These are common questions or thoughts that arise when the phrase “leave of absence” is presented to a manager or business owner.
Why would anyone need to take a long leave of absence? Why should I comply with these laws? Disability plans are too expensive for me to implement at my company.
The old school methodology is that people need to come to work every day and get the job done. In the hectic lives of overworked professionals, working parents and employees who have elder care concerns, long term leaves of absence are taking on more of a spotlight in the HR world. These benefits can feel like costs but there is employee benefit capital that can be made off of implementing these benefit programs. Here are some thoughts for you to consider.
Let’s start with – What is a leave of absence?
About.com provides a great definition of what is a leave of absence. A key point is that an employee’s employment continues during the term of the leave. Some leaves of absence are provided by employers with limitations in a policy document. Short term leaves of absence include a sick time, vacation time, or paid time off program and are often accompanied with a wage payment. Longer term leaves of absence are required and defined by law. (See Family Medical Leave Act, or FMLA, at the federal Department of Labor’s website.) These types of leaves often do not include a pay element.
Why should you comply with these laws or implement these benefits?
Compliance with the law is important from a financial, operational, and employee relations standpoint of your business. Compliance with the FMLA or USERRA for military professionals is relatively easy to implement and administer to full compliance. But beyond the requirement to comply, why have these available? I guess I could say, It’s the right thing to do, but that’s too simple of an answer. The complexity is in the impact it has on the business, not just the employee.
Leaves of absences provide job protection while someone needs to take a break from work, care for herself or care for a dependent. That’s what is in it for the employee. What’s in it for the employer is:
- Minimize recruiting, retention, training: Trained employee returns to work at the end of the leave. No need to recruit or train a replacement.
- Minimize business disruption: Employee handles the self or family support during a concentrated period of time and returns to work without on-going distractions or disruptions.
- Maximize employee morale: Employee, manager and team members can have confidence that a needed benefit was provided by the company to an employee.
Expenses of leaves of absence or disability plans
At this point in the US there are few requirements to provide paid leaves of absence. Some states are starting to mandate paid time off for sick time and vacation time. (See Massachusetts Earned Sick Time and California Healthy Workplaces, Healthy Families Act of 2014.) If you don’t have plans that provide employees a chance to take any paid time off, you may want to consider implementing a paid time off plan. Some collective bargaining agreements may have a mandate for paid time off in one form or another and with good labor practices in your company, you may chose to offer the same benefits to non-union workers. Those costs are easy to calculate and accrue for with the help of your company’s finance team. You may choose to insure your costs with longer term disability insurance programs like short term or long term disability plans. Those costs too are fairly easy to calculate because usually your company will be charged a monthly premium per participant.
The costs that are more difficult to identify include:
- How many people are likely to utilize a leave of absence program?
- What is the cost to recruit and train an employee to join my company?
- What is the lost opportunity cost by not attracting the right talent to my company to fill open positions?
Overall impact to the business
There are some costs that are more easily defined than others, but in today’s hectic lifestyles of most employees there is a value to having time off to take care of personal needs. There is a higher value in having paid time off to take care of personal needs like mental health, personal care, doctor’s appointments, childcare or elder care. Click through to see a post from Society of Human Resources Management (SHRM) about the perceived value of benefits. If you are having trouble conceptualizing the overall cost of employment for your company, here is a helpful calculator from CalcXML that will calculate Employee Total Compensation. This calculator is from an employer’s point of view so enter what are the employer’s contributions to tax, benefits and insurance.
Check out my other posts on this topic.