Planning · March 25, 2021

Developing an Appropriate Sick Leave Policy for Your Business

Offering a sick leave policy that includes paid time off for employees to take care of themselves or others has benefits beyond wellness. It can also help your business boost morale, productivity, recruitment and retention. Your policy can be as unique as your business, which means there are many aspects to consider when formulating and implementing a plan.


Options for paid leave

Determining how you want to configure short-term paid sick leave for health concerns and preventive care is a key decision you should make when starting a business or expanding your benefits package.

You could choose to have workers accrue time off, like one hour for every 30 hours worked. Or, to save you the effort of keeping track of accruals, you could give employees a lump sum of hours to use throughout the year.

If you also offer team members days off for personal reasons and vacations, you may find it worthwhile to bundle these other types of leave with sick days as paid time off, or PTO. You wouldn't need to allocate days for each category of leave. This approach gives workers the flexibility to divvy up their time off as they wish.

Leave management software, which is often part of a broader suite of human resources tools, can make it easier for managers and employees to track sick day accruals and usage.

Unlimited sick days

Not capping sick days at all can further reduce your administrative burden and alleviate employee anxiety about running out of sick leave. The policy can also send a strong signal that your workplace values health and trusts the judgment of team members.

You would need to set up guardrails to ensure the unlimited system isn't abused. On the other hand, you may also find you need to encourage some team members to take advantage of a benefit that may seem unclear without established parameters.

Unlimited sick days can work for companies that are more concerned with the results employees produce than where or when they do their work. The unlimited approach may be less appropriate for businesses that, by their nature, can't offer employees so much flexibility, like those that rely on frontline workers to operate.

Elements to consider

A number of considerations can help you determine the overall structure and details of your employment sick leave policy. These include:

  • Will there be a waiting period before newly hired employees can start accruing and using sick leave?
  • How many annual paid sick days will you offer employees? A recent survey by the US Bureau of Labor Statistics found workers in the private industry on average received 7 days of sick leave per year after one year of service. Offering higher than the average number might make your business more attractive to candidates and boost employee retention.
  • Will the same rules about sick leave apply to all employees, or will they vary for full-time, part-time and hourly workers?
  • Will you base your annual allocation of sick days on tenure?
  • Can team members carry over unused sick days into the next benefit year, or will those hours be forfeited?
  • Will employees need to show proof of an illness?
  • Can a sick employee work from home and if so, will that time count as a sick day?
  • How will you handle accrued but untaken sick time off when employees leave your company?
  • What steps will you take to ensure employees aren't punished or stigmatized for taking sick days?

Keep in mind that although there aren't currently federal mandates for paid sick leave, your city and state may have paid sick leave requirements you'll need to follow. You should be able to access relevant rules on government websites and by contacting your state's labor office.

Paid sick leave is one of the many issues the COVID-19 pandemic put into sharp relief. Employees who come to work sick because they're worried about losing their pay or their job risk harming themselves and their colleagues. Having a strong understanding of your business finances will help you create a sick leave policy that's cost-effective and meets the needs of both your company and your employees.

Insights

Financial insights for your business

No results found

This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.

Links to third-party websites may have a privacy policy different from First Citizens Bank and may provide less security than this website. First Citizens Bank and its affiliates are not responsible for the products, services and content on any third-party website.