Absenteeism insurance
Cover for an employer's wage-continuation costs during employee sickness absence.
Definition
Absenteeism insurance covers an employer against the cost of continuing to pay wages to sick employees, a statutory obligation in the Netherlands lasting up to two years. Policies are structured as conventional cover (wages above a deductible period) or as a stop-loss arrangement, and many bundle absence-management and reintegration services. For SMEs with limited reserves it is a key risk-management tool.
Example
When a key employee is off sick for several months, the absenteeism insurer reimburses the employer's continued wage payments above the deductible.
Why this is a business risk
The two-year wage-continuation obligation is one of the most significant employment cost risks for Dutch businesses, particularly SMEs where a single long-term absence can represent a material share of annual payroll. Businesses that self-insure this risk without adequate reserves can face cash-flow problems if several employees are absent simultaneously. Failing to meet reintegration obligations alongside the wage-continuation duty can also expose employers to sanctions from the UWV, including an extension of the pay obligation beyond two years.
How to manage it
- Calculate the maximum two-year wage exposure for your workforce and compare it to your reserves; if there is a gap, insurance covers it.
- Choose a deductible period that matches your financial resilience: a longer own-risk period lowers premiums but increases your direct exposure in the early weeks of absence.
- Follow the reintegration obligations set by the Wet verbetering poortwachter diligently, as failures can result in UWV sanctions that extend wage-continuation costs.
- Use the absence-management services bundled with many verzuimverzekering policies to reduce duration and support early reintegration.
Legal references
Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.
Frequently asked questions
Common questions about this term.