You have ten employees and €100,000 in unrestricted cash. One employee is absent for a year. You are insured, so the financial risk may initially appear manageable.
But what if that employee needs to be replaced for the full year? In an example published by Centraal Beheer, replacement alone costs €54,000. More than half of the cash buffer could then be absorbed by a cost you may have assumed was largely covered.
This week, during the NOS broadcast around Budget Day, I spoke with the prime minister and deputy prime ministers about social security. The position of SME employers received only limited attention, so I want to examine the financial side more closely.
What does one year of sick leave cost?
Consider an employee with an annual gross salary of €45,000 who is absent for a year. Centraal Beheer’s example includes €45,000 in continued salary, €9,000 in employer charges, €2,400 in occupational-health support and €54,000 for replacement. The total is €110,400.
| Cost item | Without sick-pay insurance | With sick-pay insurance* |
|---|---|---|
| Employee salary | €45,000 | Fully or partly insured |
| Employer charges | €9,000 | Depends on the policy |
| Occupational-health support | €2,400 | Sometimes insurable |
| Replacement | €54,000 | Usually borne by the employer |
| Total example | €110,400 | Depends on cover |
* Exact cover varies by insurance policy. Source and assumptions: Centraal Beheer, cost of a sick employee. In this example, replacement costs cannot be insured.
Lost revenue and lower productivity are not included. The €110,400 is a worked example, not an average for every business.
Which costs does sick-pay insurance cover?
Insurance can cover an important part of continued salary and, depending on the policy, some additional costs. It does not perform the work. In the example, replacement costs €54,000 a year, or an average additional cash outflow of €4,500 per month.
If the business holds €100,000 in unrestricted cash, twelve months of replacement alone could consume more than half of that buffer. The same cash may also be intended for investment, hiring, repayments, tax or protection against a weaker trading period.
When does long-term absence begin to affect cash flow?
The more useful question is not only what an absent employee costs, but when the business begins to feel the impact. What happens after three months, six months or a year? What if replacement costs €6,000 a month rather than €4,500 while revenue simultaneously falls 10% short?
A business can remain profitable on paper while its cash buffer steadily declines. Include long-term absence as a scenario in your cash-flow planning. The purpose is not to predict every problem precisely, but to see when financial headroom declines and action becomes necessary.
Why does absence risk vary by business and sector?
Average absence percentages tell only part of the story. Preliminary CBS figures for the second quarter of 2026 show absence rates of 6.2% in manufacturing, 4.9% in construction and 4.4% in commercial services.
Source: Statistics Netherlands (CBS), sickness absence by sector and business size, preliminary second-quarter 2026 data, updated 18 August 2026.
What matters more is what absence means inside your company. An experienced engineer, tradesperson or specialist may be difficult and expensive to replace. Temporary capacity may be easier to obtain elsewhere. Salary levels, premiums and the team’s ability to absorb the work also differ.
Where is the limit for a small employer?
Every employer wants to support employees properly. When someone becomes ill, they should be able to rely on support and security. But an owner with ten employees also has a responsibility towards the other nine and towards the financial health of the company on which all ten jobs depend.
The discussion about social security may therefore also consider how much financial risk a small employer can reasonably bear. This is not an argument for less protection, but for a workable balance between employee security and the capacity of a smaller business.
How do you include sick leave in a cash-flow forecast?
A 13-week cash-flow forecast should include not only expected receipts and payments but also what happens when circumstances deteriorate. Build at least a base case and an absence scenario. Include uninsured salary costs, support, replacement, possible lost revenue and the timing of insurance payments.
Only when you know how many months the buffer can absorb such a scenario do you know how much financial headroom the business really has.
Frequently asked questions about sick leave and cash flow
What can one year of sick leave cost an employer?
In the Centraal Beheer example, continued salary, employer charges, support and replacement total €110,400. Actual costs depend on salary, duration, replacement, productivity loss and insurance cover.
Does sick-pay insurance cover replacement costs?
Not automatically. Centraal Beheer states that replacement costs cannot be insured in the example used. Always check the terms of your own policy.
How should sick leave be included in a cash-flow forecast?
Model different durations and replacement costs. Include uninsured expenditure, timing of insurance payments, possible lost revenue and the available cash buffer.
Mylène helps SME owners who need more than a bookkeeper, but for whom a CFO is still a step too far. Drawing on experience in finance, private equity and M&A, she turns financial figures into clear decisions about cash flow, profit, growth and business value. Together with entrepreneurs, she builds financially stronger, better organised and transferable businesses.
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