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Joint Committee on Enterprise, Trade and Employment debate -
Wednesday, 10 Nov 2021

General Scheme of the Sick Leave Bill 2021: Discussion

I welcome the members participating in today's committee meeting. In line with exceptional circumstances, we have to take measures to deal with the Covid-19 pandemic. Members and all in attendance are asked to exercise personal responsibility in protecting themselves and others from the risk of contracting Covid-19. You are strongly advised to practise good hand hygiene and you will notice that every second seat has been removed in order to facilitate social distancing. I urge you not to move any chair from its current position. You should always maintain an appropriate level of social distancing during and after the meeting. Masks should always be worn during the meeting, except when speaking. I ask for full co-operation on this. Any member participating in the meeting remotely is required to participate from within the Leinster House complex only. We have received no apologies.

We will start by looking at the sick leave Bill. At present there is no statutory obligation on an employer to pay for a medically certified absence of employee do to illness. While many employers provide such sick pay, employees who do not receive such sick pay are disadvantaged. We know this may encourage such employees to attend for work even though they are ill. In the context of the current public health situation in particular, this very undesirable. The proposed Bill will provide for the creation of an entirely new right to sick pay, and this will be legally enforceable through the Workplace Relations Commission and the courts.

Today we commence our pre-legislative scrutiny of the sick leave Bill 2021. In referring the Bill to the committee, the Minister for Enterprise, Trade and Employment stressed the urgency of the proposal and has asked that we prioritise consideration of it. I anticipate the committee will need to devote a number of meetings to the matter to properly consider it, and I am happy we can facilitate that now. We only received this Bill last week and we have prioritised it. We are happy to start the pre-legislative scrutiny today.

To assist the committee in its consideration of the sick leave Bill, I would like to welcome from the Department of Enterprise, Trade and Employment Ms Clare Dunne, Ms Wendy Gray and Mr. Paul Norris. Before we start, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege.

Witnesses are again reminded of the long-standing parliamentary practice that you should not criticise or make charges against any person or entity, by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity. Therefore, if your statements are potentially defamatory in relation to an identifiable person or entity, you will be directed to discontinue your remarks. It is imperative you comply with any such direction.

As members are aware, the opening statement from the Department has been circulated to all members. To commence our consideration of this matter today, I invite Ms Dunne to make opening remarks on behalf of the Department.

Ms Clare Dunne

I thank the Chair and members for their invitation to attend the committee today to discuss the sick leave Bill 2021. I welcome the opportunity to do so and thank the committee for facilitating pre-legislative scrutiny on this important matter. As the Chair said, my name is Clare Dunne, and joining me today are Ms Wendy Gray and Mr. Paul Norris from the employment rights policy unit in the Department.

In June of this year, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Leo Varadkar, obtained Cabinet approval for the priority drafting of the sick leave Bill 2021. Ireland is currently one of the few advanced countries in Europe and beyond to not provide for a mandatory employer sick pay scheme, although many employers provide sick pay through company or sectoral level agreements.

The Tánaiste said many times recently that he believes one of the legacies of the pandemic must be better terms and conditions for all employees. This Bill will ensure that every worker, especially lower paid workers in the private sector, have the security and peace of mind of knowing that if he or she falls ill and misses work, he or she will not lose out on a day’s pay.

The Government introduced an enhanced illness benefit of €350 a week for anyone who was off sick as a consequence of Covid-19, but the Tánaiste is determined now to make sure all workers have a safety net, regardless of the illness in question, once it is certified by a medical doctor.

Prior to seeking cabinet approval to draft the Bill, the Department of Enterprise, Trade and Employment undertook a full public consultation that sought the views of relevant stakeholders and members of the public on key policy questions around the design of the scheme. In total, 118 submissions were received with a good mix of views from business and employee representative bodies and from individual workers and employers.

In addition to the public consultation the Department undertook an international review to get a better understanding of how sick leave schemes operate elsewhere. What we learned from that is there is no one-size-fits-all model, and there are significant variations in the models in use across the world.

In relation to the key parameters, the sick leave Bill 2021 will introduce a right, initially, to three paid sick leave days per annum for all employees. The scheme will increase incrementally over time so that all employees will eventually be entitled to ten days, or two weeks, of sick pay per year. The operation of the plan will be reviewed at regular intervals, beginning after the first 12 months of operation. The initial plan is as follows: in year one, three days will be covered; in year two, five days will be covered; in year three, seven days will be covered; and in year four, ten days will be covered. This will be in addition to any other leave such as annual leave, parental leave, or maternity or paternity leave. It will be for both full-time and part-time employees and no waiting days will apply.

