The Government has confirmed that Ireland’s first statutory sick pay scheme will come into force next year. While similar schemes are in place throughout Europe, this is the first time in Ireland that employers will be legally obliged to pay employees during periods of absence through illness.
The statutory sick pay scheme is set to come into place from 1st January 2023.
Background to the sick pay scheme
The Government passed a new law creating a statutory sick pay scheme on 20 July 2022. The Sick Leave Act 2022 (the Act) was originally intended to come into effect by the end of 2021. Following on from the experiences of the COVID-19 pandemic, the Government identified a public health need to ensure that lower paid workers did not feel obliged to go to work if they felt ill.
Speaking about this new 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.”
The passing of the Act now means all employees will have a right to be paid for up to 10 days of sick leave per year by 2026. The full entitlement under the statutory sick pay scheme will be phased in over four years to afford employers time to prepare for the additional costs.
From 1st January 2023, employees will be entitled to three days’ paid sick leave per annum, rising to five days in 2024, seven days in 2025, and a maximum of 10 days in 2026.
How much will employees be paid?
Under the Act, employees will receive 70% of their daily wage while on sick leave subject to a cap of €110.
The Government may change the rate of pay in future to reflect inflation, increasing incomes or other factors.
Free Download: Long-term Sick Leave
For employees who wish to avail of the scheme, they must get a medical cert and have at least 13 weeks of continuous employment with their current employer.
If an employee exhausts their statutory sick pay entitlement and remains absent through illness, the employee may qualify for illness benefit from the Department of Social Protection.
Does the Act pose a problem for employers?
While the scheme looks set to have a positive impact on public health and will benefit lower-paid workers, it is nevertheless employers that will bear the full cost of the scheme. Along with ongoing economic uncertainty and soaring energy costs, the timing of the scheme could contribute to negative outcomes for growth, jobs, and competitiveness. It’s quite possible that the financial implications of paid sick leave could be too much to bear for certain employers, particularly SMEs.
Now that a commencement date has been set for the new statutory sick pay scheme, employers should begin preparing if they have not already done so.
The primary action points are:
- Review your payroll processes to ensure the new sick leave payments will be reflected in your payslips.
- Review your employment contracts and policies to see if your existing sick leave policy needs to be updated (no action may be necessary if the terms of your existing policy are more generous than the statutory payments outlined above).
- Notify your team in writing about any changes in employment terms that are required under the statutory sick pay legislation.
Questions about the Statutory Sick Pay scheme in Ireland?
If you have any questions about the upcoming changes to sick pay in Ireland, speak to one of our experts on (01) 653 3663 or request a callback here.