Do you employ staff as an entrepreneur? Then you sometimes have to continue paying wages for up to two years when someone is ill. That can cost you a lot of money. Absenteeism insurance helps you reduce those costs. This insurance is not compulsory, but many entrepreneurs choose it anyway. In this article, we explain what absence insurance is, what it covers, how much it costs and what to look out for.
What is absence insurance?
Absenteeism insurance is also known as sick leave insurance. This insurance ensures that the wages of a sick employee are paid. Often, you also get help from an occupational health and safety service. That way, you know for sure that you are handling your employee's reintegration well. So this insurance is not only nice for your wallet, but also a handy support in case of illness.
Who is it relevant to?
- Entrepreneurs with staff
Once you hire someone, you have to pay 70 per cent of their wages when they are sick. This can take up to two years. With absence insurance, you protect yourself against this risk. - Self-employed persons without staff
Cannot take out absenteeism insurance, but have their own risk in case of illness. Therefore, a disability insurance (also known as AOV) is often a smart choice.
What does absence insurance cover?
Absenteeism insurance cover partly depends on your own choice. But broadly speaking, the following applies.
- Up to 70-100% of gross pay in case of illness
- A term ranging from 1 or 2 years
- Usually included with occupational health and safety service (this is mandatory if you have staff)
- Any additional options such as coverage for reintegration costs or replacement staff
If you extend your insurance to include absence counselling, you avoid problems with the Gatekeeper Improvement Act. This law obliges employers and employees to actively work together on rapid reintegration in case of illness. This aims to prevent long-term absenteeism.
What does absence insurance cost?
How much premium you pay varies by industry, type of work and coverage chosen. Let's take the following guideline:
- On average 1% to 4% of total wage bill per year
- Any additional charges for additional modules
Companies with physically demanding work, such as cleaners, often pay more than a marketing agency. Your absenteeism history also affects the amount of your premium.
Fiscal aspects
You can deduct the premium for such absence insurance from tax as a business expense. You just don't pay VAT on it. As a result, you keep less profit and thus pay less income tax.
When to close?
As an employer, you would do well to take out absence insurance before your employee starts. Is your employee already sick when he starts? Then that illness is often not covered by the insurance. And also pay attention to the waiting period. Because sometimes benefits only start after several weeks of illness.
Conclusion
A sick employee costs you both money and time. With absenteeism insurance, you ensure that illness does not become a major financial problem. This insurance is not compulsory, but it is smart if you have staff. Are you self-employed without staff? Then consider an AOV to protect yourself in case of long-term illness.
