All employees will have 10 paid sick days a year from 2025
Employers will have to make the new payment at 70% of their workers wage at the time.
The Cabinet has approved a new law which will see paid sick pay introduced for all workers from next year.
Announced by Tánaiste Leo Varadkar after the meeting, the Government’s statutory sick pay scheme will be phased in over a four-year period, starting with three days per year in 2022, rising to five days payable in 2023 and seven days payable in 2024.
Under the plan, employers will eventually cover the cost of 10 sick days per year in 2025.
“It’s being phased in to help employers, particularly small businesses, to plan ahead and manage the additional cost, which has been capped,” Mr Varadkar said.
Employees to benefit from sick pay will have to produce a sick cert.
Under the scheme, sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110.
The daily earnings threshold of €110 is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16.
It can be revised over time by ministerial order in line with inflation and changing incomes, Mr Varadkar said.
The rate of 70% and the daily cap are set to ensure excessive costs are not placed solely on employers, who in certain sectors may also have to deal with the cost of replacing staff who are out sick at short notice.
The Bill is primarily intended to provide a minimum level of protection to low paid employees, who may have no entitlement to company sick pay schemes.
The legislation will expressly state that this does not prevent employers offering better terms or unions negotiating for more through a collective agreement.
In addition to needing the sick cert, the entitlement is subject to the employee having worked for their employer for a minimum of six months.
Once entitlement to sick pay from their employer ends, employees who need to take more time off may qualify for illness benefit from the Department of Social Protection subject to PRSI contributions.
Mr Varadkar said this reform is part of the pandemic dividend, the more inclusive economy and fairer society we are going to build once the pandemic is over.
“It’s not right that people feel forced to go to work when they are sick and it’s not good for public health. I know how difficult the past year and a half has been for workers and employers alike,” he said.
The Tánaiste said the scheme is being phased in to minimise the impact on employers and to avoid any “unintended consequences” such as layoffs or limiting hours of employment.
The plan will make clear that statutory entitlement to sick pay will be phased in as part of a four-year plan and will initially be for three days per annum in 2022.
This will effectively fill the gap in coverage caused by Illness Benefit waiting days. Closing the gap of current waiting days before being able to access Illness Benefit will minimise the numbers of sick employees presenting for work.
This four-year plan takes account of the current economic climate and the existing financial pressures on businesses.
The number of days will increase incrementally with the goal that employers will eventually cover the cost of 10 sick days per annum in year four.
He said the Q4 2019 CSO quarterly earnings data will be used as the reference point for the rate and threshold.
A daily earnings threshold figure of €110 will be applied which is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16.
Imposing the cap at this level ensures that €110 is the maximum cost for any employer per day (weekly salary of €786.33 divided by 5 days multiplied by 70% = €110.08).
The Regulatory Impact Analysis estimates this to be equivalent to a 2.6% pay increase in terms of value to the average employee who currently receives no sick pay from their employer.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
