How to Design an Attendance Policy for your Organization

By Metropolitan Software | All rights reserved

Metropolitan Software has consulted in the field of attendance for thousands of American companies over the last twenty years. This article condenses the best practices learned from those companies and their experiences.  In this article, we present the three main policy types, and discuss the pros and cons of each. We outline ways to customize the standard designs and ultimately help you design a policy that is comprehensive, effective, and appropriate for your company.

This article can assist you in designing an attendance policy that meets the needs of your organization. It is also available as a PDF document.


The best way to approach this article is as follows:

  1. Read Section I, which explains the pros and cons of each of the major policy design types.
  2. Read Section II, which describes ways to customize the basic plan types, with optional clauses and features, to meet your company’s needs.
  3. Section III contains an actual attendance policy that we feel incorporates the best practices of all the competing plan types. This policy could be used as-is, or modified to suit your company’s needs.

I. Attendance Policy Designs

The three most common types of attendance policy are as follows:

  1. Twelve-month rolling policy
  2. Calendar-year policy
  3. Running Balance policy

All three are “No-Fault” policies, and all are designed to notify employees as they move through progressive “steps” of discipline up to and including termination. They differ in the tracking period, and in how employees improve their attendance record.

1. Twelve-month rolling policy

This is by far the most common – and most equitable – of all policy designs. It is easy to understand for employees, and provides a consistent incentive to maintain good attendance. Employees earn points for unexcused absenteeism, and they receive increasingly serious corrective action as they build up points towards termination. For example: employees might receive 1/2 point for a partial-day occurrence and 1 full point for full-day occurrences.  Corrective action would look something like this:

  • 4 Points (in 12 months) Documented Verbal Warning
  • 6 Points (in 12 months) Written Warning
  • 8 Points (in 12 months) Three-day suspension
  • 10 Points (in 12 months) Termination

Since the policy is based on a rolling twelve-months, employees can reduce their point balance by simply waiting for points to “expire” or “fall off” the back end.  In this way, employees are only as good as their last twelve months. All unexcused absenteeism is treated equally, and there is no possibility of favoritism.

This basic policy design could be customized for your company by changing the point levels at which corrective action occurs, or by incorporating features discussed in Section II of this document. A complete sample policy based on this design is included in Section III at the end of this document.

2. Calendar-year policy

This type of policy uses the calendar year for the tracking period. Employees start each new year (January 1st) with zero points, and they earn points for missing scheduled work. Corrective action is taken at predefined point levels, up to and including termination. For example, 4 Points might trigger a Verbal Warning; 6 Points could trigger a Written Warning; etc. up to Termination at 10 Points.

The only way employees can lose points, is to wait until January 1st of the new year, when they return to zero points.

The primary advantage of this plan is that it is easy to understand. Calculating an employee’s point balance is as simple as adding up all of the points acquired since January 1st.

The disadvantages of this plan are significant. First, most of your warnings and terminations will happen disproportionately at the end of the year, because most employees will have low point balances for the first few months of the year.

Second, when the end of the year is near, those employees that have points to “burn”, end up using them; they have little incentive to maintain good attendance, since they know they will have their points cleared soon anyway.

Third, employees that are hired during the middle of a year have an advantage over the rest of the employees. If an employee starts work in October, for example, he has only three months left in the current year, yet is still allowed 10 points before termination. (Most companies that have Calendar-year policies solve this problem by pro-rating the point levels for employees hired during the calendar year.)

3. Running Balance (or Lifetime) policy

Unlike the first two policy types, points earned in a Running Balance policy never expire. They remain on your record for the lifetime of your employment. These policies always contain some “perfect attendance” clause, giving employees a way to reduce their point balance.

For example, your policy might define “perfect attendance” as being 90 days without an infraction. Employees going 90 consecutive calendar days without an unexcused absence qualify for a credit of negative 1 point.

This type of policy is sometimes called a Running Balance policy because employees always have a running balance of points: they go up the point scale as they miss scheduled work, and they can work back down the point scale by earning perfect attendance credits. To calculate an employee’s point balance, you simply add all of the positive and negative points received since that employee’s hire date.

Some companies stipulate that employees can not go below zero in this type of plan. In other words, if they are already at zero points, new streaks of perfect attendance will not further reduce their point balance; they won’t be allowed to build up negative credits.

