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The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar today received government approval for new laws to give all workers the right to paid sick leave for the first time in Ireland.
The Sick Leave Bill 2022 was approved by Cabinet yesterday and will legislate for a statutory sick pay scheme for all employees, phased in over a four-year period.
Ireland is one of few advanced economies in Europe without a mandatory sick leave entitlement. Under current arrangements, sick leave is provided about half of all employees through their terms and conditions. There is a big gap between public sector workers of whom almost all get sick pay and private sector workers where coverage is much less.
The Tánaiste has indicated how the pandemic really brought home the stark contrast between those with and without sick leave, particularly those in more precarious working arrangements, and made him determined to bring in new laws. It builds on free GP care for the under sixes and over seventies which he brought in as Minister for Health and paternity benefit and social protections for the self-employed which he brought in as Minister for Social Protection.
The Scheme is being phased in to help employers to plan ahead and manage the additional cost, which has been capped. The government recognises that many businesses, particularly small businesses, have had a particularly difficult couple of years and continue to face challenges.
There has also been extensive consultation with employers and unions on these measures, and the scheme is comparable with those in other advanced EU economies.
The Tánaiste said:
"The pandemic exposed the precarious position of many people, especially in the private sector and in low-paid roles, when it comes to missing work due to illness. No one should feel pressured to come to work when they are ill because they can’t afford not to. Ireland is one of the few advanced countries in Europe not to have a mandatory sick pay scheme and although many, we think approximately half, of employers do provide sick pay, we need to make sure that security, that safety net, is there for all workers, regardless of their job. It has to be one of the legacies of the pandemic. It will be available to all workers, regardless of their illness."
The new scheme will start with three days per year once the Bill is enacted, rising to five days in 2024, seven days in 2025, and ten days in 2026.
Sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily maximum 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 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 a company sick pay scheme. The legislation expressly states that this does not prevent employers offering better terms or unions negotiating for more through a collective agreement.
The Tánaiste said:
"I fully understand that many businesses are struggling at the moment with additional costs because of the Russian invasion of Ukraine, as well as the aftermath of COVID and Brexit and the disruption both have brought. That is why we have chosen to phase this in, in this way. We have made a big effort to design the scheme so that it’s easy to use, fair and affordable for employers.
"We’ve done a lot of consultation on this, with representatives from both the employee and employer side and although I know some will think it goes too far and others that it doesn’t go far enough, I think it has struck a fair and reasonable balance."
An employee must 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 13 weeks. 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 government today approved the publication of the General Scheme of the Sick Leave Bill 2022. 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:
Statutory entitlement to sick pay will be phased in as part of a 4-year plan and will initially be for 3 days per year once the Bill is enacted. 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 year in year four.
The legislation is primarily intended to provide a level of sick pay coverage to many private sector workers and those on low pay, 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.
This Scheme compares favourably with the Sick Pay Scheme in Northern Ireland which pays only £96.35 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.