New sick leave law – a guide for employers

The much-anticipated sick leave legislation was recently passed by the Oireachtas, meaning that for the first time workers in Ireland have a legal right to sick leave paid for by their employer.

The implementation date confirming when employers must start providing paid sick leave has yet to be confirmed, but this is expected to be fairly imminent.

Entitlement will start at three days of paid sick leave in 2022 and will be gradually increased with the intention that employers will cover five days in 2023, seven days in 2024 and finally 10 days in 2026.

This phasing-in of sick pay is designed to reflect the current economic climate and financial pressures on businesses and will be monitored as the system progresses.

The sickness benefit rate is set at 70% of an employee’s wages, with a daily maximum of €110. This threshold may be reviewed and changed over time according to changes in income or inflation.

So far, Ireland has been an outlier in Europe

Workers must provide a medical certificate to be eligible for Statutory Sick Pay, and eligibility requires the worker to have worked for their employer for at least 13 weeks.

Since there is no waiting period, employees are entitled to sick pay from the first day of absence, in contrast to the current social security system.

What must employers do?

The legal system aims at a minimum protection; In fact, many employers already pay their employees sick pay in excess of the statutory entitlement.

If this is the case, employers should update their contracts and policies to provide that contractual sick pay includes statutory sick pay.

In any case, employers should consider reviewing their policies and contracts to ensure they comply with the system.

Employers who are not already paying sick leave must ensure that appropriate processes and systems are in place to manage payment during sick leave and to keep records (which must be retained for four years).

An employee must present a medical certificate signed by a resident doctor even if he is only ill for one day. Many sick pay policies do not require a medical certificate for the first three days of absence, so employers may want to update their policies accordingly.

The employee bears the costs of obtaining a medical certificate, which in practice can mean considerable costs for him, especially if he is on sick leave for one day several times during the year (as it must be presented). a medical certificate for each absence).

Employers who already pay sick pay to their employees could therefore maintain their policies on medical certificates to reduce the financial burden on employees.

However, since the purpose of the scheme is to protect workers in low-paid and precarious jobs, who are less likely to be entitled to occupational sickness benefits, this could diminish the value of the scheme to the workers that the scheme is intended to protect.

This consequence has been recognized by the government and may be addressed in some way throughout the programme.

Impact on employment

Statutory Sick Pay is the latest in a series of measures taken by the Government to improve social protection for workers in Ireland, following benefits such as paternity leave, parental leave and treatment allowance.

So far Ireland has been an outlier in Europe as almost all European countries require employers to pay their employees some sick pay. Statutory sick pay has existed in the UK for many years; it is paid by the employer to eligible employees from the fourth consecutive day of sickness for a maximum of 28 weeks.

While sick pay has been on the political agenda for some time, the Covid-19 pandemic was undoubtedly the trigger for the government to present a bill in 2021.

The issue became particularly urgent when workers were told to stay out of work for two weeks if they had symptoms of Covid-19, or were identified as close contacts with no statutory entitlement to sick pay.

In some cases, employees who were unable to work from home masked their symptoms or close contact status to avoid taking unpaid leave from work.

Among other benefits, it is reported that mandatory sick pay schemes result in workers feeling less pressure to go to work when they are unwell. This promotes a safer work environment, resulting in less lost productivity overall.

Interestingly, there is research from the Organization for Economic Co-operation and Development that suggests that increasing employer responsibility for sick pay could actually improve absentee rates by encouraging employers to be more directly involved in sick leave management , and encourage them to engage in preventive measures and reintegration planning with their employees.

Impact on Employers

The government has stated that the statutory sick pay system should not impose any significant costs on employers. However, she concedes that the system represents a fundamental change in the way sick leave payment is handled in Ireland and therefore some additional costs for employers are inevitable.

There are two main costs associated with the implementation of the sick pay scheme: the wage costs of paying a worker who is on sick leave and the administrative costs related to setting up and implementing the scheme and maintaining records for both.

These costs will be felt most by small employers, who are less likely to have a sick pay scheme.

Under the law, the Labor Court can grant an exemption to employers in serious financial difficulties, but this is subject to a number of conditions.

If an employee believes that their employer has broken the law, they can lodge a complaint with the Workplace Relations Commission and the maximum compensation they can be awarded is four weeks’ pay.

A fine can also be imposed on an employer who does not keep adequate records of statutory sick leave.

There will inevitably be some teething problems, so we may also see some fine-tuning as the scheme catches on in practice.

Niamh Crotty, Senior Associate, employed by Lewis Silkin & Linda Hynes, Partner at Lewis Silkin New sick leave law – a guide for employers

Fry Electronics Team

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