Employers will pay for sick leave, vows Burton

PROPOSALS to make employers pay the first weeks of an employee’s sick leave have only been abandoned for this year but will be introduced before long.

Social Protection Minister Joan Burton said Ireland was different from other European countries in placing the sick pay burden entirely on the state, which spends €900 million a year on short-term illness benefit.

She said she wanted employers to take responsibility for the first two to six weeks of sick pay.

“It is an issue that will be addressed during 2012. We will be having an intensive round of discussions with stakeholders,” she said.

Another measure affecting employers which is proceeding is the reduction in the rebate available to companies that make workers redundant, which currently enables them to claim back 60% of statutory redundancy payments.

The rate is being cut to 15% from January, a move Ms Burton said would leave Ireland more in line with Europe, where the rebate had been discontinued.

“We have had situations where profitable companies have gone into liquidation and transferred the employment abroad making Irish employees redundant and the cost to the social insurance fund of doing that has been very significant.”

She cited the massive job losses at Dell, SR Technics and Talk Talk, and said the social insurance fund was expected to have a deficit of €1.9 billion this year.

However, business groups, criticised the move to cut the redundancy rebate, claiming it would cause more companies to go out of business and more jobs to be lost.

Tom Parlon, Construction Industry Federation director general, said it amounted to another tax on employment as employers contributed to the redundancy fund through their employers’ PRSI.

“The redundancy rebate is also a factor in a company’s investment decisions as it’s an employment cost consideration. This decision runs contrary to the Government’s stated aim of promoting a business friendly economy.”

The small business group ISME said it was “livid” at the decision. Its chief executive, Mark Fielding, said: “This cost will impact on those companies that are already in the greatest difficulty and will have the biggest impact on smaller companies as they are more labour intensive.”

Last year in Ireland €373.2 million was paid out in redundancy rebates to employers and €185.3m has been paid so far this year. It is expected cutting the rate will save €81m in 2012.