How to calculate lost workdays and their business cost

What are lost workdays and how can you calculate how much they are costing your business? Finance writer Sarah Iqbal dives into the costs of lost workdays for SMEs and how your business can keep track of this.

Lost workdays affect a business’s productivity and operating costs. The time and costs associated with covering a member of staff’s duties in their absence ultimately impacts your bottom line. So, to run a successful business, it’s essential to understand how much money your business loses due to your employees not being available to work.

Lost workdays can result from employee holidays, sickness, or other activities that prevent your employees from being available to work. This article will look at how much lost workdays cost the average small business, the main reasons for lost workdays, and how to calculate lost days and associated business costs.

What is a lost workday?

A lost workday essentially refers to the total number of workdays lost vs scheduled hours that your employee would have usually been available to work. It’s the number of days a worker is absent from the workplace that they would have been in work under normal circumstances. A lost workday refers to any type of leave. That could cover either planned holidays, sickness, work-related illnesses, or workplace accidents.

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What are the main reasons for lost workdays?

In 2019/2020, it was estimated that 38.8 million workdays were lost in the UK due to work-related illnesses and workplace accidents. According to the Health and Safety Executive, depression, stress and anxiety, and muscular-skeletal disorders accounted for most of these lost days. As a result, the average absent employee took 17.6 days off to recover from a work-related accident or illness.

Accidents in the workplace

Most workplace accidents are caused by manual handling incidents or slips, trips, and falls, leading to employees needing to take time off work to recover. In 2019/2020, workplace injuries accounted for 6.3 million working days lost. Unfortunately, accidents happen, and even in workplaces which have followed the health and safety guidelines closely, these incidents can still occur.

Mental health

During the same reporting period, more lost days were caused by mental health conditions (including depression, anxiety, and work-related stress) than through physical accidents. Unmanageable workloads, a lack of support, threats, violence, and bullying are the main issues that lead to work-related mental health conditions and time off.

How much are lost workdays costing businesses?

How much are lost workdays costing businesses

It’s easy to assume that the only cost associated with an absent employee is their wages, but unfortunately, it’s a little more complex than that. When working out the cost of lost workdays, you should also consider the cost of training another employee to cover those absent, the impact their absence has on your productivity, and how it affects your team’s morale.

According to a report from mental health charity Mind and Deloitte, lost workdays due to mental health cost UK employers £45 billion a year and accounted for half of all work-related illnesses last year.

The cost of workdays lost to mental health and accidents at work certainly isn’t small. Although it’s almost impossible to stop some unavoidable lost workdays, business owners can take some steps to reduce the amount of lost time suffered by their business. These include:

How to calculate lost workdays and business costs

How to calculate lost workdays and business costs

The lost time rate calculates the total lost hours as a percentage for the maximum possible hours worked. The formula for this calculation is as follows:

  • The number of hours work missed, divided by the maximum number of hours worked, multiplied by 100

As an example, if your employee could work 37 hours per week and they miss 7 hours of work, the sum would be:

  • 7 ÷ 37 x 100 = 18.92%

So, in this example, the lost time rate would be 18.92%.

The lost time calculation is helpful as it provides an overview of how much money the business is losing due to employees being unavailable to work. It can help you identify where change is needed to reduce lost time and increase productivity. It can also help you identify policies that need updating or enable you to make changes that will positively impact your business’s bottom line and hopefully drive down absence.

The bottom line

Only when you completely understand how much lost workdays impact your business can you start to make changes to reduce the amount of time lost. Whether it’s looking to implement a more flexible working environment or encouraging a more open channel of communication between employees and managers, taking the time to analyse your lost workdays and the cost to your business can help develop strategies to facilitate a more productive and happier work environment and healthier bottom line for your business.

Read more from the myhrtoolkit blog

Revenue per employee: are you getting the most out of your employees?

The 7 best HR cost-cutting strategies for small businesses

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Written by Sarah Iqbal

Sarah Iqbal is a fully CIM qualified marketing executive and copywriter who specialises in business and finance writing. She regularly writes about how businesses can make profitable investments and use strategies to save on costs and boost revenue.

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