I recently also answered a question on LinkedIn on this subject and one of my ideas was quoted in an article in Canadian Business. www.canadianbusiness.com/article/26210-the-sick-day-dilemma
Most smaller firms are usually very tightly budgeted, and there isn't a lot of room for frills. While many would argue that providing someone who is ill with the peace of mind, that they will not go without income, is not a frill, given that there is always a percentage of the population who takes advantage of every benefit possible, I always recommend that smaller firms do not offer paid sick leave, unless they are mandated to do this by law.
If you do offer paid sick leave - and let us suppose you have five employees - under the right circumstances, you could find three of those five employees deciding to take a day or two off, leaving you and the other two employees scrambling to cover deadlines to meet client demand. Even worse, if all your employees have called in sick at your expense, as the owner you might find yourself working all the hours God gave to satisfy customers and keep the business as a going-concern. (Funny, but a lot of employees don't like to be reminded that the company's revenues are tied to their performance of their job duties). Under these circumstances, not only do you end up out-of-pocket for the money you had to pay the workers who are off sick, your own health will probably take a hit from working those punishing hours. And, when you're sick, who pays for your sick leave?
Before you agree to pay any benefit, you always need to look at whether you, as the owner, will be equally able to enjoy the benefit. If, instead, you are the one sitting there paying all the bills and not enjoying the benefit, you may need to revisit the subject and think of a different approach.
For example, rather than have paid sick days off, instead offer a wellness bonus for anyone who works all the days they are supposed to work in a month. Even if it's only amounts of $50 or $100 a month - paid in cash - it's enough to keep people who are conscientious on the job and then, if they need time off when they're unwell, you can always argue they should have banked the wellness bonuses as a reserve against being sick. With sick leave, it's always a good idea to try and find ways to make sure the conscientious workers are protected and the slackers don't get something for nothing. This is why a wellness bonus works..
Such approaches will also help you sort the wheat from the chaff when it comes to workers you want to keep, and the employees you're better off without. Over time, the conscientious hard workers will stick around because they know there's a reward for their efforts (the wellness bonus) while the slackers will migrate to "greener" pastures (companies that will actually reward them, via paid sick leave, for not working).
Other options with sick leave are to have defined limits as to how long a person may be off without penalties such as losing their job, for different types of ailment. Rather than leaving this vague, it's a good idea to spell out the length of time, such as two weeks for a tonsillectomy, eight weeks for a hysterectomy and similar parameters for different but common ailments that occur. (You will be amazed at how many people think their in-grown toenails are worthy of lavish amounts of paid time off to "recuperate" from a procedure!)
Or, suggest in your policy and procedures manual that time off for illness and recovery is at management discretion. This way, you can structure according to the individual's need but also make sure that the genuine cases get your support, while the not-so-genuine do not.
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