While the entitlement of three days per annum is relatively modest, it is important to recognise the cost that this scheme will place on employers, particularly small employers with very few staff members. It is being phased in to help employers, particularly small businesses, to plan ahead and manage the additional cost.

Some businesses in the service sectors will have to cover not only the cost of sick pay but may have also have the cost of paying for a replacement while the person is out sick. Many businesses are struggling to get back on their feet at the moment and we need to get the balance right and make sure that we do not go too far too fast and cause companies to reduce staff or cut hours to help with costs.

We have taken a balanced approach to support both workers and employers.

Setting the number at three days has been chosen as a starting point to plug the existing gap in coverage due to the current waiting days not covered by the State’s existing illness benefit scheme. As it stands, an eligible employee cannot claim illness benefit from the State until he or she has completed three waiting days. By providing for three statutory sick pay days, we will address the issue of people going to work while sick because of financial concerns.

In terms of the amount of pay, statutory sick pay will initially be paid at 70% of regular earnings up to €110 per day from the first day of illness, and this can be varied by ministerial order. This cap of €110 has been designed to give employers certainty around the costs involved at the outset, while also being fair to employees and ensuring that they receive an appropriate level of compensation if unable to work due to illness or injury. For businesses which genuinely cannot afford to pay, we have included an "inability to pay" provision which provides for an exemption to be given to a business by the Labour Court.

In relation to entitlement to a payment, any day taken as sick leave under the Act will require a medical certificate from a registered medical practitioner. While this may impose an additional cost on some employees, many low-paid workers, particularly those with children, are entitled to a medical card or GP visit card and will not have to pay to see their doctor. More than 2 million people have access to a GP without fees in Ireland.

Regarding eligibility, an employee will be required to have worked for his or her employer for a period of three months before he or she is eligible to avail of paid sick leave under the Bill. This is to allow time for an employment relationship to develop between the employer and employee and is a common requirement in other forms of statutory leave, such as carers or parental leave and in existing company level sick pay agreements. It is also a common requirement in other jurisdictions that have statutory sick pay in place.

Many companies already offer their own sick pay schemes as part of their terms and conditions and this Bill is not intended to undermine those existing sick pay agreements that may offer more favourable terms overall. It is primarily intended to act as a floor level protection and ensure that all employees, particularly those employees who currently have no access to a company level scheme, will have an entitlement to paid sick leave when unable to work due to genuine illness or injury.

As with other statutory employment rights, if an individual believes they are being deprived of rights to which he or she is entitled under the sick leave Bill, he or she will be able to refer a complaint to the Workplace Relations Commission, WRC. There the matter can be dealt with by way of mediation or adjudication leading to a decision that is enforceable through the District Court. WRC inspectors may also be asked to investigate certain breaches of the provisions of the Bill once enacted.

The Government has taken a balanced approach in bringing forward the sick leave Bill 2021. The introduction of a statutory entitlement to paid sick leave with no waiting days is a progressive measure that will bring Ireland in line with its European and other developed country peers. We have given a lot of consideration to the pressures on business at the current time, and the design parameters and the incremental approach to be taken over four years are in recognition of this.

The scheme design achieves a good balance through a cost sharing model, where workers receive 70% pay for the three days, which is a relatively low cost for employers. It should also provide for a seamless transition to State-supported illness benefit, when appropriate, when the worker applies for it on day four.

While the initial period of three days that an employer is asked to cover is modest, this has been done to close the existing gap in coverage brought about by illness benefit waiting days and in recognition of the unique economic challenges that many employers, particularly microenterprises and small businesses, have faced in the last 18 months and continue to face as we move out of the pandemic.

I must emphasise that the scheme is a first step in the development of a model which can be built on and refined over time as it is rolled out. The draft legislation has been designed with flexibility in mind. I thank the Chair and members for their attention and we would be happy to answer any questions they might have.

I thank Ms Dunne. I invite members to raise with the Department. I remind members participating remotely to use the raise hand function in Teams but, more importantly, to take down their had when they have spoken. The first person to indicate is Deputy O'Reilly who has 14 minutes. She will be followed by Senator Crowe who has 14 minutes as well.

I thank the Chair and the witnesses. Any step in the direction of a statutory sick scheme is very welcome, but I have some questions. How was the decision to require certification arrived at? I note the reference to people who have access to a GP without cost. As a State, we do not offer free GP care to many people who have to pay for it. I have a concern that it will act a disincentive. I said at the start of the pandemic, and it remains true, that sick pay is an instrument of public health. Therefore, I am concerned by idea that there would be a financial barrier to accessing it, which does not exist in other states because they have access to free GP care.