Other companies allow employees to build up negative credits. You might allow employees to go down to negative three points, but not below. Or you might even allow them to carry unlimited negative point balances. Perhaps you could offer an award to employees that reach negative 8 points.

This policy type is better than the Calendar year policy because it offers a consistent incentive (throughout the year) for employees to maintain good attendance. However, it also has significant drawbacks:

First, in order to calculate an employee’s current point balance, you’d need to go all the way back to his hire date. (In the other two policy types, you would simply look at the current calendar year, or at the last twelve months.)  Printing an employee’s attendance history requires you to print the entire history, back to that employee’s hire date, which could be a cumbersome situation.

Second, the policy is hard to administer. In particular, each employee will be on a different “perfect attendance clock” which begins the day after that employee’s last occurrence. Keeping track of each employee’s eligibility for perfect attendance credits is tedious. Some companies try to solve this problem by choosing a calendar period for perfect attendance. For example, rather than a rolling 90 days, you could stipulate that perfect attendance credits will be awarded on a calendar quarter; employees going a calendar quarter without an unexcused absence will get a negative point credit. This solution simplifies the policy, but provides a less consistent incentive. If an employee is absent on the second day of a quarter, he’s already blown his chance at perfect attendance for that quarter, so he has limited incentive to maintain good attendance.

Third, it creates problems for certain types of time off. For example, should Workers Comp disqualify an employee from earning perfect attendance? What if they are out for 12 weeks of Workers Comp? What about Layoff or Long Term Disability? Some companies try to solve these problems by “freezing” the perfect attendance clock when employees go on certain types of leave. This makes the policy even more difficult to understand and administer.

II. Variations on Standard Policy Types

There are numerous ways to customize the standard policy types above to fit your company culture.  These variations or custom clauses generally fall into the following seven categories. These clauses could be used like a menu when designing an attendance policy. You can pick and choose the clauses and features that make sense for your company’s culture.

1. Granularity of Point assignments

You might choose to handle tardy and early leave occurrences with a higher level of granularity:

For example, you could stipulate that tardy occurrences up to 10 minutes are worth 1/4 point, and between ten minutes and 60 minutes are worth 1/2 point, and anything over 60 minutes is worth 1 full point.

2. Probationary Period for New Hires

Some companies treat employees in their initial 90 work days as “probationary” and specify a different policy for those employees. For example, you could stipulate that new hires reaching 2 points in their initial 90 days will receive a warning and at 4 points they will be terminated.

3. Changing tracking periods and corrective action levels

Based on your company’s needs, you might decide to use a rolling six-month cycle, rather than a rolling twelve-month cycle. If you are considering a calendar-year policy, you could instead use a fiscal year. You could also make the policy stricter or more lenient by changing the point levels at which corrective action occurs. For example, you may decide that employee should receive warnings at 3, 5, 7 and 9 points.

4. Perfect attendance provisions

You could customize a rolling twelve-month policy by adding a perfect attendance clause. You could specify that employees going 90 consecutive calendar days without an occurrence get a cash bonus. Alternatively, you could reward employees with perfect attendance by dropping a point from their attendance history. This would give employees two ways to reduce their point total. They could wait twelve months until the point expires, or they could go 90 days with perfect attendance and a point would be automatically removed. (Note that point adjustment provisions are not compatible with all policy types. Consult Metropolitan Software for more information.)

5. Missed punch tracking

You might also track and penalize employees for “missed punches”.  Most companies like to keep track of missed punches, even if they don’t actually give out points for them, but you may decide that employees reaching 3 missed punches in a calendar month get a point, or some kind of Missed Punch warning.

6. Chronic Absenteeism provisions

Whatever style of attendance plan you adopt, your employees may try to “play” the system. You will invariably have employees that are frequently running enough points to get a Final Warning, but never enough to actually trigger a Termination.

One solution is to add an Excessive Absenteeism clause. You could stipulate that any employee acquiring two “Final Warnings” in any 12 month period (or any period you choose) will be subject to termination.

7. Voluntary Resignation Clause

Most policies contain a clause that reads something like this:  Three consecutive days of absence without calling in will be considered a Voluntary Resignation.

III. Model Policy

This section contains an entire stand-alone attendance policy for an imaginary company. It is a no-fault policy based on the industry-standard twelve-month rolling design, incorporating the best practices and features from a variety of competing designs. It balances the use of rewards and penalties to motivate employees in a consistent manner. We believe it to be a comprehensive, fair and effective approach to controlling absenteeism.

