HR: The HR Suite’s Caroline McEnery outlines what you need to know about the new statutory sick pay scheme

CAROLINE MCENERY A d o p t i n g a h e a l t h y a p p r o a c h t o s i c k p a y

The statutory sick pay scheme which will be phased in over the next four years, beginning in 2022, poses the threat of significant extra costs for some employers. For those looking to prepare themselves now, The HR Suite’s Caroline McEnery has the answers

managing director, The HR Suite

On 9 June 2021, Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, announced that a statutory sick pay scheme will be introduced.

The new scheme will be phased in over the next four years. This will begin with the introduction of three days’ sick pay per year in 2022, five days’ sick pay in 2023, and seven days’ sick pay in 2024. By 2025, it is hoped that the sick pay scheme will cover the cost of ten sick days annually.

Changing times

At this moment in time, there is no legal requirement for employers to pay employees while they are on sick leave from work. However, this is due to change from 2022. Until then, employers can decide their own policy in respect to sick pay. An employer must have written information of the sick leave policy within the employees’ contract and handbook. Although it is at the company’s discretion to decide on the amount of sick pay an employee will be paid while they are absent due to illness, the policy must be applied fairly to all employees to avoid any potential equality or other claims. The introduction of the statutory sick pay scheme will have benefits for employees; especially employees who are in low-paid jobs as they will not feel pressurised to attend work while ill to avoid the loss of income.

Potential monetary exposure

The passing of legislation requiring paid sick leave to be compulsory poses a potential threat for many employers throughout Ireland as those who do not provide such a payment already, or those whose policies may not be as lavish, may face momentous costs. The decision made by the government to phase the statutory sick pay scheme was decided in the hope that it would help employers, particularly small businesses, to plan and manage the additional cost, which will be capped.

Furthermore, for employees to prepare for the introduction of this statutory scheme, it is advised that they should review their company’s current policies, relating to absence/sick pay, to establish whether or not the clause concerning illness absence will need to be amended in the near future. As well as this, employers should review the contracts of employment they have in place to ensure that, when hiring new members of staff, their contracts and policies are aligned with minimum statutory entitlements that are outlined under the statutory sick pay scheme for when it is reinforced in 2022. To lower the possibility of being heavily affected financially by the introduction of the new statutory scheme, businesses should also calculate their company’s potential monetary exposure, to plan ahead. This calculation is based on the company’s average employee absences in previous years.

Employers will pay employees sick pay 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 a ministerial order in line with inflation and changing incomes.

Employee rights

It is worth noting that a complaint can be filed by an employee to the WRC against their employer if the employer refuses to provide the sick pay scheme from January 2022. Although there is no current provision in place in Irish law for employers to pay sick pay to their employees, some employers include paid sick leave as part of their company’s policies. If an employee does not receive sick pay but meets the company’s requirements to be granted sick pay and it is outlined in the employee’s contract or terms of employment, the employee can make a complaint under the Payment of Wages Act 1991.

For an employee to be eligible for sick pay under the new scheme, they must be working for their employer for a period of six months’ continuous service. The employee will also be obligated to provide a sick cert from their GP on the first day of absence if they wish to claim for this benefit. It is imperative that the medical cert includes information relating to the date the employee is likely to return to work.

If the employer has no sick pay policy in place, the employee may receive Illness Benefit. If they have enough PRSI contributions in place, the employee can apply to the Department of Employment Affairs and Social protection (DEASP). If the employee does not have enough PRSI contributions, they should contact the DEASP representative at their local health centre, they will then assess the employee’s personal situation.

If you are an organisation based in the Republic of Ireland and require further information or advice relating to HR, please do not hesitate to contact our office on (066)7102887. ■

A phased introduction has been designed to “help employers, particularly small businesses, to plan and manage the additional cost,” writes Caroline McEnery

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If you require further information or advice on HR, please do not hesitate to contact The HR Suite’s consultants on (01) 9014335 or (066) 7102887 or email the company at info@thehrsuiteonline.com.