Would Ms Dunne explain the thinking behind that? Was consideration given to whether or not this could potentially act as a disincentive? The purpose of this has to be that when someone feels sick he or she does not go into work. That protects the person, everybody in the person's workplace and everybody on the bus or the train as the person travels to work. I am interested to know how that was arrived at and whether consideration was given to bypassing the need for certification.

Ms Clare Dunne

I thank the Deputy. We considered very carefully the need for certified illness, a doctor's certificate. Following the extensive consultation we undertook, we believe that this is a necessary provision. It probably would not be reasonable to ask employers to cover uncertified sick leave days. Down the road there may be company arrangements or local arrangements that will cater for casual sick days or uncertified sick days. However, what we are trying to do here is to strike a balance and to bring fairness to bear. The scheme is designed to ensure that workers do not lose out on pay due to genuine certified illness. When somebody is genuinely sick over a period of several days and he or she is going to be paid by his or her employer, we believe that it is reasonable that the employer has an assurance that it is a genuine illness that has been certified by a medical doctor. It is also a current requirement in order to be able access the State's illness benefit, and it is also a requirement in many of the sectoral and company level arrangements that exist.

I understand that barriers still exist for workers on a low income. Where you are talking about places where statutory sick or where an entitlement to sick leave already exists, you are in general talking about unionised employment where there are collective agreements. As a general rule, we all know the wages there are going to be higher. Those of us who are members of trade unions will have benefited from this. The likelihood is you will earn more money, be better paid and have better conditions. Therefore we are not really comparing like with like if we are talking about low-income workers.

I have a genuine concern about this acting as a disincentive. The employer needs to be assured it is a genuine illness, but what happens if you are genuinely broke? You are going into work, which defeats the entire purpose of this. The purpose of this has to be that if you are sick, you stay at home, you protect yourself, you protect all the people on the bus and you protect all the people in your workplace. I have a concern about that. In the case of low-income workers I think it will act as a disincentive to them availing of provisions of this scheme if they do not have access to €60 to go to the doctor, which is what it costs.

In relation to the service requirement for three months. Again, I fully understand the requirement for service and the fact that it exists in other employment, but three months seems like a long time. I am concerned that if you were using a succession of three-month contracts, you could end up in a situation whereby somebody would not be able to avail of the scheme for a good chunk of the year. Is there is a protection against an employer issuing contracts to ensure they will not have to meet this requirement? I obviously read this but I did not see such protection there.

I understand that legislation on fixed-term contracts exists and that, eventually, workers will end up with more permanent contracts. Nevertheless, in the event that they do not and are working in the hospitality sector or somewhere similar, they could end up on a series of two or three rolling contracts. Is there a provision in the legislation, outside of what already exists in law, to deal with the potential abuse of short-term contracts and using them to evade the requirement?

Ms Clare Dunne

The three-month requirement seeks to strike a balance and is designed to ensure that the employer and the employee build a working relationship. Rolling short-term contracts will probably be the exception rather than the rule. There is no specific provision in the legislation to deal with that. We have been informed, as we have with all the design parameters of the scheme, by the extensive consultation and bilateral engagements we have had along the way. As I said earlier, the scheme is a starting point and we have tried to achieve a balance. It is very much pro-employee. We are trying to improve the terms and conditions of all employees, with due regard to not imposing excessive costs on businesses and to giving them reasonable assurance they are paying for illnesses that are genuine and certified.

The three-month provision is something we will examine over the first 12 months as the scheme is rolled out. For the moment, however, we believe it strikes a reasonable balance between protecting employees and not overburdening employers at the get-go. Those employees who do not qualify in the first three months may well quality for illness benefit. The key aspect of the proposed Bill is that no matter what way you look at it, it will improve the lot of employees to date, who currently have to wait a few days before they can access illness benefit, for which they require a medical certificate.

I am not disputing that there are some improvements in the proposed Bill, but our guests have mentioned the issue of genuine illness a few times. I am not sure there is evidence of widespread abuse of sick leave schemes where they exist. In general, in my experience at least, people do not ring in sick unless they are sick. It is the same as all of us here. I do not ring in to say I am sick if I am not sick, and I am sure our guests do not either. I do not understand, therefore, the constant references to genuine illness because people will not ring in sick if they do not have a genuine illness. Clearly, people do not earn as much money on a sick day as they would do if they came to work.

