Statutory Sick Pay

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Employers need to start preparing for statutory sick pay which is due to come into effect on 1 January 2023, says GroForth’s Nikki Johns.

Earlier this year, the President signed the Sick Leave Act into law. Under this legislation, from 1 January 2023, all employees will be entitled to a certain number of days’ sick leave paid by their employer.

The scheme, which is being phased in, will start with an entitlement for up to three days medically certified leave in 2023, rising to five days in 2024, seven days in 2025, and ten days in 2026.

The entitlement is subject to the employee having worked for their employer for a minimum of 13 weeks.

Statutory sick leave days may be consecutive or non-consecutive days.

Now is the time to check your sick pay policy and employment contracts and work out what, if any changes, may be needed to comply with the new regime.

Payment rate

Statutory sick pay will be paid by employers at a rate of 70% of an employee’s wage, subject to a daily maximum threshold of €110.

Employees can claim Illness Benefit from the Department of Social Protection from day 4 and for up to two years.

Record keeping

The legislation specifies that employers must keep accurate records showing

  1. the period of employment of each employee who availed of statutory sick leave
  2. the dates and times of statutory sick leave in respect of each employee who availed of such leave and
  3. the rate of statutory sick leave payment in relation to each employee who availed of statutory sick leave.

These records must be retained for four years. Failure to comply with this record-keeping requirement will incur a fine.

Impact on existing employment contracts

The new legislation does not apply to employers who already provide their employees with a sick leave scheme that is more favourable than statutory sick pay. The Act says that in determining whether a sick leave scheme confers benefits that are, as a whole, more favourable than statutory sick leave, the following matters shall be taken into consideration:

  1. the period of service of an employee that is required before sick leave is payable
  2. the number of days that an employee is absent before sick leave is payable
  3. the period for which sick leave is payable
  4. the amount of sick leave that is payable
  5. the reference period of the sick leave scheme

Where existing contracts are less favourable to employees, under the new legislation, these contracts are deemed modified so as to be not less favourable.

Inability to pay

An employer whose business is experiencing severe financial difficulties may be able to apply to the Labour Court for an exemption from the obligation to pay statutory sick leave payment. If the exemption is granted, it will be for a period not exceeding one year and not less than 3 months

Other recent developments

Various tax changes announced in the recent Budget will also impact payroll from 1 January 2023 while revised civil service mileage and subsistence rates came into effect on 1 September 2022. For further information on these changes, see  our recent Finance Bill blog.

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