Small businesses face tough choices about where to invest limited resources. But Better Way Alliance members have found that offering paid sick days leads to measurable returns through increased productivity, reduced turnover, and healthier workplaces.
“When I implemented paid sick days, employee turnover dropped significantly. The cost of replacing just one experienced staff member far outweighs providing paid sick days for my whole team,” says Anita Agrawal, CEO of Best Bargains Jewelry in Toronto.
In today’s complex small business environment, the business case for paid sick days is especially relevant as employers navigate multiple health challenges. With H5N1, COVID-19, flu, and other respiratory illnesses circulating, businesses without paid sick days risk wider workplace outbreaks that can force temporary closures or severely reduced operations. Along with this, Paid Sick Days can build an employment package that attracts and retains key talent – more about that later.
The numbers tell a compelling story. Statistics Canada reports over 1 million job vacancies in Q3 2023, with accommodation and food services hit hardest at an 8.9% vacancy rate. While employers may raise wages to attract talent, BWA members find that benefits like paid sick days or predictable schedules can matter more for retention than marginal wage increases. This comes as Canadian businesses face a 0.8% decline in labor productivity during 2024, according to The Conference Board of Canada. Retaining experienced staff who understand operations and serve customers effectively boosts productivity – and can be the difference between failure and survival in an increasingly competitive market.
The Financial Case for Paid Sick Days
The financial returns of adopting paid sick days are clear. Research from the American Sustainable Business Council shows companies that introduced paid sick leave saw average revenue increase by 6.8% per full-time equivalent (FTE) employee after introducing a paid sick leave program.
According to a 2024 Express Employment Professionals survey, the cost of a single employee leaving an office job is about $30K. Internal BWA research estimates front-line workers tend to be in the $7-10k range. While estimates for more specialized work peg turnover costs that can range into the $100s of thousands for a single highly specialized employee. This includes both direct costs like job postings and training, and indirect costs like reduced team productivity and lost customer relationships.
The true cost goes deeper. When experienced employees leave, businesses lose valuable customer relationships and team knowledge. New staff take time to reach full productivity, affecting service quality and team morale. Taking the long view – the time business owners spend managing turnover could be better invested in business growth and innovation.
Understanding Today’s Employment Landscape
Employee hiring and retention remains a critical challenge for businesses across almost every sector. Smart business owners are using this as an opportunity to update their employee compensation packages and adding items like Paid Sick Days & Employee Assistance Programs (EAP). Consider Nima Fotovat, CEO of Riverside Natural Foods, who introduced 14 paid sick days during the pandemic. The company avoided production shutdowns while protecting worker incomes and revenue. They’ve since flexed down to fewer sick days per year – but will increase the amount during heightened periods of respiratory illness spread.
Weak employee benefits can be the difference between landing a talented new employee or them selecting another job. Business owners report significant stress and burnout when short-staffed, often covering shifts themselves while trying to maintain service quality and managing other responsibilities. As one BWA member puts it: “The time and energy spent constantly recruiting and training new people could be better spent improving our business and serving customers.”
Paid sick days programs often cost a fraction of replacing just one employee. Recent workplace trend reporting from WorldatWork, an employee rewards organization, show:
- A growing preference for comprehensive benefits, with WorldatWork reporting a 7% increase in companies offering combined leave policies since 2015
- Higher engagement from younger workers, who increasingly prioritize workplace wellbeing
- Improved ability to attract and retain talent in a competitive labor market
- Stronger organizational resilience through consistent staffing
Paid sick days strengthen businesses, workers, and communities through improved happiness & health. The numbers are clear – the investment creates returns through reduced turnover, better retention, and a healthier workplace. When employees can take time to recover, they return ready to contribute their best, building stronger local economies and more resilient communities.
Ready to calculate the returns for your business? Our easy-to-use Paid Sick Days Calculator will show you exactly how this investment can work for you. Join forward-thinking Canadian business owners who’ve already discovered the benefits of paid sick days.
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