# Absenteeism insurance

Source: https://contracko.com/glossary/absenteeism-insurance

# 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.

### How Contracko helps

Contracko tracks insurance policy details and renewal dates stored in your contracts, including absenteeism cover. Expiry reminders mean your HR or finance team is alerted before a verzuimverzekering lapses, and storing the policy terms centrally lets you verify that cover levels still reflect your headcount and payroll at renewal.

## Legal references

- [BW 7:925 Dutch Civil Code: insurance contract Dutch law](https://wetten.overheid.nl/BWBR0005290)

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.

## Relevant for

[Staffing & Recruitment](https://contracko.com/industries/staffing-recruitment)[Manufacturing](https://contracko.com/industries/manufacturing)[Healthcare](https://contracko.com/industries/healthcare)[Logistics & Distribution](https://contracko.com/industries/logistics)

## Related clauses

- [Insurance Obligation Clause](https://contracko.com/clause-library/insurance-obligation)

## Related terms

- [Public/general liability insurance](https://contracko.com/glossary/public-liability-insurance)
- [Professional indemnity insurance](https://contracko.com/glossary/professional-indemnity-insurance)
- [Buildings insurance](https://contracko.com/glossary/buildings-insurance)

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## Frequently asked questions

Common questions about this term.

- **Q:** Is absenteeism insurance compulsory in the Netherlands?
  **A:** No, the insurance itself is not compulsory, but the underlying wage-continuation obligation is. Employers may self-insure the risk, but most choose to transfer it via a verzuimverzekering or by opting into the Ziektewet via UWV.

- **Q:** How long must a Dutch employer continue paying wages to a sick employee?
  **A:** Under article 7:629 BW an employer must continue paying at least 70 percent of wages for up to 104 weeks (two years) of sickness. Many collective labour agreements (CAO) require higher payments in the first year.

- **Q:** What is the difference between a conventional policy and a stop-loss arrangement?
  **A:** A conventional policy pays the employer's wage costs above the agreed deductible period for each individual absence. A stop-loss policy instead activates when total absenteeism costs in a year exceed an agreed threshold, protecting against a high number of simultaneous absences.

- **Q:** What is the Wet verbetering poortwachter and why does it matter for this insurance?
  **A:** The Wet verbetering poortwachter sets a structured reintegration process that employers and employees must follow during long-term sickness absence. Failure to comply can lead the UWV to extend the employer's wage-continuation obligation beyond two years, which increases the insurance exposure the verzuimverzekering is designed to cover.

- **Q:** Can an employer with an ERD (eigenrisicodrager) status for the Ziektewet still use a verzuimverzekering?
  **A:** Yes. Employers who opt to be eigenrisicodrager for the Ziektewet take on UWV's Ziektewet obligations for former employees. A verzuimverzekering can be tailored to cover both the first two years for active employees and the Ziektewet exposure for former employees, providing comprehensive protection under a single arrangement.

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