and when the outlook for improvement is poor.  And each province or state will likely have its own standards or steps to follow in order to terminate employment for lack of availability for work.  But once these have been met without significant improvement, it’s time to part company with the employee.

Secondly, if the absence turns out not to be incidental and is more serious, the absence policy will now provide much needed economic protection to the genuinely ill employee, until such time as the short-term disability program takes over, if necessary.  Again, that’s the safety cap for the all-paid absences approach.  

With this approach, your employees don’t need to worry about the economic hardships imposed by bad luck with their health.  They and their families are covered by a thoughtful employer’s policies.  Instead, they can focus on your customers and making your business even better.  That’s a great addition to your company culture.

This approach also solves a couple problems that an annual limit can’t.  First it helps identify malingerers and proactively removes them from the workforce, setting the cultural tone about expectations for coming to work.  Second, the number of incidental absences will, on average, drop as malingers are managed out, reducing the disruption on productivity from unscheduled absences.  It’s a win-win for employees and employers.

There will be those employers for whom paid sick days, using either method, are simply too expensive for their business.  It’s difficult to challenge that assertion since we have no way to assess their business model.  We can only hope that there will be relief available for these employees and companies through government programs that provide some measure of economic assistance to those who need it most right now.  

But if you’re a business leader who thinks you can’t trust your employees to come to work without a draconian sick leave policy, that they’re more like truculent high school students than responsible adults, then perhaps you might want to review your recruiting standards.  There are better employees out there.

Michael Roberts 

Michael W. Roberts is the Founder & Chief Strategist at groHR Consulting, Inc.

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