Protections exist within the legislation for workers who already avail of an in-company sick pay scheme, but are there similar protections for new entrants to the workplace? Protections are in place for workers who avail of a scheme already, but is there protection for new entrants to ensure they will have the opportunity to join such a scheme? I ask because there are schemes, generally in unionised employment, that will be of a higher standard than the scheme in the proposed Bill. In those cases, is there protection to ensure a new entrant will be able to avail of the same benefits, such as in the case of a collective agreement. Will they be able to avail of the same benefits and have that entitlement? My concern is that where employers have terms that are more favourable, they might put employees and workers on the statutory scheme rather than the more favourable scheme. Will there be protection to prevent that from happening?

Ms Clare Dunne

Ms Gray's microphone does not appear to be working, but I think she was going to say there is no specific protection in the legislation against a misuse of the scheme, as the Deputy put it. We would assume most employers treat their employees fairly, and that if they have a better scheme, the employee would be entitled to access it under the terms and conditions of that employment. Otherwise, after three months of service with the employer, the employee will be entitled to the statutory sick pay scheme. Quite limited data are available on employees with regard to sick days, sick pay and so on; it is something we need as a system to examine. As a general rule, from what we can gather, not many employees fall sick in the first three months. We will keep that under review and examine it to ensure it operates in the way it was intended.

The scheme is setting the floor, as it were, although I am not suggesting it is not an improvement on what is there. I worry that would then become the ceiling for employers, even where they have a better system. Perhaps consideration should be given to that to ensure that cannot and will not happen to workers. Nobody wants to see that. The introduction of a basic minimum should not be a target but rather a floor.

On the increase from three days, with days to be added subsequently, will that be subject to checks and balances or will it be automatic? The provision proposed in the legislation relates to three days only. Is it the intention there will be negotiation or will the increase be automatic? Will it be subject to discussion or locked in?

Ms Clare Dunne

That is part of the scheme design. The clear intention is that after the first 12 months, the three days will increase to five, then to seven, and then to ten, pretty much automatically. This is not a matter for negotiation but, rather, is a fundamental part of the scheme design.

Three days is all that will be written in the legislation and the rest will be by regulation. Is that correct?

Ms Clare Dunne

Yes, it will be by regulation.

I have a slight concern about that. When the 2011-16 Government cut by half the sick pay entitlement of certain civil and public servants, the then Minister for Public Expenditure and Reform said he believed it would lead to a increase in productivity. It did not do so. I accept that we do not have much evidence or information on it, but we know that the cuts certainly did not give rise to a consequent increase in productivity. If there is scope to add that provision and lock it in rather than leave it as the subject of regulation, we should do so. Perhaps as a committee we will have an opportunity to explore that.

I thank Ms Dunne for the detailed presentation. On enforceability, as she noted, employees may bring a case to the Workplace Relations Commission if their rights are not being upheld.

The vast majority of employees impacted by the Bill will not have any experience of the Workplace Relations Commission and in some cases may even be unaware it exists. I appreciate I am looking down the road but how does the Department plan to address that? Naturally, there will be an advertising campaign on social media or whatever the case may be. I would be grateful if Ms Dunne could advise what further measures would be needed.

Ms Clare Dunne

This is being introduced as a fundamental employment right, so every employee will have the right to access this payment from their employer. In cases where an individual feels he or she is being deprived of his or her rights, there is a provision whereby that individual can refer the matter to the WRC. When the scheme is launched, there will be a widespread information campaign run by the WRC and the Department to get the message out to employees that this is a new entitlement and to raise awareness about the WRC and their entitlement to take a case to it. It is a relatively straightforward process to access the WRC and there is further work being done as we speak on its website, to make it even more accessible to all employees. That will be the focus. There will be a widespread and large-scale information campaign when the scheme is launched to make sure employees know what their rights are and what they can do if their rights are being infringed.

I will leave it at that for now.

I will share my time with Deputy Stanton if he wishes to come in. These provisions are extremely welcome. We saw during Covid the exposure we had of people staying on in work because they needed to, which was putting people at risk. This is a very welcome scheme. How did the Department reach the figure of €110 per week? Over a five-day week the figure coincides with the working family payment, and maybe that was the thinking. I would be interested to know how the officials reached that threshold.

This is structured in such a way that employers of lower paid workers, in those sectors that tend to be a bit weaker, not as well organised and not as prosperous, are committing to a higher percentage of the payroll than higher wage employers. Why is there a ceiling on what should be paid under this scheme? Why do employers of very high-paid workers not have the same percentage commitment to support them during illness?

One of the things we hear, and I would like to know how the officials have assessed it in terms of regulatory impact, is that different sectors have far greater exposure to risk from this scheme. Some sectors have a small number of staff who must be on 24-7. When there is an absence they have to pay an alternative as well as paying the person who is sick. Other sectors work in teams and can quite easily accommodate an absence. There seems to be a view that there are very different types of situations in different sectors. Have the officials considered any way of trying to accommodate those differences? They are probably not insurable and the employers involved probably could not insure themselves against a spate of sickness. How was that assessed? It seems the nub of the objection to this is coming from certain sectors where employers feel they will be particularly exposed.