This policy could be used as-is, or it could be further customized to your needs.

Acme Tools – Attendance Policy

Regular attendance is critical to the success of Acme Tools. Employees are expected to be at work on-time on all scheduled days, and work through their appointed schedule. Arriving to work late or not at all puts undue strain on the rest of the employees, negatively affecting morale and the quality of everyone’s work.

While perfect attendance should be everyone’s goal, we realize that some absenteeism is unavoidable. This attendance policy is designed to treat employees equitably and consistently. Employees will receive points for unexcused absenteeism, and will be disciplined only when absenteeism becomes excessive.

Employees who maintain perfect attendance are an asset to Acme Tools, and will be rewarded as per the Perfect Attendance Policy, discussed below.

1. Excused Absences

The following reasons will be considered excused, and will not carry any points:

  • Jury Duty
  • Court appearance
  • Workers Comp
  • FMLA
  • Bereavement
  • Vacation
  • Hospital Stay
  • Military Duty
  • Layoffs
  • Long term Disability
  • Short term Disability

Vacation leave is subject to the Vacation plan as discussed in the employee handbook. Bereavement is limited to 3 days upon death of an immediate family member. Absences of more than one day for the same illness will be considered a single occurrence, and will carry only one point. Illnesses of more than three days require proper documentation.

2. Unexcused Absences

All absences not mentioned above will be considered unexcused.  If you are going to be absent from work for any reason, you must call your supervisor within one hour of the start of your shift. Failure to do so will constitute a “No Call/No Show” and will carry two points on the Attendance Policy.

Employees earn points for missing work according to the following scale:

  • Tardy (up to 2 hours): 1/2 Point
  • Tardy (greater than 2 hours): 1 Point
  • Early out (up to 2 hours): 1/2 Point
  • Early out (greater than 2 hours): 1 Point
  • Absent 1 Point
  • No Call/No Show 2 Points

3. Corrective Action

Corrective action will be administered according the following table. Note that employee point balances are based on a rolling 12-months. If you are absent today, for example, that absent remains on your record until its own anniversary date the following year.

  • 4 Points Documented Verbal Warning
  • 6 Points Written Warning
  • 8 Points Three-day unpaid suspension
  • 10 Points Termination

Employees will be notified in writing of a policy violation within five working days of that violation.

4. Probationary Policy for New Hires

 Employees in their initial 90 days are considered “probationary” by Acme Company, and are subject to a stricter policy than permanent employees. Corrective action will occur as follows:

  • 2 Points in first 90 Days Probationary Warning
  • 4 Points in first 90 Days Probationary Dismissal

5. Perfect Attendance

Perfect attendance is defined as not missing any scheduled hours in a consecutive 90 calendar day period, except for the following exceptions: Jury, Court Appearance, FMLA, Bereavement, Vacation, or Suspension.  The ninety day period begins the day following an unexcused absence.

  • 90 Days of perfect attendance $25 Cash Bonus

Employees that complete a calendar year of perfect attendance will receive an additional award of $100.

  • Calendar year perfect attendance $100 Bonus

6. Chronic Absenteeism

Employees that chronically carry very high point balances are a detriment to the company. The following clause is an attempt to address that problem:

  • Any employee receiving two Suspensions (two 8-point violations) within a rolling twelve-month period will be terminated.

7. Missed Punch policy

Employees are required to punch in with their own badge every scheduled day. If you forget your badge, or fail to punch for any other reason, your supervisor will punch you in. You will not be charged a point, but “missed punches” will be tracked, and if you have three missed punches in a calendar month, you will receive a formal “Missed Punch Warning”. An employee receiving two “Missed Punch Warnings” in a rolling twelve-month period will be terminated.

8. Voluntary Resignation

If you are absent for three consecutive days without notice from you or a family member, it will be considered a voluntary resignation.

Joel's avatar

About the Author

Joel Sackman, with degrees from Wharton and the Moore School of Engineering, is a “data visualization designer” and leading voice in the field of workforce optimization. He has been helping companies understand the causes of absenteeism and strategies for reducing it for thirty years. He is the founder and CEO of Metropolitan Software, Inc., an ADP business partner and maker of Attendance Counts.