What Employers Need to Know
Currently there is no legal obligation for an employer to pay an employee who is on sick leave, although many offer this as an additional benefit to attract and retain good employees. At present, the only option for those who do not receive payment from their employer while on sick leave, is to apply to the Department of Social Protection for social welfare payment. Payment of the Illness Benefit is dependent on the employee having sufficient PRSI contributions. However, this is about to change.
In June the government announced the introduction of a Statutory Sick Pay scheme (SSP) to bring Ireland in line with other OECD countries. The legislation required to bring this into effect is expected to be in place by the end of this year. This change represents a fundamental shift in how we deal with payment for illness related absences in Ireland. The main objectives of this scheme are:
- Employees unable to work due to illness or injury will receive a minimum amount of financial support and protection in the form of sick pay from their employers. This will not interfere with more favourable sick pay schemes employers currently offer.
- Employers will be required to manage and comply with the terms of the statutory scheme and ensure that their employees receive this employment right.
What does this mean for employers?
Although the scheme is not intended to impose significant new costs on employers, some additional costs are inevitable. The statutory sick pay scheme will be rolled out incrementally over a four-year period, commencing in 2022. Employers will be required to provide employees with the following sick leave cover:
- 2022- 3 days sick pay per year.
- 2023- 5 days sick pay per year.
- 2024- 7 days sick pay per year.
- 2025- 10 days sick pay per year.
How much will this cost employers?
Statutory sick pay provided by employers will mean employees will receive 70% of their wages up to a maximum daily threshold. The cost to the employer is capped. The amount received by the employee will not be ‘topped up’ by the State.
|Current Weekly Wage||2022
(3 days’ pay)
(5 days’ pay)
(7 days’ pay)
(10 days’ pay)
|Annual extra cost||0.8%||1.3%||1.9%||2.7%|
The Statutory Sick Pay Scheme sets out certain criteria that an employee must meet to be eligible. This includes the requirement of an employee to:
- Work for employer for a minimum of six months.
- Be certified as medically unfit to work.
Employee may move straight to state supported Illness Benefit, if the applied for, removing the current gap between applying for Illness Benefit and receiving payment.
As part the scheme, employers will have certain responsibilities, including:
- Ensure that employees receive their right to minimum statutory sick pay.
- Be responsible for making the statutory deductions in normal way.
Employers will not receive any form of compensation to assist with the cost of statutory sick pay. As many companies are recovering from the impacts of the COVID-19 pandemic, the phased approach over the next four years gives employers time to adjust and plan for the new responsibility.
What happens if an employer does not provide this right to employees?
Where an employee does not receive the minimum statutory sick pay from their employer, they have a right to take a complaint to the Workplace Relations Commission.
Employers who do not currently provide a sick pay scheme to their employees must plan for the implementation of this new right. Contact [email protected] or phone (01) 5134740 for a free consultation.