All Irish employers should note that for the first time, a compulsory sick pay scheme will come into existence in Ireland shortly, most likely in 2022.
Unlike many European jurisdictions, Ireland has never had a scheme like this – typically, an employment contract will provide for a few days of paid sick leave but this is exclusively a matter of the employer’s discretion. Putting it another way, an Irish employer is not, at the moment, obliged to pay employees while they are sick – our system operates on a quid pro quo basis: if the employee is not able to work because of illness, the employer is under no obligation to pay them.
This is about to change. The Sick Leave Bill 2021 was published recently and provides for a comprehensive Statutory Sick Pay scheme.
The key points for employers to note are as follows:–
1. While the number of eligible days per year will start at a low level, the Government intends that this will increase to two working weeks by 2025.
The following is the planned increase year on year (this is not included in the legislation, but the Government has flagged a clear indication to work to these thresholds):-
2022 3 days
2023 5 days
2024 7 days
2025 10 days
2. Statutory Sick Pay will be capped. An employer will only be obliged to pay up to 70% of wages, subject to a cap of €110/day. The Government will have the power to change these thresholds in the future.
3. The Government will not “top up” the employer’s contribution to 100%.
4. It is unclear at this stage how “wages” will be defined – including whether it will be limited to basic salary.
5. Employees will have to have at least 13 weeks of continuous service before they are eligible.
6. Employees will be obliged to furnish a medical certificate in respect of each day of Statutory Sick Leave.
7. If an employer maintains it cannot afford to discharge its Statutory Sick Pay obligations, an exemption can be granted by the Labour Court (although it is likely that quite a stringent test will be put in place before the Court grants an exemption).
8. If an employer already provides more favourable sick leave benefits to an employee, they will not be obliged to comply with the Statutory Sick Pay rules (although, once again, a stringent test is provided for in the draft legislation to ensure that there is no scope for avoidance).
At first glance, the obligations do not appear unduly onerous for employers – especially in circumstances where the two-week target will likely not be achieved until 2025. That said, it would be prudent for employers – especially smaller employers – to start financial planning now so they can ensure that they are ready. Employers could also usefully review any existing sick pay schemes to check whether the new rules will affect them in the first place.
For further information in relation to the above article, please contact Patrick Walshe.