Q&A: Will new sick pay entitlement make workers feel a little better? 

Q&A: Will new sick pay entitlement make workers feel a little better? 

The new sick pay entitlement scheme will ensure that all employees are entitled to a minimum level of financial compensation if they are unable to work due to illness or injury.

The Cabinet’s approval of its universal sick pay scheme is the latest change to worker’s rights and will seek to help up to 50% of employees who are not currently entitled to any benefit if they are unable to work.

Tánaiste Leo Varadkar said the plan is intended as a progressive measure that will bring Ireland in line with many other wealthy OECD countries.

Q: What does the plan seek to achieve?

A: The scheme will ensure that all employees are entitled to a minimum level of financial compensation if they are unable to work due to illness or injury. The scheme is primarily intended to provide a level of sick pay coverage to those employees, often in low paid roles, who currently receive no sick pay/ or are not entitled to illness benefit.

Q: Will it be mandatory or a voluntary scheme?

A: It will become an employment right and as is the case with existing employment rights, employers will be required to administer and comply with the terms of the scheme. “The scheme will be as simple and straightforward as possible to reduce the administrative burden and costs on employers,” Mr Varadkar said.

Q: Is the scheme set to be a maximum ceiling or a floor that companies can go beyond?

A: The scheme is intended to offer a floor level of protection, and legislation will not interfere with existing, more favourable, sick pay schemes that are in place. The scheme is not intended to impose significant new costs on employers. However, some additional costs for employers are inevitable. Mr Varadkar said the intention is to develop a scheme that is fair and affordable with the minimum complexity and administrative burden, for both the employers and the State.

Q: So how will the scheme work?

A: 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.

Q: So will it come in overnight or will it be phased?

A: The 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. 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.

Q: What is the €110 threshold based on?

Statutory Sick Pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110.

Setting a percentage of the gross wage is in line with the calculation method used in the majority of EU Member States that have statutory sick pay schemes, where the percentage used varies from 25% to 100% of the employee’s gross wage. The rate of 70% is set to ensure excessive costs are not placed on employers, who in certain sectors may also have to deal with the cost of replacing staff who are out sick at short notice.

Q: Will employees have to produce a medical cert?

A: Yes, unlike some employers who allow a certain amount of non-certified sick days, the new scheme will demand that from day one a certificate is required in order to qualify.

Q: For those employees who already get sick pay, will this limit their rights?

A: No. Mr Varadkar’s bill is explicit that existing arrangements will not be interfered with as most scheme offered by employers are more generous than what this statutory minimum seeks to provide. The bill also states it in no way limits the rights of workers to negotiate better terms through their unions.

Q: What about employers? Will they be able to afford this or will they be forced to lay off staff?

A: Mr Varadkar’s department conducted a Risk Impact Assessment and concluded that by phasing the measure in, there should not be any direct threat to employees. He said that since 2011, there have been seven increases to the minimum wage, none of which have caused firms to let go of staff. Mr Varadkar feels this “gets the balance right”.

Q: Remind me, what has changed since 2016?

A: The Government’s Sick Leave Bill 2021 is the latest in a series of actions that have improved social protections for workers and the self-employed over the last five years, including, paternity benefit, parental leave benefit, enhanced maternity benefit, treatment benefit and the extension of social insurance benefits to the self-employed

 

More in this section

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up