Ms Clare Dunne

I hope I got all of the Deputy's questions as the sound is quite poor at this end. In answer to his first question as to how we arrived at the figure of €110 per day, we arrived at it based on the 2019 mean weekly earnings of €786.33. That equates to an annual salary of €40,889.16. We felt that imposing a cap at this level ensures €110 is the maximum cost for any employer per day. That is based on a weekly salary of €786.33 divided by five and multiplied by 70%. The daily threshold has been set at that level to prevent excessive costs being imposed on employers for very high earners and to provide certainty around costs for employers. The current highest personal rate of illness benefit is €33.83 per day. We used 2019 data because we were advised by research within our Department that the Covid-19 pandemic had a significant impact on 2020 data, which was skewed slightly by payment of the employment wage subsidy scheme, EWSS, and so on. We were advised to initially base this on 2019 data.

The Deputy referred to the ceiling on higher earners and higher paid people. What are setting here is a floor. We are saying an employer is required to pay 70% of his or her wage to each employee but we have capped it at €110. The legislation is very clear that many private or company-level schemes have much more advantageous sick pay schemes in place. Therefore there is no impediment to any employer offering a higher ceiling and paying more than the statutory amount. This is a first step in introducing statutory sick pay. We thought it was a reasonable level at which to set the payment. We did it in consultation with various bodies.

The Deputy's third question as I understand it is about the fact that different sectors operate differently and there are different risks in terms of illness. The Deputy is right about that. For this exercise we have not gone into looking at the different sectors. For the time being this is an across-the-board scheme that will cover all sectors and all employees. We did consider looking at sectors differently but we felt that for the time being it was better to proceed with this general scheme. We will look in greater depth at some of these issues across sectors as the scheme is rolled out.

I think it is an issue we will need to tease out as we go along. It may be that as it progresses up from three days or whatever, we will see there are difficulties. I will let Deputy Stanton in.

I welcome our guests today. I also welcome the scheme, which is very progressive and timely. I note from some of the comments on it that I have seen that workers who are ill are less productive. That goes without saying. If someone is forced to go into work because he or she cannot afford not to and he or she is ill, that person is not going to work as well as people who are well. That person's colleagues might also be concerned if there is somebody at work who might have an infectious disease. They might not be too happy about that. For all kinds of reasons, this is very positive. I also note there is a gender equality issue here as well. Quite often, unfortunately, women are in lower paid employment than men, generally speaking, and this will help them.

We know there are many companies and employers in Ireland that already have in-company sick pay schemes where people are very well looked after.

Have the witnesses any idea how many employees and companies are covered in that regard? How many companies and employees, or what percentage of workers, will potentially benefit from this scheme? Has any analysis been done on that?

Ms Clare Dunne

One thing we discovered while working on this scheme was that there is a real absence of data on sickness in the workplace, sick pay schemes and illness benefit. We will need to look at that, and not just my Department. It is a bigger question across the board. We have some evidence based on an IBEC survey conducted in 2011. That survey is quite limited and very small in the context of the number of companies operating in Ireland. It involved 600 companies and found that 66% of companies have a sick pay scheme in place, but again, I imagine, and I think we would all imagine, they are the larger companies. I think we can be pretty sure that many small and medium-sized companies do not have any scheme in place for their employees, but I cannot put a figure on that. Some further work on that would be needed.

Are there any plans to carry out research on this? It seems from what Ms Dunne says and from anecdotal evidence that many of the very large multinational employers have very good schemes in place, maybe because of their international experience and so forth, whereas this measure will impact mainly the microenterprises and small employers with three or four people working for them and so on. I would encourage research on this being commissioned to see exactly where this is going and what is going on.

Having assumed it is the smaller businesses that will be impacted, will Ms Dunne tell us about the administrative costs involved? Also, I noticed there are provisions in the Bill whereby employees can appeal if they cannot afford to pay. Will Ms Dunne tell us how that might work? Where does that leave the employee who is sick? Who steps in there? Does anyone step in or is it the case the employee does not get anything under this scheme if the small employer is adjudged by the Labour Court or whatever not to be able to pay?

Ms Clare Dunne

I cannot give the Deputy exact figures for the admin costs. There will be some admin costs involved for businesses. That is clear. We have started to engage and we will do further engagement with the companies that operate the payroll systems across businesses. We will work with them. We will probably get a better handle on the admin costs at that stage. As the Deputy can see, we are starting fairly modestly and will build on the model. We will definitely keep an eye on costs because clearly we are trying to minimise any additional costs on business, whether sickness benefit payments or admin costs, but there will be some admin costs.

