What Does The New Sick Pay Law Mean For Employers?

Under a new government scheme, employees will be entitled to 10 days sick pay a year. Here, Jenny Diamond from Small Business Payroll, has this advice for small businesses to help them plan ahead for the change.

The phase-in is designed to help small businesses

In order to help small businesses plan ahead for the additional cost, the new law is being phased in.

The changes will be phased in as early as 2022

The Irish Government’s new statutory sick pay scheme will be phased in over four years. Workers will be entitled to three days per year in 2022, rising to five days payable in 2023, and seven days payable in 2024. Employers will eventually cover the cost of 10 sick days per year in 2025.

There is a daily threshold

Employers must pay sick at a rate of 70% of an employee’s wage. This rate is subject to a daily cap of €110 to ease the financial burden on employers – particularly those who need to pay to replace sick staff at short notice. The daily cap equates to an annual salary of €40,889.16 and is based on 2019 mean weekly earnings of €786.33. This amount may be revised over time in line with inflation and changing incomes.

New employees are exempt

The entitlement is subject to the employee having worked for their employer for a minimum of six months. In all cases, an employee will have to obtain a medical certificate to avail of statutory sick pay.

Further government support is available

If an employee needs to take further time off once their entitlement to sick pay ends, an employee may qualify for illness benefit from the Department of Social Protection subject to PRSI contributions.

You may have to compete for a contractor’s times

Contractors can move easily between companies and work on a variety of projects at once. You may have to wait, pre-book or join a waiting list for an in-demand contractor. If you have them on their books as an employee, they are obliged to turn up for set hours.

The changes equate to a 3 per cent pay rise

The Government estimates that the new programme is equivalent to a 2.5 or 3 per cent pay rise, phased in over four years, with 0.8 per cent in the first year.

Small Business Payroll offers help and advice to small businesses on navigating employment laws. We can help you incorporate the new law into your employment contracts and manage your leave and sick pay obligations. Contact us today for more information.