Statutory sick pay FAQs: Answers to questions your employees may have

Legislation requiring employers to provide paid sick leave for their employees took effect from 1 January 2023.

The Sick Leave Act 2022 became law on 20 July 2022.

The legislation that sets up the statutory sick pay scheme aims to bring Ireland in line with other European countries that have mandatory paid sick leave for workers in place.

Both full and part-time employees can avail of paid sick leave under the scheme, which will be rolled out over four phases.

This article will provide a series of answers to questions that employees may have on statutory sick pay.

As an employer, you can use the answers in this article to educate your employees on the legislation (support from a payroll expert is recommended too).

Here’s what we cover:

• What is statutory sick pay in Ireland?
• Is statutory sick pay a legal requirement?
• What is the difference between sick pay and statutory sick pay?
• How much is statutory sick pay?
• How is statutory sick pay calculated?
• How do I get statutory sick pay?
• What is statutory sick pay for part-time employees?
• Is statutory sick pay means tested?
• How can I apply for statutory sick pay?
• Who pays statutory sick pay?
• Can statutory sick pay be backdated?
• Will statutory sick pay increase?
• Is statutory sick pay taxable?
• What happens when statutory sick pay runs out?
• Final thoughts on statutory sick pay

What is statutory sick pay in Ireland?

Statutory sick pay is a payment paid by employers to employees who are unable to work due to illness or injury.

It came into force from 1 January 2023 and the legislation gives employees the right to a minimum period of paid leave if they’re unfit for work, and is open to both full and part-time employees.

The scheme is being rolled out in four phases, starting with three days from 2023 and increasing incrementally to 10 days or two working weeks in 2026.

This entitlement will be in addition to other leave including annual leave, public holidays, and maternity and parental leave.

Is statutory sick pay a legal requirement?

Now the Sick Leave Act 2022 has commenced, employers are legally obliged to provide paid sick leave at the minimum level, starting at three days.

Under the legislation, all employers must comply with the requirement to provide sick leave unless they are granted an exemption from the Labour Court in certain circumstances including severe financial difficulties.

An employee who exercises their right to take sick leave can’t be penalised or treated differently.

Additionally, any absence in relation to statutory sick leave should not affect any other employment rights – whether statutory or contractual.

The scheme is being enforced through the Workplace Relations Commission (WRC) and the courts system.

An employee can submit a complaint to the WRC if they believe they are being deprived of their right to paid sick leave or if their employer has failed to comply with the provisions of the legislation.

Claims must be submitted to the WRC within six months of the dispute.

The Act sets the maximum compensation to be awarded to the employee at four weeks’ remuneration, which would be paid by the employer.

What is the difference between sick pay and statutory sick pay?

Mary Connaughton, Director of CIPD Ireland, explained that statutory sick pay is limited to a specified number of days per year and is subject to additional criteria such as length of service.

While many employers already operate a sick pay scheme for their employees under the terms of their contract of employment, Mary says these companies “will have to automatically bring their company scheme in line with statutory sick pay if it is less generous”.

She further explained that if a company has a more favourable sick pay scheme, such as, “pays up to 100% of pay, covers a longer period than the statutory number of days, and is available to employees with at least 13 weeks service,” then the existing scheme does not have to change.

For clarity, the Act sets out the criteria for employers to determine whether their existing sick pay scheme is more favourable than the proposed statutory provisions as follows:

• The length of service before an employee becomes eligible for paid sick leave
• The period for which the sick leave is payable
• The number of days of absence that accrue before it is payable
• The amount of sick pay payable
• The reference period for comparison.

Note: An employer who provides a sick leave scheme to employees more favourable than the terms of the statutory scheme will not have additional obligations under the Act. So for employees who already have an entitlement to paid sick leave, the legislation may not apply or make any difference to their current employment terms and conditions.

How much is statutory sick pay?

The legislation states that the daily rate of sick pay is 70% of your employee’s usual daily income – and this amount is subject to a cap of €110 per day.

This rate can be adjusted by ministerial order to take into account the inflation rate, and other factors.

In his speech to the Seanad on 15 June 2022, the Tanaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, stated that the legislation contained a provision that the rate “can be revised by ministerial order in line with inflation and changing incomes”.

How is statutory sick pay calculated?

Payment is 70% of gross normal earnings, up to a maximum of €110 per day, and applies from the first day of illness.

