The highly anticipated Sick Leave Act (“the Act”) was finally signed into law by the President on 22 July this year, however the provisions of the Act are not due to commence until 2023.
Employers in anticipation of this, will need to review their Sick Leave policies and ensure that they are in compliance with the Act before 2023.
Provisions of the Act
The Act sees the introduction of a mandatory employer Statutory Sick Pay scheme (“SSP Scheme”) for the first time in this jurisdiction. It will provide for an entitlement to a minimum period of paid sick leave for all employees should they fall ill or sustain an injury which prevents them from being able to work.
The current system in place for employees is that after three days of sick leave an employee may apply for Illness Benefit, however the first three days are not covered. The implementation of the Act will effectively fill the gap in coverage caused by Illness Benefit waiting days.
Employee Entitlements under the Act
- The Act provides that an employee shall be entitled to up to and including 3 statutory sick leave days in a year, commencing in 2023. Provision is also made for the Minister to specify and vary the number of sick leave days an employee is entitled to; however, the entitlement cannot fall below 3 days per year.
- The Department of Enterprise, Trade and Employment has indicted that entitlement to sick leave days will increase on a graduated basis to 5 days in 2024, 7 days in 2025 and 10 days in 2026.
- The entitlement for payment of sick pay is subject to the employee having worked for their employer for 13 weeks.
- A sick leave payment will be paid by employers at a rate of 70% of an employee’s wage. This will be subject to a daily threshold of €110.00, ensuring that employers are not subject to excessive costs in relation to employees on high salaries. This can be revised over time by ministerial order in line with inflation and changing incomes.
- An employee will have to be medically certified as unfit to work to avail of statutory sick pay.
Employers with more favourable provisions?
In the event that an employer provides a more favorable sick leave scheme then the Act will not apply. In determining whether an employer’s scheme is more favorable, reference should be made to a number of factors:
- the period of service that is required before sick leave is payable;
- the number of days that an employee is absent before sick leave is payable;
- the period for which sick leave is payable;
- the amount of sick leave that is payable;
- the reference period of the sick leave scheme pay schemes to their employees.
Exemption from obligation to Pay?
In instances where an employer is experiencing severe financial difficulties they can make an application to the Labour Court seeking an exemption from paying for a period of between 3 to 12 months. The employer must also have the agreement of the employee /employees before such an exemption will be granted.
However, notwithstanding this the Labour Court my still grant an exemption provided it is satisfied that that
- the employer has informed and attempted agreement with the employees in relation to the financial difficulties and a proposed exemption;
- a material number of layoffs or redundancies; or that the sustainability to the employer’s business would be significantly adversely affected.
Records
Another notable provision of the new Act is the obligation on employers to make a record of the statutory sick leave taken by each employee and to retain the record for a period of 4 years. Failure to comply with this provision without reasonable cause will constitute an offence under the Act.
Preparation for 2023
The introduction of the Sick Leave Act may have a significant effect on employers if they are unprepared:
- Employers without a Sick Pay/Leave Policy should ensure that a policy is in place prior to the commencement of the Act;
- A review of existing Sick Pay/Leave Policies within employee handbooks and contracts should be carried out to ensure compliance with the Act;
- Employers should ensure that financial planning is in place to meet this new payment and;
- Employers should ensure that facilities are in place to record and retain a record of each employee’s statutory sick leave taken.
Authors – Ethna Dillon & Anne O’Connell
30th September 2022