Press release
Tánaiste announces details of Statutory Sick Pay Scheme
From Department of Enterprise, Trade and Employment
Published on
Last updated on
From Department of Enterprise, Trade and Employment
Published on
Last updated on
The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD, today announced further details of his new law to give all workers the right to paid sick leave.
The government’s statutory sick pay scheme will be phased in over a four-year period, starting with three days per year in 2022, rising to five days payable in 2023 and seven days payable in 2024. Employers will eventually cover the cost of 10 sick days per year in 2025. It’s being phased in to help employers, particularly small businesses, to plan ahead and manage the additional cost, which has been capped.
The Tánaiste said:
"Ireland is one of the few advanced countries in Europe not to have a mandatory sick pay scheme and although about half employers do provide sick pay, we need to make sure that every worker, especially lower paid workers in the private sector, have the security and peace of mind of knowing that if they fall ill and miss work, they won’t lose out on a full day’s pay. I believe this scheme can be one of the positive legacies of the pandemic as it will apply to illness of all forms and not just those related to COVID-19."
The government today approved the drafting of the General Scheme of the Sick Leave Bill 2021. It will be the latest in a series of actions that have improved social protections for workers and the self-employed over the last five years, including:
Sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110. The daily earnings threshold of €110 is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16. It can be revised over time by ministerial order in line with inflation and changing incomes.
The rate of 70% and the daily cap are set to ensure excessive costs are not placed solely on employers, who in certain sectors may also have to deal with the cost of replacing staff who are out sick at short notice. The Bill is primarily intended to provide a minimum level of protection to low paid employees, who may have no entitlement to company sick pay schemes. The legislation will expressly state that this does not prevent employers offering better terms or unions negotiating for more through a collective agreement.
The Tánaiste said:
"I believe this reform is part of the pandemic dividend, the more inclusive economy and fairer society we are going to build once the pandemic is over. It’s not right that people feel forced to go to work when they are sick and it’s not good for public health. I know how difficult the past year and a half has been for workers and employers alike.
"We are only now getting back on our feet and are not yet out of woods. By phasing this in over a four-year period, we are taking a balanced approach to plug a well acknowledged gap in our social protections while also responding to the cost concerns of small businesses in the current economic environment. The scheme is designed to be fair and affordable with the minimum complexity and administrative burden for employers."
Other features of the scheme are that an employee will have to obtain a medical certificate to avail of statutory sick pay, and the entitlement is subject to the employee having worked for their employer for a minimum of six months. Once entitlement to sick pay from their employer ends, employees who need to take more time off may qualify for illness benefit from the Department of Social Protection subject to PRSI contributions.
The Tánaiste also published a Regulatory Impact Assessment (RIA) on the Sick Leave Bill today, a copy of which is available here: Sick Leave Bill 2021 Regulatory Impact Assessment.
Statutory entitlement to sick pay will be phased in as part of a 4-year plan and will initially be for 3 days per annum in 2022. This will effectively fill the gap in coverage caused by Illness Benefit waiting days. Closing the gap of current waiting days before being able to access Illness Benefit will minimise the numbers of sick employees presenting for work.
This four-year plan takes account of the current economic climate and the existing financial pressures on businesses. The number of days will increase incrementally with the goal that employers will eventually cover the cost of 10 sick days per annum in year four.
The legislation is primarily intended to provide a level of sick pay coverage to those employees, often in low paid roles, that currently receive no sick pay/or are not entitled to illness benefit.
The initial plan is as follows:
Statutory Sick Pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110. Setting a percentage of the gross wage is in line with the calculation method used in the majority of EU Member States that have statutory sick pay schemes, where the percentage used varies from 25% to 100% of the employee’s gross wage. The rate of 70% is set to ensure excessive costs are not placed on employers, who in certain sectors may also have to deal with the cost of replacing staff who are out sick at short notice.
The Q4 2019 CSO quarterly earnings data will be used as the reference point. A daily earnings threshold figure of €110 will be applied which is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16. Imposing the cap at this level ensures that €110 is the maximum cost for any employer per day (weekly salary of €786.33 divided by 5 days multiplied by 70% = €110.08).
The Regulatory Impact Analysis estimates this to be equivalent to a 2.6% pay increase in terms of value to the average employee who currently receives no sick pay from their employer.
This compares favorably with the Sick Pay Scheme in Northern Ireland which pays only £95.85 per week.
The daily earnings threshold cut-off point will also ensure that employers do not face excessive costs in relation to employees who are on high salaries.