Cabinet approves move to establish sick pay scheme

Tánaiste suggests some employers may also have to pay workers more post pandemic

Under the timeline set out for Cabinet by the Tánaiste on Wednesday, the benefits of the sick pay scheme will build up over a number of years. File photograph Nick Bradshaw / The Irish Times

Under the timeline set out for Cabinet by the Tánaiste on Wednesday, the benefits of the sick pay scheme will build up over a number of years. File photograph Nick Bradshaw / The Irish Times


Workers will be entitled to 10 days sick pay a year, but only after a new Government scheme is fully phased in several years from now, Tánaiste Leo Varadkar has said.

Mr Varadkar, the Minister for Enterprise, Trade and Employment, received Cabinet approval to begin priority drafting of a sick pay Bill on Tuesday, which will see new rights begin to accrue to workers from 2022 onwards.

Under a timeline set out by the Tánaiste following Cabinet on Tuesday, employers will have to provide three days sick pay per year under statute from next year, which will be paid at a rate of 70 per cent of a worker’s daily wage, capped to a maximum of €110 per day.

The following year, this will increase to five days, then seven the year after that. The full 10 days are to be made available to workers in years subsequent to that.

Employees will have to be with a firm for at least six months to qualify for the payment, and they will need a doctor's note.

Mr Varadkar said it was “one of the legacies of the pandemic” that there would be better terms and conditions for all workers “particularly those essential workers in the private sector who generally have lower pay and conditions”.

“It’s simply not right that people who are sick are often afraid to take time off for fear of a major reduction in their income,” he said. In the first year after it is introduced, workers will move to illness benefit, the State-paid scheme already in existence, on the fourth day of an illness-related absence.

Mr Varadkar cautioned that the scheme was seen as a floor to rights and benefits in this area, and that better arrangements could be negotiated by collective agreement.

“It’s a little bit like the minimum wage, many, if not most, employers will offer better than this. It is a floor, not a standard,” he said. Existing arrangements with employers will be protected under the scheme.

He said the Government had decided against going further with the scheme in order to give firms a chance to adjust to it. “There will be a cost on employers for this, particularly small employers who may only have one or two or three members of staff. Bear in mind they’ll have to cover 70 per cent of the cost of sick pay, and also the replacement costs of cover.”

The Government estimates that the new programme will work out for employers and employees as 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. “We think at that level, it shouldn’t cause any layoffs or any businesses to close”.

Mr Varadkar also said the incidence of workers refusing to leave the Pandemic Unemployment Payment (PUP) and return to jobs was “probably overstated”.

“When you do drill down to it a little bit more, there are a lot of people who worked in certain sectors who are no longer in the country,” he said.

“There are others who quite frankly found jobs in other sectors, and I do think it’s one thing that employers may have to consider that perhaps in order to get employees back they may need to pay a little bit better than they did in the past”.

Following a report in the Financial Times newspaper which suggested opposition parties were open to re-examining the 12.5 per cent corporation tax rate, Mr Varadkar said the Government is “standing over” the tax rate.

Ireland takes in about twice as much per head in corporation profit tax per head than other countries. It’s a very good example of how low taxes can actually result in higher revenues, and we are going to push back very strongly against anything that might jeopardize that,” he said.

Comments from opposition finance spokesmen Ged Nash and Pearse Doherty had, he said, “allowed people to create the impression that there wasn’t a political consensus behind our 12.5 per cent rate any more and that was damaging to the national interest in my view”.