As for appeals, there is a provision in the legislation relating to employers who believe they genuinely cannot afford to pay illness benefit or sick pay to their employees. It is the same provision that exists in the National Minimum Wage Act and in the Industrial Relations Act that provides for sectoral employment orders. There is a provision in the legislation whereby a company can appeal to the Labour Court and the Labour Court can take a decision in favour of that company such that it can be absolved of paying illness benefit for a prescribed period of not less than three months, I think, and not more than six months. That is from memory. We do not believe that would be an issue in year one because of the way we have designed the scheme, at three days and with a cap of 70% on €110 per day. We believe that should be manageable for companies. If, however, such an appeal is made, the employee will not be left with nothing. We are working with colleagues in the Department of Social Protection, which will step in and ensure illness benefit will be paid in those cases.

Ms Clare Dunne

That is a matter to be discussed with the Department of Social Protection. We are in discussion with the Department on that.

Maybe colleagues will agree with me on the following. I would support payment from day one. Otherwise, the employer will not be able to pay and the employee will then be left in the lurch and, obviously, the whole rationale for the scheme in those cases will not work.

May I ask about future years? Up to 2025 we are talking about ten days being covered. Assuming they are ten consecutive days, will this act as a top-up on illness benefit while illness benefit is paid after three days, as it is at the moment?

Mr. Paul Norris

The operational details of that and when we will move forward on the scheme and increase the number of days' coverage is under discussion with the Department of Social Protection. We have had quite extensive discussions with the Department. The idea is that it will not be a top-up. The employer will cover whatever statutory sick pay days there are and then the employee will move seamlessly onto illness benefit if he or she is eligible for it. We will not have a duplication of payment system.

Am I right in saying that, at the moment, there is a three-day gap that initially will be covered by the introduction of the scheme as outlined earlier? As the scheme rolls on over the years, are we talking about consecutive days?

Mr. Paul Norris

There would be a kind of countdown system, if you like, whereby you would have your seven or ten days' statutory sick pay and, once that is complete, you would move onto illness benefit. We are working on the details with the Department of Social Protection. It will not be such an issue in the first year but it will be resolved when we move forward.

Ms Clare Dunne

The sick days do not have to be consecutive. When the entitlement moves to ten days, an employee could take three days at one point and then three days at another point and four days subsequent to that. The ten days do not have to be taken together. As long as there is a certified illnesses, they can be taken at different points during the year.

At introduction, then, we are talking about three days initially in year one and they do not have to be consecutive days. An employee could take one day in February, one day in March and one day in April if he or she needed to. Is that correct?

Ms Clare Dunne

Three waiting days apply for illness benefit. With the new statutory sick pay scheme, an employee could take one day in March and one day in June if the illness is certified. Anything beyond that he or she-----

Deputy Stanton, you are well over your time, I am afraid.

I have a final point. Getting back to what Deputy O'Reilly said earlier, if somebody has to go to the GP and pay €60, in effect he or she is getting €50 for the first day. I think that might act as a deterrent. The witnesses might take that into consideration. Sorry, Chairman. I know my time is up.

It is great we are doing this. It is great that finally there will be clarity, people will be able to get sick pay from all employers, and we are legislating for that. I welcome the work done to date. It is a first for the State so it is a very important move we are making today as a Government.

I have just one question because many other questions have been cleared. It is fairly clear to me what the proposals are and how the days can be spread out and so on. The one thing I wonder about is that the scheme is not intended to impose significant new costs on employers. I am thinking in particular about small businesses, which seem to be my obsession. A small employer with an employee out for three days either has to get the rest of the staff to do the work to cover for that employee or has to employ somebody else to cover for him or her. If that is the case, is there any way we hope to try to assist that employer or give it some kind of tax refund or whatever else? If it is paying out €330 in wages for somebody who is not coming in, how does it afford to employ somebody else as well? For small businesses with tight budgets, that is tricky.

If a person is getting €330 for being sick on three days, and let us say that the €60 charge for a sick certificate is €20 per day, then the person is getting €270. I can see how €60 might not be in the pocket because overall the person is getting €330 for the three days. It is prohibitive, but one would hope that they would find a way knowing they are getting the €330. I do not see how we could do it without it being certified in some way.

