Sick Leave Pay, another bill for the business owner
Earlier this week, cabinet signed-off on new legislation to give all workers the right to paid sick leave.
The Government’s Statutory Sick Pay Scheme will be phased in over a four-year period, starting with 3 days per year in 2022, rising to 5 days payable in 2023 and 7 days payable in 2024. Employers will eventually cover the cost of 10 sick days per year in 2025. This is the statutory minimum level of sick days for which a company must provide, but they have the freedom to offer more should they wish.
The Tánaiste said,
I believe this reform is part of the pandemic dividend, the more inclusive economy and fairer society we are going to build once the pandemic is over. It’s not right that people feel forced to go to work when they are sick and it’s not good for public health. I know how difficult the past year and a half has been for workers and employers alike.
HABIC agrees that when an employee is sick, they should be able to take sick leave as needed. However, HABIC believes any Statutory Sick Pay (SSP) model should be funded via the national social insurance fund, and not fall on already burdened SME’s.
According to the Government’s press release,
“Sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily threshold of €110. The daily earnings threshold of €110 is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16. It can be revised over time by ministerial order in line with inflation and changing incomes.”Tánaiste announces details of Statutory Sick Pay Scheme
The Government’s announcement will add an extra 2.6% onto the payroll cost of each employee, which is a vast increase for struggling SMEs.
HABIC made a detailed submission on the Statutory Sick Pay in December 2020, outlining that the cost of the sick pay should be borne by the national social fund.
As mentioned in our submission, employers within the personal grooming industry may not be able to absorb or sustain the costs of Statutory Sick Pay if made mandatory. The reasons for this include; the high costs of doing business, high rents, lack of disposable or discretionary spending by consumers, competition from the black market, etc. Prices within the industry are compressed, and the opportunity to adjust prices is extremely limited.
Employers and SMEs are the backbones of Irish society. They have taken on the demanding and challenging role of creating and sustaining employment, and all the worry and complexities that go along with it. Many will say employers are rewarded with massive profits, this is simply untrue. For most businesses in the personal grooming industry, recent research by Jim Power notes a profit level of 0% – 3% in 2019 pre-COVID-19. There is no doubt that with social distancing and the new working norms, this will be lower in 2021 and beyond.
Read the Government’s Press Release at: https://www.gov.ie/en/press-release/fee76-tanaiste-announces-details-of-statutory-sick-pay-scheme/