What are the costs of sick leave?
Below are the costs of sick leave incurred by a firm, with the average per sector. If one employee is sick, this results in loss of production. The employer tries to reduce this impact by engaging a replacement. Replacement and loss of turnover form the main costs of sick leave.
Average per Sector
Company
Sick leave 5.5 per cent
Salary Euro 30,279
Replacement costs Euro 1,602
Turnover loss Euro 418
Costs health and safety executive (Arbodienst) Euro97
Sick leave guidance Euro 25
Total costs of sick leave Euro 2,142
Below are given the costs of sick leave, per week, for one or more employee who is absent for a long period. The main costs of sick leave are loss of turnover and the cost of replacement.
Length of sick leave (no of weeks) 1
Full-time equivalent (fte) 100 %
Gross annual salary Euro 30,279
Costs of replacement Euro 560
Loss of turnover Euro 146
Costs of health and safety executive (Arbodienst) Euro 97
Sick leave guidance Euro 0
Total costs of sick leave 812
With \’the Pemba Act \’ the costs for your company can be considerable.
Below, is an estimate of your WAO (invalidity scheme) costs for one employee who enters the WAO in 2002.
If the employer does not fulfil, or does not fulfil adequately, his obligations by virtue of the Wet verbetering Poortwachter (Act designed to avoid that employees enter the invalidity scheme), he can be subject to a sanction. The maximum sanction that has been given was equivalent to the continuation of the salary payment for 1 more year.
Basic premium WAO 2002 Euro 1,771
Differentiated premium
in 2002 if no
WAO benefit was paid out Euro 375
Differentiated premium
in 2004 in the case of 1 employee
in the WAO Euro 1,908
Total additional costs due to
1 employee in the WAO Euro 7,661
Risk salary sanction Euro 24,587
Standpoint of Tax Inspector in respect of Salbar Health Concept.
Dear Mr Feldman,
In your letter of 4 April 2002, you requested that the tax authorities adopt a standpoint in respect of Salbar Health Concept as a method of preventing work-related sickness symptoms. You ask what the attitude of the Tax Inspector is concerning an employer in terms of being able to deduct the costs of your Health Concept, when a company introduces this concept.
The costs charged to the client are deductible for this objective.
As far as the employee is concerned, Article 10 Clause 1 of the 1964 Income Tax Act states that:
A salary is all that is received from employment or from former employment.
The therapeutic treatment that your provide for the prevention of RSI is related to employment, and is therefore a benefit derived from the employment.
In the situation that you depict, the services you offer are provided by your client to an employee.
In articles 17 and 17a of the 1964 Income Tax Act is stated what is to be understood as free provision
As far as the employee is concerned, Article 10 Clause 1 of the 1964 Income Tax Act states that:
A salary is all that is received from employment or from former employment.
The therapeutic treatment that your provide for the prevention of RSI is related to employment, and is therefore a benefit derived from the employment.
In the situation that you depict, the services you offer are provided by your client to an employee.
In articles 17 and 17a of the 1964 Income Tax Act is stated what is to be understood as free provision.
Art.17 1. Free provisions are:
a. provisions to the extent that they can be supplied in order to avoid costs, charges and repayments for the purpose of an appropriate fulfilment of the employment contract;
b. other provisions to the extent that they are not experienced as a salary advantage according to the generally accepted opinion.
2. Articles 15a up to and including 16c apply likewise.
3. Contributions of the employee to the free provisions are not deducted from his salary.
If the employer charges the full costs to the employee, the situation of “free provision” does not apply.
In Art. 17a. the term “free provision” can reasonably be applied to:
a. commuter travel in the form of transport for a person subject to deduction of taxes;
b. generally recognised public holidays, an anniversary of the person subject to deduction of taxes, as well as the termination of the employment contract, as long as the provisions have a mainly idealistic value.
Further to this letter, I wish to inform you that massage may be freely provided within the Arbo-provisions under certain conditions:
-The company has an Arbo-plan
-The massage may be reasonably considered to form part of this Arbo-plan.
-The massage is given during working hours
-The employee does not pay any own contribution
-For the employee, there is a situation of a considerable private saving
I trust that I have informed you fully.
Yours faithfully,
Belastingdienst/Ondernemingen Amsterdam 2,
De inspecteur
(The Tax Inspector, Tax Office for Businesses, Amsterdam 2)
Vroemen G.M.J
