Merrill Lynch & Co., the world’s biggest brokerage, cut the number of sick days employees can take without consequences each year to three from 40 so it can reduce the cost of absences.

Workers out more than three days must discuss the matter with their managers, Merrill said in a memo to employees. Anyone absent four or more days may lose pay, and could face termination at nine days. The rule took effect May 14. Managers have discretion to waive the limits on a case-by-case basis.

“A good attendance record and demonstrated reliability is one attribute of successful performance and is expected of all employees,” the memo said. The policy applies to all American staff members. Merrill employed 60,300 people worldwide by the end of the first quarter, more than any other American-based brokerage.

Previously, Merrill allowed workers to be absent as many as 10 times for four days each, said spokeswoman Selena Morris. Employees still get four personal days in addition to sick time, she said. Those with extended illnesses can request medical leave. The policy brings the firm in line with rivals, she said.

The sick and personal days come on top of paid vacation time, which is three weeks for employees with fewer than 10 years of service and four weeks for those with more, she said.

Merrill offers generous benefits, Ms. Morris said, such as 13 weeks of paid leave for primary caregivers of newborns, including for adoptive parents. The company also offers subsidized day care at its New York headquarters and operations campus in Hopewell, N.J.