Employers must prepare now for the Statutory Sick Pay scheme in Ireland

The Sick Leave Bill 2021 was meant to come into effect by the end of 2021. However, this legislation is still undergoing legislative process and isn’t likely to be implemented until later in 2022.

Under draft legislation recently published by the Government, all employees will get a right to be paid for up to 10 days of sick leave in Ireland each year by 2026. A new Statutory Sick Pay (SSP) scheme will be phased in over four years to give employers the time they need to prepare for the additional costs.

New sick leave entitlement

From later this year, employees will be entitled to three days of sick leave. This will rise to five days in 2024, seven days in 2025, and a maximum of 10 days in 2026.

Ireland’s need for a mandatory sick pay scheme

Speaking about the new sick pay scheme, Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar said, “Ireland is one of the few advanced countries in Europe not to have a mandatory sick pay scheme. Although about half of employers do provide sick pay, we need to make sure that every worker, especially lower-paid employees in the private sector, have the security and peace of mind of knowing that if they fall ill and miss work, they won’t lose out on a full day’s pay. I believe this scheme can be one of the positive legacies of the pandemic as it will apply to illness of all forms and not just those related to COVID.”

How much will the scheme cost employers?

The proposed legislation sets out that employees should receive 70% of their wage while out on sick leave. However, a daily cap of €110 will apply. This figure is based on 2019 mean weekly earnings of €786.33 or an annual salary of €40,889.16.

It’s estimated that this payment equates to a 2.6% pay increase to an employee who receives no sick pay at present.

Article: Long-term sickness absence: When to conduct an informal welfare meeting

Who does the new scheme benefit?

The Government has stated that the scheme will help low paid employees who currently have no access to an employer’s sick pay scheme. Employees wishing to avail of the scheme must get a medical cert and have at least 13 weeks of continuous employment with their current employer.

If the employer sick pay period ends and the affected employee needs more time, they may qualify for illness benefit from the Department of Social Protection.

What does the scheme mean for employers?

The final details of the proposed Statutory Sick Pay scheme are yet to be published. Yet, it does seem likely that employers will face extra payroll costs over the coming years.

While the scheme will have a positive impact on public health and will benefit lower-paid workers, it’s employers who must burden the cost of the scheme. Impacted by the economic setbacks caused by COVID-19, the timing of the scheme could negatively affect growth, jobs, and competitiveness.

It’s also possible that the financial burden of paying all employees two weeks’ paid sick leave could be too much for certain businesses, such as SMEs.

What can employers do now?

The proposed Sick Leave Bill 2021 is likely to bring additional costs for employers. This is at a time when they’re working to return to normal operating levels.

And let’s not forget that the COVID-19 pandemic is still an issue. In response to the challenges employers are facing, the Government has made several financial supports available.

As an employer or business owner, you should make yourself familiar with the supports designed to help you and your people get back to work.

Questions about the Statutory Sick Pay scheme in Ireland?

Graphite provides expert guidance on all HR challenges. If you have urgent questions about statutory sick pay in Ireland, contact our advice line today on 01 886 0350.

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