The Irish government approved the General Scheme of the Sick Leave Bill 2021 on 9 June 2021. The bill proposes to implement an obligation on employers to pay their employees a certain amount of sick pay per year. The Minister for Enterprise, Trade, and Employment, Leo Varadkar, outlined that the bill is primarily intended to provide a minimum level of protection to low-paid employees working in the private sector, who may have no entitlement to company sick pay schemes.
Currently, in Ireland, employers are under no obligation to provide employees with sick pay while they are absent from work due to illness. However, while many employers choose to implement their own policies in respect of sick pay, many do not.
Where the employer does decide to provide a certain amount of sick pay, the duration of the entitlement and rate of pay is decided exclusively by the employer subject to either the contractual terms of employment or a company policy. For the most part, entitlement to sick pay may be suspended or removed by the employer at any time depending on how the policy is structured and/or whether it is contractual or not.
Where Irish employers choose not to provide their employees with sick pay, their employees may be entitled, subject to qualification, to social welfare payments from the state. These include Illness Benefit (€203 per week) and also Covid-19 Enhanced Illness Benefit (up to €350 per week at the time of writing, although this is likely to be phased out in the near future).
The employee must also be on sick leave for six days before they can claim illness benefits (i.e. on the seventh day) with this requirement amounting to the longest waiting period in Europe. The requirements for Covid-19 Enhanced Illness Benefit are significantly more lenient than for Illness Benefit in order to ensure that employees who have been diagnosed with covid-19, advised to self-isolate or to restrict their movements can do so without any financial concerns.
For many employees, however, these social welfare payments amount to less than their weekly pay. In fact, the reason the enhanced illness benefit was introduced was to encourage employees to desist from attending work when potentially ill with covid-19, in circumstances where it may have made more financial sense for them to attend work than to stay home and claim illness benefit.
The bill proposes to phase in statutory sick pay over a four-year basis starting in 2022, increasing from three days up to 10 days per annum by 2025. The bill outlines the phases as follows:
- 2022 – three days statutory sick pay per annum;
- 2023 – five days statutory sick pay per annum;
- 2024 – seven days statutory sick pay per annum; and
- 2025 – 10 days statutory sick pay per annum.
Sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110 (which equates to an annual salary of €40,889.16 – the current national average – and may be revised as incomes evolve over time). Employees will be required to have completed a minimum of six months' service with their employer before they can avail of statutory sick pay entitlement.
Ireland is currently one of only three EU member states that have no legal provisions for statutory sick pay so the changes, while gradual, are welcome, providing a baseline of pay for employees while out sick.
Employers are advised to start planning for the changes to be implemented once the bill is enacted, which is as early as next year at present. Employers will need to review their contracts and policies to see what they currently offer and whether that will be compliant with the provisions as outlined above.