Following an announcement by the government in June 2021 of plans to establish a statutory sick pay (SSP) scheme, a draft Sick Leave Bill was published on 5 November 2021.
And on 20 July 2022, the Sick Leave Act 2022 became law.
Once commenced, the statutory sick pay scheme will be rolled out over four years.
This article will explain the new scheme to employers at small businesses and medium businesses and how they can prepare for the scheme coming into effect from 1 January 2023.
Here’s what we cover:
- The new statutory sick pay scheme
- What is statutory sick pay?
- When will the scheme start?
- How will it affect employers?
- What employee protections are included?
- What employers need to do now
- What your employees might ask about the scheme
- Final thoughts on statutory sick pay
The new statutory sick pay scheme
The new scheme aims to bring Ireland in line with other European countries that have mandatory paid sick leave for workers in place.
The move by the government is in response to the recognition during the pandemic for the need for greater security for lower-income workers.
Leo Varadkar, the Tánaiste and Minister for Enterprise, Trade and Employment, said: “This is a really important new employment right, that all workers will now have, no matter what their illness or job. Many employers pay sick pay, but the pandemic really highlighted the vulnerability of some workers, especially in the private sector and those on low pay.”
Under the legislation, employers will be obliged to provide a minimum number of paid sick days annually from 2023.
Currently, an employee whose employer does not provide paid sick leave can apply for Illness Benefit.
However, the payment is a flat €203 per week and the worker must satisfy a minimum level of PRSI contributions.
The applicant doesn’t get paid for the first three days they are absent, called ‘waiting days’ – this was reduced from six days in March 2021.
Different conditions and payment amounts apply to Covid-19 related absences.
Stay up to date with statutory sick pay
Want to keep up to speed with the latest updates on statutory sick pay? Sign up today to receive the Sage Advice newsletter, straight to your inbox.
What is statutory sick pay?
Statutory sick pay is money paid by employers to employees who are ill and unable to work.
The new legislation gives employees the right to a minimum period of paid leave if they become sick or sustain an injury that makes them unfit for work.
Both full and part-time employees can avail of paid leave under the scheme, which will be rolled out in four phases.
They’ll be entitled to a rate of 70% of usual daily earnings up to €110 a day for three days.
In 2024, this rises to five days of paid leave, before increasing again in 2025 (seven days) and 2026 (10 days).
The eventual 10 days, or two working weeks, of sick pay per year will be in addition to other leave entitlements including annual leave, parental and maternity leave as well as public holidays.
The staggered roll-out has been designed to avoid placing an excessive financial burden on employers. It gives them time to plan and budget for the additional costs.
When will the scheme start?
The Sick Leave Act 2022 became law on 20 July 2022.
Once commenced, the scheme is due to come into force from 1 January 2023.
Leo Varadkar said: “Given the current challenging business environment and inflation in particular, I have concluded that the fairest and most appropriate approach is to introduce the entitlement on 1 January 2023.”
How will it affect employers?
If your business doesn’t already have a sick leave scheme in place, the new legislation will impose costs on your company.
Additionally, indirect costs may include administrative costs in relation to setting up and implementing the scheme and maintaining records for each employee.
Potential benefits for employers include reducing presenteeism and managing absenteeism.
Other benefits include reduced employee turnover and promoting a safer work environment where those who suffer injury or infectious illnesses take time to recover and which results in less productivity loss overall.
As an employer, you must keep proper records for each employee. The records must be maintained for four years and include information in relation to each employee who availed of sick leave.
The following information must be included in the records:
- The employee’s period of employment
- The dates of statutory sick leave in respect of each employee
- The rate of statutory sick leave payment in relation to each employee.
An employer who fails to maintain accurate records may be convicted and subject to a fine of up to €2,500.
In certain circumstances, an employer whose business is experiencing severe financial difficulties may apply to the Labour Court for an exemption to pay sick leave.
If an exemption is granted, it will be for a minimum of three months and up to one year.
What employee protections are included?
The scheme will be enforced through the Workplace Relations Commission and the courts system.
As an employer, you’re obliged to ensure that employees who express their intention to take or do take statutory sick leave aren’t treated differently.
An employee who avails of their right to statutory sick leave should not be penalised for their absence. Penalisation includes dismissal or layoff, coercion, demotion or transfer of duties.
Additionally, any absence in relation to SSP should not affect any other employment rights – whether statutory or contract.
The Sick Leave Act provides protection for an employee to lodge a complaint to the Workplace Relations Commissions if they believe their employer has failed to comply with the provisions of the statutory sick pay legislation.
What employers need to do now
If you already provide for paid sick leave through your employment contract or through collective sector or union agreements, you’ll need to review the contracts in light of the upcoming legislation.
If you have a dedicated HR manager or team, you’ll need to look at the Act and how it relates to your company.
The Sick Leave Act states that if an existing provision for paid sick leave in an employment contract is as favourable or more favourable than the statutory provision, then the employer’s obligation under the legislation is met.
The Act further states any such provision shall be a “substitution for, and not in addition to” the entitlement.
However, if a provision for sick leave in your standard employment contract is less favourable than the entitlement provided under the legislation, it will be “deemed to be so modified so as to be not less favourable”.
In summary, 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.
The Sick Leave Act sets out the criteria for employers to determine whether their existing sick pay scheme is more favourable than the proposed statutory provisions provided in the Act:
- The period of service of an employee required before sick leave is payable
- The number of days 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.
What your employees might ask about the scheme
The Act sets out the conditions under which employees can take statutory sick leave:
- Employees must have completed 13 weeks’ continuous service before availing of statutory sick leave.
- The employee must provide their employer with a certificate from a registered medical practitioner and the certificate must state that the employee named is unfit to work due to their illness or injury.
- The leave must be in relation to a day or days when an employee would ordinarily work but is incapable of working due to illness or injury.
- The leave can be taken on consecutive days or non-consecutive days.
Additionally, once the entitlement to statutory sick pay from the employer ends, employees who haven’t recovered and are still unfit to return to work may qualify for Illness Benefit.
Check out our article covering frequently asked questions about the new scheme: Statutory sick pay FAQs: Answers to questions your employees may have.
Final thoughts on statutory sick pay
While statutory sick pay will be beneficial for your employees, you may need to make changes to your payroll processes to adapt to the new rules.
And there will be additional costs to cover, too.
If you currently operate an occupational sick pay scheme, it’s advisable to conduct a review and keep up to date with any further government announcements around statutory sick pay.
If you currently have no provision for paid sick leave, it’s worth taking the time now to prepare for the legislation to come into effect, in 2023.
Preparation should include communication to employees about their rights and obligations under the terms of the scheme, and the set up and implementation of processes to manage SSP.
Editor’s note: This article was first published in December 2021 and has been updated for relevance.
The A to Z of payroll
Learn about the key terms and concepts that will help you to manage the complexities of payroll systems effectively, and to confidently meet compliance requirements.
Recommended Next Read
How to use the Small Benefit Exemption Scheme for your business
Never miss an episode
Subscribe by email and get Sound Advice delivered to your inbox every month with the Sage Advice newsletter with a ton of related articles, templates and problem-solving guides for small businesses so you can put our sound advice into practice.