Sick Leave Act 2022
The Sick Leave Act 2022 (the Act) introduced a statutory sick pay scheme for employees in Ireland. The scheme is being phased in over a four-year period. The scheme entitles employees to be paid for limited periods of sick leave, for days on which they would ordinarily work but are incapable of doing so due to illness or injury.
Ireland had previously been an outlier in the EU in not providing for statutory paid sick leave. Ultimately, the Act benefits employees whose employers did not offer sick pay before the introduction of the Act. Minister Simon Coveney said the Act is the latest in a series of improvements to employee rights and social protections for workers introduced in recent years.
At present, the Act stipulates entitlement to 5 days of paid statutory sick leave per calendar year, which cannot be carried over. It is intended that this will increase yearly until 2026 as follows:
7 days in 2025
10 days in 2026
What are the eligibility criteria for sick leave?
Employees must have a minimum of 13 weeks’ continuous service with their employer and are required to provide their employer with a medical certificate to be eligible for statutory sick pay. The medical certificate must be provided and signed by a registered medical practitioner in the Republic of Ireland, be written in an official language (English or Irish) and must cover each day of illness.
Calculating sick pay: a business guide
The rate of statutory sick pay is set at 70% of the employee’s wage subject to a daily threshold of €110. This threshold may be reviewed and amended over time in line with changes in income/inflation.
Where an employee’s pay is calculated by reference to a fixed hourly or other time rate, or by reference to a fixed wage or salary, the gross amount payable will be 70% of the sum paid to the employee in respect of the normal daily hours last worked by the employee before the statutory sick leave day, or €110, whichever the lesser.
Where an employee’s pay is not calculated by reference to a fixed hourly or other time rate, or by reference to a fixed wage or salary, the gross amount payable will be either 70% of the average hourly rate of pay multiplied by the number of hours that the employee was due to work on the statutory sick leave day, or €110, whichever is less. In these circumstances, the hourly rate of pay is calculated over the period of 13 weeks ending immediately before statutory sick leave commences, or if no time was worked during that period, the 13 weeks ending on the day last worked by the employee before the statutory sick leave day commences.
In accordance with Section 5 of the Act, the first day in a year that an employee is incapable of working due to illness or injury shall be the first statutory sick leave day, and any subsequent days shall be construed accordingly.
Impact on existing employer sick pay schemes
Section 9 of the Act allows employers who offer a scheme which is on the whole more beneficial to the employee an exemption from the requirement to pay statutory sick pay. In determining whether an employer sick pay scheme confers benefits that are, on the whole, more favourable than the statutory sick pay scheme, the following is taken into account:
The period of service of the employee required before sick leave is payable
The number of days of absence required before sick leave is payable
The period for which sick leave is payable
The amount of sick leave payable, and
The reference period of the sick leave scheme
In November 2023, the Workplace Relations Commission (WRC) gave its first decision on the Act in relation to whether an employer scheme was on the whole more beneficial to the employees. A shop assistant who was absent due to illness for four days in 2023, claimed entitlement to statutory sick pay.
The employer’s sick pay scheme (the employer’s scheme) offered eight weeks' fully paid sick leave in a rolling 12 month period, but importantly, it excluded the first three days of sickness absence. Employees were also required to have 6 months’ service to benefit from the employer’s scheme.
The employer acknowledged that statutory sick pay is more favourable than its own sick pay scheme in some respects, given the length of service requirement (13 weeks under the statutory scheme v 6 months under the employer’s scheme), and the fact that days 1 to 3 are paid under the statutory scheme. However, the employer argued these differences were minor and were outweighed by the benefits in its scheme.
The WRC concluded that the duration of paid sick leave in the scheme coupled with amount of sick pay provided outweighed any negatives of a 3-day waiting period and requirement of 6 months’ service. The case is illustrative for employers and legal practitioners as to how the WRC may approach the Act going forward.
From the employer’s perspective, it may be useful to update contracts to include a clause that the company will comply with obligations in circumstances where an employer does not have a scheme in place.
Additional sick leave beyond statutory limits
Employers are not obliged to provide any sick pay beyond what is stipulated in the Act. However, in the interests of being competitive in the employment market, many employers will have their own schemes in place that offer increased sick pay to their employees.
Section 8 of the Act specifically states that nothing prevents the inclusion of provisions that are as favourable or more favourable to employees, and any provisions are in substitution for the statutory scheme rather than in addition to.
The Act prohibits provisions which are less favourable to employees than the statutory scheme, and any such provisions will be deemed modified so as to not be less favourable.
Records
In accordance with Section 13 of the Act, employers must keep a record of the statutory sick leave taken by each of his or her employees. Records must be kept for four years and should include:
the period of employment of each employee who availed of statutory sick leave
the dates and times of statutory sick leave in respect of each employee who availed of such leave, and
the rate of statutory sick leave payment in relation to each employee who availed of statutory sick leave
Failure on the part of the employer to keep these records will be an offence, and an employer found guilty faces a class C fine not exceeding €2,500 on summary conviction.
If an employee believes that their employer has failed to comply with provisions of the Act, they may make a complaint to the WRC. A decision of the WRC can lead to compensation of such amount that the Adjudication Officer considers just and equitable having regard to all circumstances but shall not exceed 4 weeks’ remuneration.
Financial implications for small businesses
Small businesses may find the provisions of the Act to be financially burdensome. However, the Act provides for a temporary exemption from the obligation to pay statutory sick pay where the employer is in financial difficulty.
This exemption can apply for a period of not more than 1 year and not less than 3 months.
To avail of an exemption, the employer must apply to the Labour Court. The Labour Court will not grant an exemption unless satisfied that the employer has entered an agreement whereby employees or their representatives consent to the application, and that the business is experiencing extreme financial difficulties.
If the Labour Court is not satisfied that the majority of employees or their representatives’ consent, the Labour Court may still grant an exemption if the employer has informed employees of financial difficulties and has attempted to come to an agreement on sick leave.
The employer must be unable to pay sick pay and if they were compelled to pay there must be a substantial risk of lay-off, redundancy, or that the sustainability of the business would be adversely affected, for the exemption to apply.
For further information on the Act, please contact our Employment Law & Benefits team.
The content of these articles are provided for information purposes only and does not constitute legal or other advice.
