From Department of Enterprise, Trade and Employment
By: Minister for Enterprise, Trade and Employment;
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I move: "That the Bill be now read a Second Time."
I am very pleased to introduce the Sick Leave Bill to the Seanad today. The Bill has completed its passage through the Dáil and I am keen to have it enacted by the summer recess.
This Bill creates a new workers’ right in Ireland. For the first time, employees will be entitled to statutory sick pay from their employers.
It is one of five new workers' rights I am establishing this year. The other four are:
1. Establishing a new public holiday, which from next year will be at the start of February to mark Imbolc/St.Brigid's Day.
2. The right to request remote working, which is undergoing pre-legislative scrutiny in committee.
3. Better protection for workplace tips and gratuities, which has completed second stage in the Seanad.
4. A new COVID-related lay off payment for people laid off during the pandemic who are subsequently made redundant. That payment scheme was commenced in April.
Separately, Minister O’Gorman is legislating for a Right to Request flexible working for parents and carers.
Introducing Statutory Sick Leave is part of the pandemic dividend. It’s about developing a more inclusive economy and fairer society. It’s about making work pay.
The pandemic exposed the vulnerable position of many people, especially in the private sector, when it comes to missing work due to illness.
No one should feel they have to go work when they are sick because they will lose all their income otherwise. It is bad for them, and it is bad for public health. Sick workers may infect colleagues, clients and customers and are more likely to make a mistake leading to harm to themselves and others.
Cathaoirleach, this is a progressive Bill. It will improve the rights of workers. The events of the last two years have shown how necessary this legislation is.
Ireland is one of the few advanced economies in Europe not to have a mandatory sick pay scheme.
Cyprus and Portugal are the only other EU members that do not have employer-funded sick pay or state financial supports similar to Ireland’s illness benefit scheme. The United States, Japan and South Korea also do not have such a provision.
But, it is part of President Biden's agenda in the US and Canada is taking steps to introduce employer-funded sick leave at national level.
The scheme I am proposing compares favourably with the sick pay scheme in Northern Ireland and Britain, which pays only £96.35 weekly. I’d strongly encourage Sinn Féin Senators to put this right in Northern Ireland should they return to Government there later in the year.
Many employers, we think approximately half, do provide sick pay, but low paid workers are the least likely to be covered. We now need to provide that security, that safety net, for all workers, regardless of their job.
The Bill ensures that paid sick leave will be available to all workers. It covers both full time and part time employees.
The Bill will lessen inequality between the public and private sectors. Nearly all public servants have access to paid sick leave through the Public Service Sick Leave scheme. It will reduce inequality between better paid and lower paid workers, because better paid workers are more likely to have access to sick pay, or simply to be able to afford to take time off when ill. Coverage in the private sector, and particularly among the lowest paid workers, is much lower.
This is particularly true for workers in retail and hospitality, where employees often work directly with the public, and the chance of spreading infectious diseases is greater.
Statutory Sick Pay is the latest in a series of actions that have improved social protections for workers and the self-employed over the last five years, including:
As a starting point, this scheme will cover the three ‘waiting days’ before eligibility for illness benefit from the State.
Where an employee has an extended period of illness, the scheme will operate seamlessly with the existing Illness Benefit system. Once the employee has exhausted their entitlement to paid sick leave, they will move onto illness benefit, if eligible, for up to two years if needed.
The four-year plan takes account of the current economic climate and existing financial pressures on businesses. The number of days will increase incrementally.
Our firm intention is that the employer will eventually cover the cost of ten sick days per year from the fourth year of operation, after which illness benefit from the state continues to kick in.
Closing the gap of current waiting days before being able to access illness benefit will help to reduce the number of sick employees presenting for work. Illness benefit is payable from day four and runs up to one year and, in some cases, for two years, as I mentioned earlier.
I acknowledge that many businesses are facing additional costs because of Putin’s invasion of Ukraine, as well as the aftermath of COVID and Brexit and the disruption both have wrought.
