The real cost of employee sick leave: why healthcare benefits make financial sense

By Emma Capper, UK Wellbeing Leader at Howden Employee Benefits

Employee sick leave is more than just lost hours on a timesheet. When staff are absent, the ripple effects reach across the business – delayed projects, increased workloads for colleagues, and sometimes even a drop in service quality. While occasional illness is unavoidable, frequent or prolonged absences can carry hidden costs that affect both performance and profit.

Counting the cost of employee absences

Ill health costs the UK economy around £150 billion per year, with more than 2.8 million people economically inactive due to long-term health conditions. In 2025, employee absence levels reached a record high of 9.4 days per employee, up from 7.8 in 2023.

Most businesses track absenteeism in terms of days missed, but that only tells part of the story. Extended absences can disrupt workflows, overload teams, and result in lost knowledge. Employees covering for absent colleagues may experience stress, increasing the likelihood of further sick leave. In small or specialised teams, even a single absence can quickly escalate into a significant operational challenge.

The preventive power of healthcare benefits

Healthcare benefits are an effective tool to manage these hidden costs. Private medical insurance, health screenings, physiotherapy, and mental health support give employees the resources they need to help manage their health proactively. Early intervention can prevent minor issues from developing into long-term absences, saving both the employee and the business time and stress.

For example, regular access to physiotherapy can address musculoskeletal problems before they require extended time off. Similarly, counselling or wellbeing programmes can help employees deal with stress, anxiety, or burnout before it escalates into a serious absence.

Financial benefits for the business

One major factor preventing businesses from introducing more healthcare benefits for their employees is they’re unsure about the upfront cost. Finding budget for employee wellbeing on top of rising business costs is the top challenge for nearly 40% of organisations surveyed for CIPD’s Health and Wellbeing at Work 2025 report*. However, we believe there’s a clear return on investment.

By reducing absenteeism, helping employees return to work faster (without pressurising them to rush their recovery) and improved productivity, companies can outweigh that initial outlay.

And there is also evidence that healthcare support can also reduce turnover, as employees who feel supported are more likely to stay, saving recruitment and training costs.

A healthy workforce is a more-productive workforce. Businesses that can give their employees access to preventative and ongoing care often see improved morale and engagement. This ultimately improves efficiency and profitability.

Practical steps for employers

Investing in employee wellbeing is not only a compassionate choice – it’s a smart financial decision. Businesses that take proactive steps to support health often see stronger performance, reduced disruption, and a workforce that feels valued and supported*.

Here are some practical steps to make healthcare benefits effective:

• Assess workforce health risks: Consider industry-specific risks and the specific needs of your team.
• Offer a mix of preventative and reactive care: Cover both physical and mental health support.
• Consider tax implications: Ensure that costs or restrictions don’t create barriers for employees.
• Make benefits accessible and clear: Ensure employees understand what’s available and how to use it.
• Track usage and outcomes: Monitor how frequently benefits are accessed and the impact on absenteeism and wellbeing.

At Howden, we help businesses protect their workforce and bottom line. Contact our team of experts today to explore healthcare benefits solutions that reduce sick leave, support employee wellbeing, and keep your teams performing at their best.

[*] Health and wellbeing at work 2025
 

Disclaimer: The views expressed in this opinion piece are those of the author and do not necessarily reflect the views of The Well Crowd. This content is for information and discussion purposes only and should not be taken as medical, health, or professional advice.