The Challenges in implementing Statutory Sick Pay
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On 20 July 2022, the Sick Leave Act 2022 (“the Act”) became law. The government has recently confirmed that entitlement to sick pay will commence on 1 January 2023. Regulations are also awaited to provide further guidance to employers.
The implementation of sick pay legislation brings Ireland into line with other European jurisdictions. However, it is likely to place a burden on small employers who have not provided for contractual sick pay in the past.
In this article we look at the key provisions which been published to date as well as considering whether any lessons can be learnt from the UK who have been operating this system for many years.
To date the following has been clarified:
- All employers in Ireland will become obliged to make minimum mandatory sick payments to their employees from 1 January 2023.
- Employees will be entitled to sick pay for up to 3 sick days per year. This will increase to 5 days in 2024,7 days in 2025 and 10 days in 2026.
- In order to avail of the statutory payment, the employee must provide their employer with medical certification from a general practitioner stating they are unable to work.
- Employees must have been working for their employer at least 13 weeks to become eligible for the payment.
- Subject to complying with these requirements the statutory entitlement will be triggered on the first day of the employee’s sick leave.
- An employee who meets those requirements will be entitled to statutory sick pay of 70% of their normal wages up to a maximum of €110 per day.
- The Act provides a limited exception for employers were experiencing severe financial difficulties.
- Any provision of a company’s sick pay scheme which is deemed to be less favourable than the entitlements in the Act will be modified to comply with those entitlements.
- If the employer has a contractual sick pay scheme in place which exceeds the entitlements contained in the Act, there will be no necessity for them to make any additional payments to employees. If their scheme requires the employee to ‘wait’ for several days before receiving a payment (“waiting days “) the employer may need to adjust their scheme to address this difference.
- Employees are entitled to lodge a complaint to the Workplace Relations (“WRC”) if their employer refuses to discharge statutory sick pay. The WRC can make a maximum award of four weeks remuneration.
- Employers are obliged to retain records of statutory sick pay for 4 years. Failure to comply with the record-keeping requirement may result in a fine of up to €2,500.
Although this is a welcome development for employees, particularly those on lower wages, it remains to be seen whether those employees will avail of the statutory sick payments for short absences in circumstances where they will have to incur the cost of a medical appointment to avail of the statutory payment.
It is unclear whether an employer can withhold the statutory sick payment until they are in receipt of a doctor’s certificate stating that the employee is unfit for work. This may cause difficulties as there can be a delay in accessing GP services. This challenge has been addressed in the UK by allowing for the provision of electronic medical certificates.
It is also questionable whether addressing complaints to the WRC is practical given the current backlog of cases and the nominal sums involved and whether a fast-track dispute system such as the one in the UK might be more appropriate.
What should employers do now?
- We would recommend that all employers to review their employment contracts and handbook/policies.
- An employer with no Sick Pay Scheme in place will need to amend their contracts and handbook to comply with their statutory obligations and implement a scheme which aligns with the Act as well as putting measures in place to trigger the incremental increases.
- Employers who already provide contractual sick pay should review their employment contracts and handbook to ensure the provisions of their scheme align with the legislation. If their scheme exceeds the minimum entitlements under the Act their policy should reference the fact that payment of contractual sick pay is inclusive of their statutory obligations.
- Employers should engage with payroll to ensure the appropriate systems are in place to comply with their sick pay obligations and that adequate records are kept of those payments.
- Employers should consider whether waiting days and medical certification apply to their sick pay scheme and what if any changes may be required to comply with the Act.