For those not paid a fixed salary whose income varies in relation to work done, normal earnings will be calculated over the four-week period immediately prior to the sick leave or, if no time was worked in that four weeks, the four weeks ending on the day on which time was last worked.

The cap was set to help employers manage the costs and to make the scheme more affordable, particularly owners of small businesses and those operating in sectors such as retail and hospitality where they will need to pay for temporary staff to cover absences.

As explained in the previous section, the Act provides for a minimum entitlement to be set and also for changes to rates or number of days to be made.

How do I get statutory sick pay?

To be eligible for paid sick leave, an employee must have worked for their employer for a period of at least 13 weeks.

The service must be continuous.

Temporary layoffs don’t affect the entitlement so, for example, childcare workers who aren’t working over the summer are still eligible for paid sick leave if they have accumulated service of 13 weeks before the end of term.

Additionally, an employee who is starting a new contract with the same employer after a break in service is entitled to paid sick leave as long as their total accumulated service is 13 weeks or more.

What is statutory sick pay for part-time employees?

Both full and part-time employees can avail of paid leave under the scheme.

And that’s as long as the employee meets the criteria of 13 weeks’ service and the sick day falls on a day they would be expected to work.

Is statutory sick pay means tested?

No, the payment is not means tested.

Sick pay is based on a proportion of your income, so the payment is 70% of regular earnings regardless of your means.

The amount is, however, as mentioned above, subject to the maximum amount of €110 per day.

How can I apply for statutory sick pay?

The employee who is availing of paid sick leave must provide their employer with a certificate signed by a medical practitioner, which states that the employee is unfit to work due to illness or injury.

In respect of shift workers, the sick leave day must be a day they would ordinarily work or be typically rostered to work.

The entitlement of sick leave days can be taken consecutively or non-consecutively.

There’s no minimum requirement, so for example in the first year of the scheme’s operation, an employee could take one sick day on three separate occasions providing they are unfit to work on that day and provide their employer with a medical certificate.

Who pays statutory sick pay?

The employer must cover the costs of statutory sick pay to employees.

Mary Connaughton says: “Once the entitlement to statutory sick pay from their employer ends, employees who are ill may qualify for illness benefit from the Department of Social Protection, subject to PRSI [pay related social insurance] contributions.”

Your company’s payroll software provider will provide an update to integrate this function into your payroll. It might also have the capacity to determine eligibility and automatically calculate the amount to be paid.

The payment is being phased in over four years, starting at three days in 2023, rising to five days from 1 January 2024, and increasing incrementally to reach 10 days by 2026.

This lead-in period is to allow employers to prepare for full implementation of the scheme and the costs involved.

Can statutory sick pay be backdated?

Statutory sick pay won’t be backdated.

The days covered may be consecutive days or non-consecutive days, so up to three days per year when the scheme started, rising to 10 days per year in 2026, Mary Connaughton explained.

Will statutory sick pay increase?

The statutory sick pay scheme started in 2023 with an entitlement of three days annually and increases incrementally to five days from 1 January 2024, seven days in 2025 and finally 10 days in 2026.

The eventual 10 days, equivalent to two working weeks, will be in addition to other leave entitlements including annual leave, parental and maternity leave, and public holidays.

The legislation contains a provision to increase the rate of payment and/or the number of days by ministerial order, as mentioned in the section “How much is statutory sick pay?”

Is statutory sick pay taxable?

Statutory sick pay will be subject to tax in the same manner as normal pay, a spokesperson for the Department of Enterprise, Trade and Employment confirmed.

What happens when statutory sick pay runs out?

The scheme currently covers the first three days of illness that are usually ‘waiting days’ before a worker is eligible for the State Illness Benefit payment.

The scheme has been set up to run alongside the existing Illness Benefit scheme.

Should an employee be unfit for work for an extended period and they’ve used up all of their annual entitlement to paid sick leave, they’ll likely be eligible for Illness Benefit, depending on their PRSI credits.

Final thoughts on statutory sick pay

Statutory sick pay began from 1 January 2023.

That means if you need to update your processes, now’s the time to begin.

Start by reviewing your current processes to see what needs to be amended, and provide information to employees on the details and criteria as it relates to their employment.

(The answers in this article will help but it’s also worth reaching out to a payroll expert, employment lawyer or an accountant specialising in payroll.)

Editor’s note: This article was first published in July 2022 and has been updated for relevance.