As Budget 2012 draws closer, employers are bracing themselves for confirmation on whether responsibility for the payment of sick pay is to be transferred from the Department of Social Protection to employers. The Minister for Social Protection is understood to have drawn up proposals which, if accepted, will see employers paying the first four weeks of their employees’ sick pay. The proposals have provoked a negative reaction from employers and employer groups and are regarded by many as being “anti-employment”.
While some employers may already have a policy of paying employees a certain amount of sick pay, this is a benefit provided at the discretion of the employer and is not a statutory requirement. Employers usually insist that employees on sick leave apply to the Department of Social Protection for Illness Benefit and reimburse the employer accordingly.
An application for Illness Benefit must be made by the employee within seven days of becoming ill. The payment of the benefit is subject to the employee having made the requisite PRSI payments and no payment is made for the first three days of leave. The benefit may be paid for up to two years or, in some cases where the employee fell ill before 2009, for as long as he/she remains ill. The current rate of Illness Benefit is €188 a week for those earning over €300 a week, although the payment is lower for lower paid workers.
Statutory sick pay schemes are not unknown in other jurisdictions. In the United Kingdom, for example, employers are obliged to pay a flat rate of sick pay for up to 28 weeks. However, differences in national welfare systems mean that a direct comparison of our current system and other statutory sick pay schemes is not possible.
A further proposal which, if implemented, will impact directly on employers is the proposed reduction of the employer’s rebate on statutory redundancy payments from 60% to 30%. Currently, an employer can obtain a rebate from the Department of Social Protection of 60% of the statutory element of redundancy payments made to employees. However, this rebate may soon be reduced to only 30%.
Contributed by Caoimhe Heery.
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