This week, on 20th July, the Sick Leave Bill 2022 became law. Once the law is commenced, employees in Ireland will be entitled to sick pay. The Irish Government first produced a draft to introduce a new Sick Leave Bill back in November last year. An Tánaiste, Leo Varadkar, announced in March 2022, that the Sick Leave Bill was approved by cabinet and will legislate for a statutory sick pay scheme for all employees, which will be phased in over a four-year period. Before the law was passed, Ireland was one of the few countries in Europe who were without mandatory sick leave entitlement. Before the Sick Leave Act, only about half of all employers had their own sick pay scheme. The Covid-19 pandemic helped to highlight the need for such a scheme to be introduced into Ireland.
When the law is commenced, which is expected to happen shortly, employees will be entitled to three statutory sick days. This will rise to five days in 2024, seven days in 2025 and to ten days in 2026. Employers will pay employees at a rate of 70% of an employees’ wage, subject to a daily maximum threshold of €110. These earnings are based on 2019 mean weekly earnings of €786.33 and an annual salary of €40,889.16.
The rate of 70% and the daily cap are there to ensure excessive costs are not placed solely on the employer. The introduction of the new Sick Leave Bill is to provide a minimum level of protection to low paid employees, who may not be entitled to a company sick pay scheme.
If your business does not have a sick leave scheme set in place already, the new legislation being introduced will act as your sick pay scheme. Employers must keep a record of all employees who have availed of the scheme for up to four years, those who fail to keep a record may be fined up to €2,500.
To ensure that your employees are entitled to receive sick leave pay under the scheme, they must obtain a medical certificate as proof, and must have worked for their employer for a minimum of 13 weeks. If your employees’ sick pay entitlement is finished, and they need extra time off, they may be able to qualify for illness benefit from the Department of Social Protection, depending on their PRSI contribution.
The new Sick Leave Bill will help ensure employees are not penalised for missing days due to illness. Once the law is commenced, your payroll software should be updated to cater for this new employee entitlement.
The Government is currently drafting the Sick Leave Bill 2021 which will make it mandatory for employers in Ireland to provide Statutory Sick Pay (SSP) for employees. The sick pay scheme aims to ensure that every worker in the private sector will have the security and peace of mind of knowing that if they fall ill and miss work, they will not lose out on a full day’s pay.
Currently, there is no legal obligation on employers in Ireland to pay employees who are on sick leave, and it is up to the discretion of each employer. At present, employees in companies who do not offer sick pay can apply for Illness Benefit after 3 days of illness. Different rates apply depending on the employee’s earnings - the maximum for those earning over €300 is €203 per week. COVID-19 had a particular impact on those employees in companies where sick pay was not provided and highlighted the fact that Ireland is one of just three remaining countries in the EU not to have introduced a Statutory Sick Pay Scheme.
See statement from Tánaiste, Leo Varadkar:
“Ireland is one of the few advanced countries in Europe not to have a mandatory sick pay scheme, and although about half employers do provide sick pay, we need to make sure that every worker, especially lower-paid workers in the private sector, have the security and peace of mind of knowing that if they fall ill and miss work, they won’t lose out on a full day’s pay. I believe this scheme can be one of the positive legacies of the pandemic as it will apply to illness of all forms and not just those related to COVID-19.”
The plan is to introduce SSP over a 4-year period commencing January 2022.
The initial plan is as follows:
The rate of pay will be calculated on 70% of the employee’s wages (subject to a daily maximum of €110). Employees will need to provide a medical certificate to qualify and they must be in that employment for a minimum period of 6 months before they can qualify.
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.
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.
Employers will need to prepare for this new legislation and update Contracts of Employment and company policies accordingly. Check out our sister product, Bright Contracts, which can help you keep contracts of employment and staff handbooks up to date with changing legislation.
Please note that the above plan has not yet been legislated on and is subject to change.
Here are the main points from Budget 2021, as delivered by Minister for Finance Paschal Donohoe.
There is no change to tax rates for 2021, the standard rate will remain at 20% and the higher rate at 40%.
In addition, there is no change to Standard Rate Cut Off Points (SRCOPs).
The Earned Income Tax Credit will be increased by €150 from €1,500 to €1,650 to bring it in line with the PAYE tax credit.
The Dependent Relative Tax Credit will be increased by €175 from €70 to €245 to support families with caring responsibilities.
For 2021, USC will apply at the following rates for those earning in excess of €13,000
|Up to €12,012||0.5%|
Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will pay a maximum rate of 2%.
The emergency rate of USC remains at 8%.
Non-PAYE income in excess of €100,000 is subject to USC at 11%.
The National Minimum Wage will increase by 10 cent from €10.10 to €10.20 per hour from January 1st 2021.
The weekly threshold for the higher rate of employer PRSI will increase to €398 from €395, this is in line with the increase in the National Minimum Wage.
The age to qualify for the State Pension will remain at 66 for 2021, it was due to increase to 67.
The ‘waiting days’ for Illness Benefit will reduce from 6 days to 3 days for all new claims from the end of February 2021.
Parent’s Benefit has been increased by three weeks, this brings it up to five weeks. The leave must be taken during the first year following the birth of a child.
The Employment Wage Subsidy Scheme (EWSS) is due to continue until 31st March 2021, a wage subsidy scheme in some form is expected to be in place until the end of 2021.
The tax debt warehousing scheme will be expanded to include repayments of the Temporary Wage Subsidy Scheme (TWSS) owed by employers.
A new scheme was introduced for businesses impacted by Covid-19 restrictions, it will provide support for businesses that have had to close because of Covid-19. The scheme is operational from October 13th until March 31st 2021.
The payment will be calculated as a percentage of the business’s average weekly VAT exclusive turnover in 2019 subject to a maximum payment of €5,000 per week. The first payments are expected to be made in Mid-November.
The 13.5% rate of VAT for the tourism and hospitality sector will be reduced to 9% from November 1st 2020, the reduced rate will remain in place until December 31st 2021.
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Currently, employers are required to tax Illness Benefit and Occupational Injury Benefit payments paid to employees by the Department of Employment Affairs and Social Protection (DEASP).
With effect from 1st January 2018, employers will no longer be responsible for taxing Illness Benefit. From this date Revenue will tax Illness Benefit by adjusting employee's tax credits and/or rate bands. Revenue will receive real-time interfaces of taxable DEASP income and the adjusted tax credits and/or rate bands will be notified to employers via P2C files. As a result of this change there will be more frequent P2Cs for employees. While payroll operators will no longer need to tax Illness Benefit, it will be extremely important to implement amended P2Cs immediately.
In addition, from 1st January 2018 Illness Benefit letters will no longer be delivered to the ROS Inbox. In light of this change, employers may need to review their sick pay schemes.
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Managing sick leave can be a challenge for every employer. It is essential that businesses find the balance between supporting those employees who are genuinely sick and minimising unnecessary absences in order to reduce costs. Costs can include:
The 2011 IBEC Guide to Managing Absence found that over 11 million days are lost to absence in Ireland every year, costing businesses €1.5 billion or €818 per employee. The report also found that employees missed 5.98 days on average, an absence rate of 2.6%.
Absence levels can be addressed by taking some simple steps:
Return to Work Interviews: these are informal meetings between a line manager and an employee on the first day the employee returns to work. Return to work interviews are consistently rated as one of the most effective methods of managing absenteeism levels and it is recommended that they should be included in all sickness absence policies.