Deirdre Malone, head of Employment Law at EY Law Ireland, explains the implications of the new Sick Leave Bill for employers and employees.
At long last, being sick in Ireland is going to get better for employees.
There is a vast gap in Ireland between employees who qualify for paid sick leave (public sector and higher paid private sector employees) and those who do not qualify for paid leave (generally lower paid private sector).
“Employers must retain a record of employees who avail of SSP for a period of four years. A failure to do so will be an offence subject to criminal prosecution and a fine of up to €2,500”
The Government is proactively working to close that gap and improve terms for employees.
New legislation for Ireland
The Sick Leave Bill has successfully passed through both houses of the Oireachtas and is currently with the President for signing. Once the legislation is signed, the Tánaiste will publish Regulations setting out the financial terms available to sick employees.
Below sets out the key information every employer needs to know:
How will statutory sick pay work?
- Employees with 13 weeks’ service will be entitled to 3 days of paid sick leave in one year.
- Sick days may be taken either consecutively or non-consecutively across the year.
- Employees will need to produce a medical certificate from the first day’s absence.
- Employees absent on statutory sick leave cannot be penalised.
How much money will employers need to pay?
An employee who is absent from work due to illness will receive 70% of their day’s pay, capped at €110 per day. The government chose this formula based on an assessment of fairness to employers (who may need to replace the employee and pay that cost) and to employees (making sure that they receive a fair amount and can take time off while sick without fear of being unpaid). The figures used are based on the mean average salary of approximately €41,000 gross.
The Minister may also direct maximum daily amounts in recognition of employees who receive board and lodgings, or for those who receive additional pay for shift work, Sunday working or other premium pay.
How much time off for illness must be paid?
The new legislation will require an employer to pay up to 3 days a year in 2022 and 2023. From 2024, this requirement will increase to 5 days. It will be 7 days in 2025 and ultimately will be 10 days in 2026.
The purpose of this incremental annual increase is to give smaller employers still recovering from the impact of the pandemic, Brexit and inflation the chance to plan ahead and budget for this additional cost.
What if an employer already has sick pay in place?
Many larger employers already have favourable sick leave benefits in place for employees. Employers must offer the same or more favourable sick leave benefits to employees. Employers cannot offer less favourable terms than those in the draft legislation.
What if a small business cannot afford to pay sick leave?
Feedback from employers over the last year has consistently criticised the cost of this benefit to SMEs. Employers are conscious that they will need to pay an absent employee and potentially pay another employee (probably at a premium) to cover the absent employee’s work.
In recognition of this, employers experiencing “severe financial difficulties” may apply to the Labour Court for an exemption from the payment of sick pay for a period of between 3 to 12 months.
What are the consequences for failing to comply?
Employees cannot be penalised for availing of statutory sick pay. Penalisation includes suspension, lay-off, demotion, transfer of duties, reduction in wages/hours etc as well as dismissal. In the event of dismissal, an employee will be permitted to take a complaint to the Workplace Relations Commission (WRC) for unfair dismissal.
If an employee believes that their employer has failed to comply with the legislation, they may make a complaint to the WRC. The maximum compensation available is 4 weeks’ remuneration. There is also a right of appeal to the Labour Court.
Requirement to keep records
Employers must retain a record of employees who avail of SSP for a period of four years. A failure to do so will be an offence subject to criminal prosecution and a fine of up to €2,500.
What should employers do now?
Statutory sick pay should be a positive step towards a more attractive workplace for all workers. It is important to remember that employees must produce a medical certificate from their doctor (with a potential cost of €60) to qualify for the maximum daily payment of €110, so there is a level of shared burden on employees and employer.
If an employer does not currently offer paid sick leave, immediate action should be taken. It is important for an employer to assess its position and communicate this to the employees.
- Contracts of employment should be reviewed and updated – particularly as employees will need to provide a medical certificate on the first day of absence to qualify for sick pay under the new legislation. Many employers currently only require a medical certificate on the third day of continuous absence.
- Absence/Attendance policies should be reviewed and updated to reflect the new procedures to qualify for payment.
- Budgets should be prepared to cover the cost of sick leave, as well as a practical plan to cover absent employees. Future proofing the budget will be important as this benefit will increase in its cost over the next four years.