Business owners, in particular small employers, tell me that a lot is coming at them at the moment – higher labour costs, input costs, energy costs, as well as higher costs from Government. Those costs include the additional public holiday, for which I signed the order and from auto-enrolment, which I advanced as Minister for Social Protection.
I get it.
We must be fair to employees and employers, particularly SMEs, so the cost is going to be shared between employers, employees and the government. It will be phased in and we will ensure there are proper controls.
The scheme has been designed based on consultation with employee and employer representatives. Prior to seeking Cabinet approval for the draft of the Bill, my officials undertook a full public consultation that sought the views of relevant stakeholders and the public on key policy questions around the design of the scheme. In addition to the public consultation, my officials also undertook an international review to get a better understanding of how sick leave schemes operate elsewhere.
I have been clear about what regulations under this legislation will provide for in order to make it predictable for employees and employers alike.
Regarding rates, statutory sick pay will initially be paid at 70% of regular earnings, up to €110 per day, from the first day of illness. We are setting a cap to give employers certainty around the costs involved at the outset. It will rise, however, as earnings rise.
The regulatory impact assessment illustrates that a scenario in which everyone took the full three days of sick leave in year one would increase payroll costs by 0.8%. When this scheme has been fully introduced, the maximum additional payroll cost will be 2.7% annually. That is not dissimilar to a year's pay increase. It is important that we bear this point in mind in assessing the cost to employers.
A minimum rate entitlement will also be set to ensure that all workers receive a reasonable level of financial compensation.
I will now provide a brief explanation of the various sections of the Bill.
Sections 1 and 2 are standard provisions setting out the short title and commencement, and necessary definitions.
Section 3 gives the Minister the power to make regulations for matters referred to in the Bill and requires the Minister to lay those regulations before the Oireachtas.
Section 4 provides for expenses incurred in relation to the Bill to be refunded out of monies provided by the Oireachtas.
Section 5 sets out an employee’s entitlement to statutory sick leave and the conditions an employee must satisfy to qualify for paid sick leave.
In the first instance an employee will be entitled to three paid sick leave days in a calendar year. This may seem modest, but it’s set at that level to ensure excessive costs are not imposed on employers at the outset. It will increase incrementally over time. Absences may be consecutive or non-consecutive.
Regarding eligibility an employee will be required to have worked for their employee for a period of 13 weeks before they are eligible to avail of paid sick leave under the Bill.
There was significant debate around the length of service requirement as the Bill passed through the Dáil and amendments were made based on these discussions.
The length of service requirement is linked to the Minimum Notice and Terms of Employment Act 1973. This means an employee will not have to qualify again for sick leave merely because they are temporarily laid off, for instance, over the summer period. We are well aware that this would be a significant issue in some sectors, particularly for workers in crèche and childcare settings, many of whom work on a term-time pattern. Where an employee is laid off, that does not constitute a break in service. His or her service is continuous for the purpose of the Bill.
We think it is reasonable that an employee should have worked for an employer for some time in order to qualify for paid sick leave and to have established an employee-employer relationship. For example, if an employer takes somebody on to work in a shop or restaurant for a few weeks in the summer, it would not be fair if that employee took ten days' sick leave at the start and only worked for a week or two after that.
It's not an unusual provision, for example, in the case of parental leave, a parent must have completed one year's service with the employer before he or she may take parental leave. It is important to allow sufficient time to establish an employee-employer relationship.
Senators, I want to ensure that it is not the case that there will be a reset for every service interruption for an employee. The Dáil amended the Bill to provide extra clarity that each period of service will be cumulative. This means an employee resuming service with an employer on a new contract after a break will be entitled to statutory sick pay as soon as their total service amounts to 13 weeks. If they were entitled to sick pay when their previous service ended, they’ll be entitled to sick pay from day one.
Any day taken as sick leave under the Bill will require a medical cert from a registered medical practitioner.
I believe it would be unreasonable to introduce a legal obligation for employers to pay for sick leave without the need for a worker to produce evidence for this in the form of a medical certificate. That would not be sick leave; it would be a different form of leave.
Of course, employers do not need to insist on this or can provide uncertified sick days.
