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The impact of a sick pay waiting period on sick leave patterns

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Abstract

This article assesses how a waiting period for sick pay impacts sick leave patterns. In the French private sector, statutory sick benefits are granted after 3 days. However, 60 % of employers in this sector provide complementary sick pay to cover this waiting period. Linked employee–employer survey data compiled in 2009 are used to analyze the impact of this compensation on workers’ sick leave behavior. The assessment isolates the insurance effect (moral hazard) from individual and environmental factors relating to sick leave (including health and working conditions). Results suggest that employees who are compensated during the 3-day waiting period are not more likely to have an absence. On the contrary, their sickness leaves are significantly shorter by 3 days on average. These results could be explained by consequences of presenteeism and ex post moral hazard when employees are exposed to a waiting period.

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Notes

  1. The basic statutory benefit from the public health insurance system corresponds to 50 % of daily capped earnings (subject to minimum contribution). The replacement rate reaches 66 % after 1 month’s leave for workers with three children.

  2. A national law from 1978 ("loi de mensualisation") requires that employers offer complementary benefits to reach replacement rates of 90 and 66 % to all their employees subject to tenure (1 year since the latest reform of 2009) and sick leave duration (8 days since 2009).

  3. Employers can provide higher replacement levels at their own initiative or due to industry-wide collective agreements.

  4. This sub-sample contains more large firms than the initial sample, but its breakdown according to other characteristics (sector, region, average wage, labor force structure) is similar to the initial sample (Table 3 in the appendix).

  5. By matching the two sections of the survey, we make sure that the level of compensation provided by the employer applies to the category of the employee (manual worker, clerk, intermediate profession, manager). About 70 % of the firms have at least one employee in the survey. Among these firms, 76 % have at least one employee retained in the sample of study (i.e., an employee with at least 5 years’ tenure). We therefore have information on the level of compensation on the first 3 days of absence and the characteristics of 1381 employees working in 735 firms. Information on the level of compensation on the 6th day of absence is missing for 100 individuals of this sample. This is why, for some estimations, the sample of analysis is of 1280 observations. Results are, however, unaffected by this restriction.

  6. Firms are asked to provide the level of compensation for a typical case of an employee with 5 years’ tenure. The level of compensation for employees with less than 5 years of tenure is therefore unobserved (this concerns 35 % of the initial sample). Employees with over 5 years of tenure represent 60 % of private sector employees in France according to the national Labour Force Survey (Enquête emploi 2010, INSEE). Their sickness claims are similar to employees with 3–5 years’ tenure. Among workers with 3–5 years’ tenure, the gap in sick leaves depending on whether their firm compensates the waiting period or not is also similar to the gap observed among workers with over 5 years’ tenure.

  7. It does not seem pertinent to study the impact of the 3-day waiting period for workers faced with severe work incapacities. These workers represent 3.3 % of the sample. This restriction does not affect the results.

  8. It is not possible to distinguish the occurrence from the duration for different sickness spells in the data because employees are asked to report the total duration of the sickness leaves that were prescribed by a practitioner (such a prescription is mandatory as of the first day of sickness absence in France) and that were effectively taken in the last 12 months. The potential outcomes of this estimation strategy are discussed in the conclusion.

  9. We keep only the variables Z that have a significant effect on Y in the final specification. Labor force structure in terms of professional category, age, gender, and contract type, are not correlated with individual claim risks. These results are not sensitive to the filters on the firm sample: the results presented here are carried out on all firms that have provided information on sick pay compensation during the waiting period, but the same effects are found when restricting the sample of firms that have provided this information and that have at least one employee in the sample analyzed.

  10. For 3 % of the sample, no information is available on firm characteristics. These firms are more likely to compensate for the waiting period, so we prefer not to exclude their employees from the sample. We treat this non-response by imputing missing values to the reference category for firm characteristics and including a “missing data” dummy in the regression.

  11. Individuals with long-term illnesses are not subject to the sick leave waiting period corresponding to their LTI. This exemption applies to about 25 % of their sick leave (own calculation using National Health Insurance data). We chose to include these individuals in the analysis. Excluding individuals in poor health could bias our results since financial incentives targeting short sickness spells may have a different effect on individuals who anticipate recurrent spells of sickness.

  12. The level of education is not included in the model because education is one important component of the professional occupation variable.

  13. We verify that tenure and age are not too closely correlated to be included in the same model (corr. = 0.5).

  14. This proportion is not sensitive to the restriction on tenure, and is in line with other survey or administrative sources.

  15. According to PSCE data, employees with lower levels of tenure (between 1 and 5 years) have a slightly higher probability of absence (about 35 %) but have shorter absence durations. With the hypothesis that these employees are compensated by their firms similarly to their colleagues with over 5 years of tenure, the difference in claims between “compensated” and “uncompensated” employees are weaker among employees with 1–5 years of tenure (1 day in average, compared to 2 days among employees with over 5 years of tenure).

  16. The results presented in the table are estimated with a Hurdle model that makes the hypothesis that null and positive values can result from different processes. The marginal effect of the complementary compensation during the 3-day waiting period on sickness absence is −4.12 days (significant at 2 %) with a zero-included negative binomial model, which relies on the hypothesis that null and positive values do not result from two different processes. It is −2.778 days with a zero-inflated negative binomial model, which relies on the hypothesis that there is an unobserved selection on null values and that null values can result from two distinct processes.

  17. We do not further interpret results on environmental variables, because these variables only serve as controls and have a weak external validity (their effects are specific to the sub-group of employees with over 5 years’ tenure).

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Acknowledgments

I am grateful to discussants and participants at several seminars and conferences (Drees and Irdes seminars, JESF, JMA, International Risk Conference) for helpful discussions on earlier versions of this paper. Many thanks are particularly due to Magali Beffy, Renaud Legal, and Denis Raynaud.

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Authors and Affiliations

  1. DREES (French Directorate for Research, Studies, Evaluation and Statistics), Paris, France

    Catherine Pollak

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  1. Catherine Pollak
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Correspondence to Catherine Pollak.

Appendix

Appendix

See Tables 4, 5, 6, 7.

Table 4 Sample description (firms)
Full size table
Table 5 Distribution of sickness leaves
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Table 6 Determinants for employees to be compensated during the waiting period
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Table 7 Determinants for firms to offer compensation during the 3-day waiting period
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Pollak, C. The impact of a sick pay waiting period on sick leave patterns. Eur J Health Econ 18, 13–31 (2017). https://doi.org/10.1007/s10198-015-0755-0

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