The General Scheme of the Sick Leave Bill 2021, providing for sick pay and leave, as announced recently by the Tánaiste will be phased in over a four year period from January 2022. This new legislation will bring Ireland in line with its European neighbours and will oblige employers to provide a minimum number of paid sick days annually from 2022. The scheme will commence with three days per year in 2022, rising to five days payable in 2023 and, seven days payable in 2024.
It will be the latest in a series of actions that have improved social protections for workers and the self-employed over the last five years, including:
- paternity benefit
- parental leave benefit
- enhanced maternity benefit
- treatment benefit
- the extension of social insurance benefits to the self-employed
Sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110. The daily earnings threshold of €110 is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16. It can be revised over time by ministerial order in line with inflation and changing incomes.
The rate of 70% and the daily cap are set to ensure excessive costs are not placed solely on employers, who in certain sectors may also have to deal with the cost of replacing staff who are out sick at short notice. The Bill is primarily intended to provide a minimum level of protection to low paid employees, who may have no entitlement to company sick pay schemes. The legislation will expressly state that this does not prevent employers offering better terms or unions negotiating for more through a collective agreement.
Employees must have a minimum of six months service with the employer to be eligible to receive statutory sick pay. The scheme applies to both fixed term and part time employees. It is also a condition of the scheme that the employee is medically certified as unfit to work. The Employer must deduct taxes in the normal manner. Once the entitlement to statutory sick pay from the employer ends, employees who need to take more time off may qualify for illness benefit from the Department of Social Protection subject to PRSI contributions.
Employers will eventually cover the cost of 10 sick days per year in 2025. It is being phased in to help employers, particularly small businesses, to plan ahead and manage the additional cost, which has been capped.
Employers should be aware that the draft legislation will not erode existing contractual rights where an employee’s current contractual entitlement to sick pay exceeds the amount of paid sick leave envisaged by the draft legislation.
As currently drafted, the bill does not provide for any further top up of salary for the employee and nor will any compensation scheme be provided for employers to assist them with the costs of sick pay. Therefore, Businesses around the country must now make provision for this new regime and consider where changes to existing policies are required once the scheme is introduced. The right to sick pay will be legally enforceable by employees through the Workplace Relations Commission and the Courts. The scheme will be another arsenal in an Employees complaint against an Employer. Employers need to recognise this and ensure that the correct policies and procedures are put in place in their workplace. If you are an employer who is concerned about issues surrounding Sick Pay policies and need to review your employment contracts, contact our Employment Law Expert Anthony Shields by telephone on 021 239 0620 or by email: Anthony.shields@mdmsolictiors.ie