Ms Clare Dunne

Absolutely. We are very conscious of imposing excessive costs on small and micro businesses. As I said earlier, if an employee is out sick in many of these businesses, for example in the services sector, many of them are required to pay somebody to come in to take their place. They are doing that already. This will be an additional cost on those businesses. We are introducing it at this level and incrementally to give businesses a chance to adjust to it. There will be a cost. If it is three days, it will be €330 per employee, which we believe is fairly modest.

The international evidence points to huge benefits for employers when they have to take some level of responsibility for their employees, including reducing presenteeism and managing absenteeism, a reduced turnover of employees, a safer work environment and so on. Over time, many employers have realised the benefits they reap from having such a scheme in place.

On the certified or non-certified sick days, many employers expressed to us their concern that employees would simply be inclined to take casual days at the drop of a hat without the need for a doctor's certificate. This is why we believe that a certified illness is the way to go. It is a requirement for illness benefit. I believe the point was made earlier that most employees do not just take one or two casual days. Most employees only stay out of work sick when they are genuinely sick. Some of the limited data we have show that people taking one and two days are a small percentage overall of employees. The payment of €60 for a medical certificate is a reasonable ask of an employee by the employer. Many people in very low-paid occupations do have access to medical cards or GP visit cards so they would be covered for that.

That is interesting. I had not thought about it like that. I thank Ms Dunne for clarifying that. There are GP visit cards too, which is good. I have been on the bread line previously. I recall that as a single mother sometimes we would not go to the doctor because of not having the €50. The GP card has definitely spread out and more people are getting it. That did not exist when my son was young. Let us hope that the medical card and the GP visit card will help in the challenges that people might face around €60 charge. It is very positive overall. We must get this started. Of course there will be teething problems, and then we will figure out how to do it better. We will not know until we get it rolling. Well done to the witnesses for their work on this.

I thank the departmental officials for attending our hearing. I am relieved and frustrated in equal measure that we have this pre-legislative scrutiny today. I am relieved that finally we are discussing sick-pay legislation. The Labour Party introduced a Bill on this September 12 months ago, following on from a campaign by the Irish Congress of Trade Unions and my own union, SIPTU, which highlighted the sheer lack of sick pay among low-paid workers and, in particular, in the meat, childcare and other sectors. I am relieved it is before us today but I am frustrated at some of the detail not contained in the Bill. I am concerned that the detail of the entitlements is effectively being delegated to regulations as opposed to being hardwired into the Bill itself. For the avoidance of confusion, and to give us confidence to know that the three days will go to the ten days, we need to have that written into the Bill.

On the detail, my first query relates to the amount. I am aware that the Department will say that the worker should not lose out on a day's pay, but by setting it at 70% of earnings raises a series of questions. Is it 70% of gross or net pay? The €110 is a ceiling, not a floor and, therefore, if a person is a low-paid worker, then 70% of earnings could be very low. If a worker on the national minimum wage earning €80 as a full-time worker, then 70% of that daily wage is approximately €56, which is less than what it would cost to go to the doctor. We need to seriously consider introducing a floor for all workers but which would impact low-paid workers to ensure their sick pay would not fall below a particular threshold. There is also a concern about how we define daily pay. Is it one fifth of a working week or is there a different type of calculation? This needs to be written into the legislation. If there was a 100% replacement rate, we would not have these issues. If the Department is insisting on going with the lower rate, which we are not happy with, then we need to see it comprehensively prescribed in the legislation.

With regard to the selection of three days and then moving to the ten days, how is this identified? How do the officials believe that this compares with other EU member states? Ms Dunne started her contribution by highlighting that Ireland is one of the few countries that does not have paid sick leave. According to the research from Eurofound and the European Trade Union Institute, ETUI, the maximum number of days in the UK, France and the Netherlands is in excess of 200 days, but that the average days is well over double what is being proposed in the legislation. I want to understand how the Department arrived at three days.

There is also the issue of medical certification. We need precise wording that allows for it to be retrospectively provided. I share the concerns that have been articulated by everybody else with regard to having access to a GP. There is a difficulty in registering with a GP at the moment, and certainly where I am based in Dublin central there are massive issues for people trying to secure an appointment Out-of-hours doctor services will not provide a sick certificate. People have come to me in recent days about this. Again, we need to ensure that if we are going down the road of medical certification we provide as much flexibility to workers in the provision of those certificates.

I must express a little bit of annoyance at what I consider to be the throwaway remark that more than 2 million people have access to a GP card or medical card in this country. If we consider the working age population within that 2 million, it is a much smaller figure. The number who are working and who have access to a GP card or a medical card is much smaller again. One fifth of those 95,000 people who have access to a GP card are of working age, and we know that a large share of those people are not working. We are engaging with the Department in good faith but I ask that the Department also engages with us in good faith with regard to the figures it provides to us in its contributions.

