Key Contacts: Patrick Walshe – Partner
The Sick Leave Act 2022 (“the Act”) was signed into Irish law in November 2022 and began operation in January 2023. The Act provided for employees’ entitlement to Statutory Sick Pay (‘SSP’). SSP affords protection for employees whose employer did not previously offer sick pay or offered a less favourable sick pay scheme.
The government has recently elected not to implement a planned increase in the number of paid sick days in 2025.
Implementation of the scheme
The scheme is being implemented over a 4-year period through gradual increases in the days SSP can be claimed. The Act initially provided employees with an entitlement to 3 days of SSP per year.
SSP was increased to 5 days in January 2024 and was scheduled to increase by 2 days in January 2025, which would have entitled employees to 7 days SSP per year. A final 3 days are scheduled to be added in 2026, reaching 10 days per year.
Postponement of Scheduled Increase
The scheduled increases are optional and not explicitly prescribed by the Act. Increases are implemented by Minister for Enterprise, Trade and Employment, who must first consider various factors, including:
- The state of the economy generally, the business environment and national competitiveness;
- The state of society generally, the public interest and employee well-being;
- The potential impact, including the potential for any disproportionate or other adverse impact, that the making of an order will have on the economy generally, specific sectors of the economy, employers or employees;
- Annual and quarterly data on earnings and labour costs as published by the Central Statistics Office;
- Expert opinion, research, national or international reports relating to the matters specified above that the Minister considers relevant;
- The views of employer representative bodies and trade unions; and
- Such other matters as the Minister considers relevant.
Consequently, the scheduled increase for 2025 has been postponed, pending a review of research published by the ESRI (Economic and Social Research Institute).
Impact on businesses
Research published by the ESRI highlights the ongoing rise in business costs, as numerous small and medium-sized enterprises (SMEs) have expressed concerns to the Government regarding the cumulative expenses associated with providing new employee rights, including SSP.
The Act provides for potential exemptions from SSP for employers; however, the conditions for obtaining such are quite restrictive. To secure the exemption, the employer must submit an application to and receive consent from the Labour Court to discontinue payment of SSP to employees.
Where granted, the suspension of the employee’s right can only be for a period no less than 3 months and not exceed a year, provided that the employer can demonstrate that:
- They have entered into an agreement with employees/employee representatives to suspend SSP; and
- The employer’s business is experiencing severe financial difficulties.
Given the exceptional nature and rarity of employees agreeing to waive their rights, the Labour Court may still grant an exemption if satisfied the employer has notified its employees of the severe financial difficulties and attempted to reach an agreement with them.
Furthermore, the employer must outline that the burden of paying SSP, would hinder the sustainability of business, or would result in a substantial number of redundancies or lay-offs.
Current Effect of the Act
Currently, SSP entitles both full and part-time employees who have at least 13 weeks’ continuous service with their employer to 5 days paid sick leave per year. Additionally, the employee must provide a medical certificate administered by registered practitioner, stating they are unfit to work.
The SSP is paid by the employer and calculated at 70% of the employee’s normal pay, up to a maximum €110 a day.
Naturally, the Act does not apply to an employer implementing a more favourable sick pay scheme for their employees as confirmed by the WRC in Leszczynska v Musgrave Operating Partners, the first WRC decision under the Act.
When considering whether a sick leave scheme is more favourable than SSP, consideration will be given to:
- The period of service of an employee that is required before sick leave is payable;
- The number of days that an employee is absent before sick leave is payable;
- The period for which sick leave is payable;
- The amount of sick leave that is payable;
- The reference period of the sick leave scheme.
Potential Employer Penalties and Protection of Employees from Penalisation
Employees who are successful in the WRC, claiming a breach of the Act, can be awarded up to 4 weeks’ renumeration, payable by the employer.
The Act addresses the potential penalisation of employees who attempt to exercise their rights under its provisions.
Such penalisation can be considered a dismissal under the Unfair Dismissals Acts, where suitable, with awards for such cases potentially reaching up to 104 weeks’ remuneration.
This article was written with the assistance of intern, Ronan McNulty.