Irish workers took six million sick days last year at a cost of €757 to the economy, a survey has found.
The survey - carried out by the Small Firms Association (SFA) - found stress was now the most common reason for absenteeism.
Avine McNally, SFA assistant director, said "Stress has arisen as a key cause of absence from work, replacing back pain, as the most commonly cited problem on medical certs".
"This is a particularly concerning development, as aside from absenteeism, stress can lead to a less productive workforce, faulty decision-making, and ultimately the possibility of legal action being taken against the company for negligence or constructive dismissal."
The survey found showed the national average for absenteeism is 3.8 per cent or 9 working days. For medium firms this rises to 4.9 per cent or 11 working days while for small firms the average falls to just 3.1 per cent or 7 working days.
In cash terms, absenteeism costs small businesses with sick pay schemes an estimated €757 million a year, based on average earnings of €120 euro a day or €30,800 a year.
"This takes no account of other direct costs such as the requirement to replace absent staff with other workers or overtime payments, and the cost of medical referrals, or of the indirect costs such as the effect on productivity and quality, the increased work pressure on other colleagues, and the admin time in managing absence," Ms McNally said.
"The overall cost in reality could be in excess of €1 billion."
The SFA, a branch of the Irish Business and Employers Confederation, urged companies to more to keep staff fit and well and ensure they meet obligations to prevent stress.
The increased incidence of stress is not a particularly Irish phenomenon - an International Labour Organisation Survey from 2000 shows that in the EU overall, 4 per cent of the gross national product goes to treat mentally-ill employees.
In the UK, three in ten employees suffer from mental health problems, resulting in an estimated 80 million lost working days a year.
The SFA survey showed over half of the companies asked indicated they recorded the causes of short-term absence. Minor illnesses are the most common cause for short-term, uncertified absences, while secondary causes are home responsibilities and personal problems.