The Oireachtas Committee on Enterprise, Trade and Employment has approved the Statutory Sick Pay Scheme.
This scheme has not come into place yet, but Tánaiste Leo Varadkar has stated that he aims to “bring forward the final Bill as soon as possible."
The committee has recommended that all employees receive the legal right to statutory sick pay to ensure employees on all forms of employment contracts receive the same protections. The committee is recommending that some form of rebate for the cost of medical certification should be made available to ease the financial burden on employees, particularly those on lower incomes. The committee is also calling for businesses to be given an exemption from the sick pay requirement if they can demonstrate to the Labour Court that they cannot genuinely afford to make the payment.
Background to the sick pay scheme
Last year, the Government recently published its long-awaited draft of the Sick Leave Bill 2021 (the Bill), which was originally intended to come into effect by the end of 2021. However, this legislation is still undergoing legislative process and is not expected to be implemented until later this year.
Under proposals recommended by the committee, all employees will get a right to be paid for up to 10 days of sick leave per year by 2026. The proposals would see a new Statutory Sick Pay (SSP) scheme phased in over four years to afford employers time to prepare for the additional costs.
In addition, employees will be entitled to three days per annum from later this year, rising to five days in 2024, seven days in 2025, and a maximum of 10 days in 2026.
The need for a mandatory sick pay scheme
Speaking about this new Bill, Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar said, "Ireland is one of the few advanced countries in Europe not to have a mandatory sick pay scheme. Although about half of employers do provide sick pay, we need to make sure that every worker, especially lower-paid employees in the private sector, have the security and peace of mind of knowing that if they fall ill and miss work, they won't lose out on a full day's pay. I believe this scheme can be one of the positive legacies of the pandemic as it will apply to illness of all forms and not just those related to COVID."
How much will employees be paid?
It’s proposed that employees will receive 70% of their wage while on sick leave. However, a daily cap of €110 will apply, which is based on 2019 mean weekly earnings of €786.33 or an annual salary of €40,889.16.
The State estimates that this payment is equivalent to a 2.6% pay increase to an employee who currently receives no sick pay. This amount may vary to keep it aligned with inflation and incomes using a ministerial order.
Free Download: Long-term Sick Leave
Who does the Bill benefit?
The Government has stated that the Bill will provide a minimum level of protection to low paid employees who have no access to an employer’s sick pay scheme. For employees who wish to avail of the scheme, they must get a medical cert and have at least 13 weeks of continuous employment with their current employer.
If the employer sick pay period ends and the affected employee requires further time, the employee may qualify for illness benefit from the Department of Social Protection.
Does the Bill pose a problem for employers?
While the final detail of the proposed Statutory Sick Pay scheme won’t be known until the supporting legislation is passed, it seems clear that employers will face additional payroll costs in the coming years. Whilst the scheme will have a positive impact on public health and will benefit lower-paid workers, it is nevertheless employers that will bear the full cost of the scheme. Along with the economic uncertainty caused by COVID-19, the timing of the scheme could contribute to negative outcomes for growth, jobs, and competitiveness. It’s quite possible that the financial implications of paying all employees two weeks' paid sick leave could be too much to bear for certain employers, particularly SMEs.
As mentioned above, the proposed Sick Leave Bill 2021 could bring additional costs for employers at a time when they’re working hard to return to normal operating levels. The ongoing COVID-19 pandemic means that many employers are continuing to face many challenges and uncertainties. In response to the difficulties facing employers, the Government has made several financial supports available to help businesses. As an employer, it’s important to research the various financial measures designed to help you and your people get back to work. It’s essential that you begin to review your employment contracts and sick pay policies. Doing so will ensure you’re prepared to update these documents to reflect the changes when they come into effect.