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Explainer: Why it's taken a pandemic to get sick pay back on the government agenda

An employment law expert explains the current legal situation and the government’s options.

Image: Shutterstock/SOMNATH MAHATA

IT TOOK AN unprecedented public health crisis to draw attention to it but at long last, Ireland’s sick pay regime is finally set for an overhaul.

This week, the government launched a public consultation on sick pay, the first step in a process towards implementing a statutory right to sick pay and enshrining it in legislation.

But why exactly has it taken so long and why is Ireland considered an outlier in a European context when it comes to this issue?

To find out, we spoke to employment law expert Karen Killalea, partner and head of the employment team at Maples and Calder, the Maples Group’s Law firm in Ireland.

What’s the current legal situation?

As it stands currently, the vast majority of Irish employers are not legally obligated to offer paid sick leave to workers.

That doesn’t mean that huge swathes of the working population have no access to sick pay.

As Killalea explains, outside of the law itself, there are “a number of other sources of obligations” for employers, not least contracts of employment, which often guarantee access to sick pay arrangements.

All permanent public sector workers have a right to sick pay guaranteed by their contracts, she says, “an enormous cohort” within the Irish labour force.

Within the private sector then, certain industries are regulated by Sectoral Employment Orders.

“Those are sort of almost like national collective bargaining agreements,” Killalea explains — legally binding rules that determine the terms of employment within certain industries.

“They apply, for example, across the construction sector; across mechanical and electrical engineering and they cover thousands of people. They also provide for sick pay,” she says.

Finally, many workers within the private sector — mostly in white-collar industries — will have access to sick pay guaranteed by their contracts.

Overall, just about half of private sector workers have access to it through contractual arrangements, she says.

But again, because there is no legal obligation, Killalea explains it means that the vast majority of private sector workers “are dependent on the benevolence of their employer” to pay them for sick days. 

So who does that leave out?

Mostly low-paid, part-time or casual private-sector workers.

The obvious iniquity of this is that precarious and low-paid workers are often not financially capable of taking unpaid leave, meaning they’re forced to work when they’re ill.

These issues are, of course, heightened by the pandemic.

Earlier this week, deputy chief medical officer Dr Ronan Glynn highlighted the fact that some workers are still turning up for their jobs even though they’re displaying symptoms of Covid.

It’s obvious that for many people, concerns about pay or whether they’ll lose their job if they fail to show up override public health advice.

Killalea says, “People who are working in casual employment; low-paid work, they’re definitely vulnerable… I think if there’s one thing that the pandemic is teaching us that it is a false economy to incentivise people to attend work when they’re sick.” 

So what happens if I’m sick but my employer doesn’t provide sick pay?

You can avail of a State illness benefit.

The normal weekly rate of Illness benefit is €203 per week or €31.33 per day. 

The scheme is available to anyone under the pension age who has paid 26 weeks of PRSI contributions in the relevant tax year, and 26 weeks of PRSI contributions paid in the previous tax year.

An enhanced Covid-linked version of the scheme was rolled out earlier this year. 

Designed to incentivise workers who are diagnosed with the coronavirus or forced to self-isolate to stay at home rather than come into work, the scheme pays out at €350 per week.

Both employees and self-employed people can qualify for the COVID-19 enhanced Illness Benefit.

What do other countries do?

Within Europe, Ireland is an outlier when it comes to statutory sick pay.

Most of our continental neighbours place some kind of statutory obligation upon employers to pay workers for sick leave. 

German employers are required to pay the sick workers’ full wage for up to six weeks, tapering then to 70% of the worker’s salary for a maximum of 78 weeks. 

Denmark has a statutory sick pay system for up to nine months and in Portugal, it extends up to three years.

In many cases, the state will step in to cover some of the cost to the employer.

Killalea says, “In Germany, there is quite a significant government subsidy [to the employer] for statutory sick pay. So in other words, the system in Germany recognises the ability of the employer to pay and I think that’s probably a very sensible approach.”

It’s slightly different in the UK, where employers cover the full cost of sick pay.

“It’s not a very high level of sick pay. It’s relatively modest, but it does extend for up to 28 weeks.” 

Italy and France also operate sick pay systems where employers contribute to the cost of sick pay.

Why is Ireland so far behind on this issue?

Well, for a combination of reasons.

For one, as Killalea points out, compared to France or Germany, for example, a much smaller proportion of the working population here are covered by collective bargaining agreements.

Ireland has a broadly voluntary industrial relations system. This means that employers are not obliged to recognise or to negotiate with trade unions although everyone is free to join one.

“Vast swathes of private sector employees in continental Europe are already covered by heavily negotiated collective agreements,” Killalea says.

By contrast, contract negotiations in Ireland tend to me a lot more “ad hoc”.

What are the other reasons?

Politics, mainly.

In 2012, Joan Burton as Minister for Social Protection began a public consultation on introducing a statutory sick pay model.

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As Dr Laura Bambrick, social policy officer at the Irish Congress of Trade Unions highlighted recently, it was actually the Troika — the International Monetary Fund, the European Central Bank and the European Commission — who raised the issue during the bailout years.

“They encouraged reform that would require employers to pay for the first two to four weeks of sickness, bringing an end to the unusual practice of the state picking up the full cost” through illness benefits.

Unfortunately, the conversation kicked off a major row within the Fine Gael-Labour Party coalition government of the time. 

The proposals were also met with fierce opposition from business lobbyists and representative groups like IBEC, who argued against forcing employers to foot the bill.

Widely expected to be introduced in the 2013 Budget, the plan eventually fell by the wayside.

It took a pandemic to put the issue back on the political agenda.

So what’s happening now?

In September, the Labour Party introduced a private members bill.

Entitled ‘Sick Leave and Parental Leave (Covid-19) Bill 2020’, the proposed legislation would entitle employees to a maximum of 30 days of paid sick leave “at the employee’s normal weekly rate of pay”. 

Separately, about a month later, the Oireachtas Committee on Covid-19 Response produced a report, which called for statutory sick pay to be rolled out to protect low-paid workers in high-risk industries like meat processing.

But the government decided to delay a debate on the Labour bill to facilitate a public consultation on the issue.

What is the public consultation and what will happen next?

Beginning this week and ending on 18 December, the public consultation will hear from trade unions and employers groups.

At the end of this process, a report will be produced informed by submissions from the various parties.

Although the exact timeline is yet to be finalised, it will likely be six months before any recommendations will be made

“What will happen is that the views will be taken into consideration. A costing will have to be done,” Killalea explains.

“The Department of Public Expenditure and Reform, obviously will be key in reviewing this, and then typically at the end of that, a report is produced, which will summarise the consultation.”

At the end of all of that, the government will either decide to amend the Labour Party’s bill or introduce one of its own, based on the consultation.

Commenting on the launch of the consultation process, Tánaiste and Minister for Enterprise Leo Varadkar said the government is committed to introducing new legislation as soon as possible.

“This needs to change and I am committed to introducing a statutory sick pay scheme that works for employees and employers as quickly as possible,” he said.

The government has committed to enacting statutory sick pay legislation by the end of 2021.

 

 

 

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