The requirement for a medical certificate for paid sick leave is a fair and necessary provision. It is also not an unusual requirement. Employees are currently required to provide medical certificates to access the State Illness Benefit scheme and it is a requirement in many sectoral and company level sick pay arrangements.
Section 6 provides that the number of sick leave days under the Bill may be increased by ministerial order, and the matters the Minister may wish to consider in doing so.
I accepted an amendment at report stage in the Dáil that removed the power to reduce the number of statutory sick leave days by ministerial order. It has always been my intention that the number of days provided for would increase over time and there are no plans to reduce the number of statutory sick leave days. It will now require primary legislation to reduce the number provided for.
Given the close links between Statutory Sick Leave and Illness Benefit, and the need to ensure alignment between the two schemes, section 6 provides for consultation with the Minister for Social Protection in advance of any increase in sick leave days.
Section 7 provides for the setting of the rate of payment in respect of sick leave by ministerial order. As I have already stated, the intention is to introduce sick pay at a rate of 70% of regular earnings up to €110 per day, and a minimum entitlement will also be set.
I know some stakeholders believe that the rate of payment and earnings cap should be set in the Bill itself. I can’t agree with that. Doing so by ministerial order allows greater flexibility. It will allow the rate to be revised as necessary and future-proofs the Bill. We have all seen concerns recently around inflation and the rising cost of living. Allowing the rate of payment to be amended by ministerial order gives us the ability to respond quickly to changing circumstances.
Section 8 provides that nothing in the Bill will prevent the inclusion of more favourable provisions, in relation to sick leave, in a contract of employment.
As is always the case with any workers’ rights legislation, this legislation sets out the minimum standard that an employer must provide. It will not prevent employers having superior sick pay schemes to that which is required by law. Many already do.
Section 9 provides that obligations under the Bill will not apply where the employer provides his or employee with a sick pay scheme that confers benefits, over the course of a reference period set out in the scheme, that are more favourable.
This section has been designed with flexibility in mind. We know that there are a lot of private companies that already offer their employees paid sick leave as part of their contract of employment. Overall, these schemes may offer more generous terms and it is not our intention that they will be undermined by this Bill.
For businesses which genuinely can’t afford to pay we have included, under Section 10, an ‘inability to pay’ provision. This allows the Labour Court to grant an exemption to a business from their obligations under this Bill, for a period of not less than 3 months and not more than 12 months.
There’s a similar provision in the National Minimum Wage Act 2000. It will only be granted where there’s a real risk to business sustainability.
Section 11 provides that the rights of an employee will not be affected by exercising their right to sick leave under this Bill and that sick leave may not be recorded as any other form of leave. It also provides that where an employee is on probation, an employer may suspend the probation period while the employee is on sick leave.
Section 12 provides that an employee cannot be penalised for exercising their right to sick leave under the Bill.
Sections 13, 14 and 15 deal with enforcement and compliance issues and provide for the relevant amendments to be made to the Workplace Relations Act of 2015.
This enables and authorises the WRC to carry out inspections and to take complaints regarding compliance with the Bill.
As with other statutory employment rights, where an individual believes they are being deprived of rights to which they are entitled under the Bill, they will be able to refer a complaint to the WRC.
There the matter can be dealt with by way of mediation or adjudication leading to a decision that is enforceable through the District Court. WRC inspectors can also be asked to investigate certain breaches of the provisions of the Bill.
The maximum penalty that can be awarded for a breach of the legislation is 4 weeks’ remuneration. This was a judgment call. We are trying to get the balance right. We believe the penalty being double the offence is proportionate and that is the thinking behind it.
I know some will think the Bill goes too far, and others that it doesn’t go far enough. I think we have struck a fair and reasonable balance giving protection to employees and predictability to employers.
Ultimately this Bill means that workers will not have to attend work while sick though economic necessity. This will be one of the positive legacies to emerge from the pandemic. It is a step forward for workers rights and equality.
I look forward to listening to Senators' views and working with you to progress this important legislation through the Seanad as quickly as possible.