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The Cost of Banking Sick Days in the Public Sector

Sick Days
Banked Sick DaysConclusion

Key Findings

  • Banked sick days are costing federal and provincial governments $3.8 billion
  • As of 2013-2014, employees working in the federal government accumulated 15 million sick days
  • Federal government employees have an average of 74 banked sick days; oldest workers have close to 120 banked sick days
  • Federal government employees and some provincial government employees in Quebec and Saskatchewan can bank sick days without limit
  • City employees in Winnipeg and Moncton can bank sick days without limit among major municipalities
  • Some government employer plans allow employees to apply unused sick days towards cash payouts upon retirement/termination of employment or early retirement
  • Less than 3 per cent of private sector sick leave plans allow employees to bank sick days compared to 28 per cent of government sick leave plans
  • Newfoundland and Labrador faces the highest sick day liability per capita ($441) among provincial governments
  • City of Toronto has the highest sick day liability per capita among the largest municipalities in Canada ($176)

Sick Days

Sick days in the public sector have become controversial in recent years due to concerns over their possible misuse among employees and related costs. The last CFIB1 report on sick days showed that public sector workers take a higher number of days away from work compared to private sector workers. Similar to findings in CFIB’s report, both the Treasury Board and the Macdonald Laurier Institute show that federal public sector employees take on average more sick days compared to private sector employees.2 Treasury Board estimates that sick days taken by federal public sector employees cost more than $1 billion a year in lost wages.3 While most of the existing research4 examined has been on the number and cost of sick days taken primarily by federal government employees, little has been said about the cost of banked sick days (unused sick days that can be carried over into future years) at all levels of government. Not everyone working in the public sector has the ability to bank sick days but for the many employees that do so, this benefit can inadvertently reduce the productivity of government employees and create unnecessary costs for government employers and ultimately, taxpayers.5 This is a much larger issue in the public sector as less than three per cent of private sector plans allow employees to bank sick days compared to 28 per cent of government plans.6

Federal government employees can take up to 15 paid sick days a year and can carry unused sick days into the future without limit. As of 2012-2013, federal government employees had an average of 74 banked sick days which is equivalent to 15 workweeks (see Figure 1), more than what is needed to cover any short-term sick leave required before long-term sick leave provisions kick in.

Employees in the public sector are typically given a certain period of time off using banked sick days in the short-term until they qualify for long-term disability (i.e. after 65 days or 13 workweeks for federal government employees). However, there are caveats to this design. Newer employees may not have worked long enough to accumulate a sufficient number of sick days and may have to take an unpaid leave for the amount of time off needed before long-term leave kicks in. This raises questions as to how fair and effective the application of banked sick days for short-term sick leave and long-term disability provisions are for federal public sector employees. Ideally, all employees including new and long-serving employees should be able to take time off when they are sick and not have to fear losing their income in the process.

For employees that do have an adequate number of sick days banked, they must use up all these days before long-term leave provisions apply which is similar to a short-term disability plan.

The perspective that bankable sick days may not be the best solution for ensuring that employees have access to adequate short-term sick leave is shared by many other levels of government; as a result, some governments across Canada have already eliminated provisions that allow employees to bank sick days.

Providing employees a safety net if they get sick in the short-term is a responsible labour policy practice. If an employee falls ill, it is best for them to have access to some sick days so they can take time to recover. However, it is possible that some employees use banked sick days for purposes unrelated to illness. Some governments allow banked sick days to be used by certain employees to retire early or to receive cash payouts for banked sick days that go unused. These alternative sick day provisions raise questions as to why governments have allowed public sector employees to use banked sick days for purposes unrelated to illness.

The next section takes a look at the cost of banked sick days and presents recommendations on how governments can begin to eliminate this provision and curb costs.

  

Of further interest: Calling in Sick: Comparing Days Away from Work in the Public and Private Sector

 

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