New statutory sick pay rules are due to come into force imminently in Ireland. This is an innovation for this country, as up until now, there was no obligation to pay employees during periods of sick leave, something which made Ireland an outlier in Europe.
Irish employment contracts may provide for a (usually limited) period of sick pay, but this has always been very much at the discretion of individual employers. If an employer chose not to exercise their discretion in favour of paying staff while sick, the only recourse for affected employees was state-sponsored illness benefit, subject to sufficient PRSI contributions.
That is now going to change. For the first time, the obligation to pay a sick employee will be on the employer. It’s worth noting that this is intended to be the first step and the system is due to become more onerous on the employer over time. It’s unlikely that this will change even in future administrations. Once a benefit is introduced, it tends to remain indefinitely.
Irish employers should prudently take note of the changes now and be ready for them.
Under the new regime, employees will have an entitlement to three days of paid sick leave this year. This is due to then go up to five next year, seven in 2024 and ten in 2025.
According to the draft bill, the increases will be made by way of ministerial order each year. Factors including the state of the economy generally must be taken into account by the minister when making their decision.
The draft bill does not specify the amount of statutory sick pay. It simply states that an employer must pay a prescribed daily rate for a “statutory sick leave payment”.
The government’s intention (although this does not appear in the draft legislation) is apparently to place a cap upon the amount. It has been suggested, specifically, that an employer will only be obliged to pay up to 70 per cent of wages, subject to a cap of €110 a day. At the same time, the government retains the power to change these thresholds in future.
It’s also interesting to note that there is no form of top-up envisaged. The state will not boost the employer’s contribution to bring the employee up to 100 per cent of wages.
Employees will need to have at least 13 weeks of continuous service before they are eligible for statutory sick pay, although the majority of the workforce will probably have little difficulty meeting this threshold.
It’s also important to note that employees will be obliged to furnish a medical certificate in respect of each day of statutory sick leave. This is clearly intended to protect the employer, although in practice, securing a sick cert may not be particularly challenging.
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. Unsurprisingly, an employer will have to demonstrate that any discretionary or pre-existing scheme is definitely more favourable than that provided for in the legislation.
Also anticipated is the possibility that an employer may be in a financial position where it cannot afford to make a statutory sick pay payment. Provision is made in the legislation for exemptions, although it’s very clear that the Labour Court will only agree to that in circumstances where it is satisfied that there is a genuine case for doing so.
Given the fact that most of our neighbours in Europe already provide for statutory sick pay, it’s perhaps unsurprising that Ireland is introducing this, but it’s still a new development for employers to adjust to.
In particular, they are likely to focus on any future plans to increase the amount of the daily contribution. Certainly, any movement to compel employers to pay 100 per cent of normal daily pay could make the legislation far more controversial than it is at present.