With regard to the issue of having to get replacement staff in, over recent weeks we have been talking about employers being unable to get staff such are the shortages in some sectors. Today, we hear about many employers having to get replacement staff in to cover for workers who are sick. We need to be clear on what exactly the issue is. I have previously asked representatives of small employers' bodies to survey their members to establish precisely who needs to get in replacement staff. We need clarity on that issue. I would also like an answer to the question regarding the three days, if possible.

I am sorry. I missed the Senator's last comment.

I would like the witnesses to come in briefly on the issue of the three days. How was that identified?

Ms Gray is talking but unfortunately we cannot hear her. She is not on mute.

Ms Clare Dunne

I am sorry. The technology is not working very well at all today. With regard to the three days, the initial thought was to plug the gap with regard to the required waiting period of three days before employees can access illness benefit. That was where the three days came from. We will then work up to what we believe is reasonable, that is, ten days. As I said at the outset, there is a wide range of sickness benefit schemes in operation across Europe and the world. Quite a few involve a period of ten days to two weeks. Looking at these examples and at the inputs we got during our public consultation, we felt that ten days was a good initial landing point for Ireland. Some countries offer as little as two days. Some pay the first three days. One country pays between four and eight days. The examples go on and on. In the Netherlands, the duration is at the other end of the scale, 104 weeks, but different terms and conditions apply. There is a very wide range. All of this information is available in the international review we published in January of this year. That is available on our website and would give the Senator a very good flavour of what is on offer. To the question of how we arrived at the three days, this was initially to plug the gap relating to the waiting period for illness benefit.

The Senator is right and makes a very valid point about those on very low wages and the fact that we will need to look at setting a floor. We accept that and are currently working on that issue. That will form part of the legislation. We are just working that out at the moment to see how we can articulate it in legislation. That point is being taken on board so that we can provide a real floor for the very low-paid.

With regard to daily pay, we are looking at gross pay. My colleague, Ms Gray, probably has further detail on this matter but unfortunately the system in not allowing her to come in.

The Department might come back to us in writing on that matter.

Ms Clare Dunne

Ms Gray has told me that we purposely did not define a time for submitting a medical certificate. We expect that employers will be reasonable and not expect a certificate on the first day of illness. We expect that a bit of leeway will be given. Those are the questions I picked up on.

I thank the witnesses for the presentation. Something that struck me when reading the Department's regulatory impact assessment was the fact that workers with paid sick leave are 28% less likely than workers without access to paid sick leave to be injured at work. That raises a question as to how many workers, for example, meat factory workers, have suffered significant injuries as a result of working while sick. Moving to a sick pay scheme is therefore welcome, although this scheme is far from what we need.

I will go into that. The opening statement claims that this will bring Ireland in line with its peers among European and other developed countries. With regard to having a statutory sick pay scheme at all, that is the case, but in its content the scheme, including the replacement rate and the time period covered, seems to be significantly weaker than those in our developed country peers, for example, in other EU countries. In Austria, for example, employers pay ten to 16 weeks at 100%. In Germany, employers pay for the first six to 12 weeks and must pay a sick worker's full wage for up to six weeks. In France, employers pay between 60 and 90 days. This is paid at 90% for the first 30 days. In the Netherlands, they must pay 70% of the wage for up to two years, with supports for small businesses. In Norway, workers get a year on full pay with the company paying the first 16 days. In Belgium, employers pay a month's sick leave and in the UK employers must pay a flat rate of £96 for up to six months. In the Department's analysis, how does what is introduced here compare with what is available in other EU countries?

Ms Clare Dunne

As I have said, this is the first step in the development of a model that can be built on and refined over time as it is rolled out. The draft legislation has been built with flexibility in mind. The Deputy is correct; in terms of this bringing us in line with other developed countries, this is initially being implemented precisely because we currently do not have a statutory requirement for employers to pay any level of sick pay to their employees. That is why, in the context of Ireland, this legislation is quite groundbreaking. It is a first step. We are also mindful that we need to be balanced in our approach. On the one hand, we want to protect employees and that is why we are starting with three days to bridge the gap that currently exists with regard to waiting days. However, we also need to be mindful that many employers including small and micro businesses do not currently provide any sort of sick pay for their employees. We are now requiring them to do so, but in an incremental and balanced way. The Deputy will know only too well, as do we all, that many of these companies have suffered very badly during the pandemic. We are still just coming out of that. We are very mindful that we do not want to impose any significant additional costs on business.

We believe this is a fair and balanced first step in providing statutory sick pay for all employees. We are planning an increase from three days to ten over four years. One of the cornerstones of what we are doing is that this will be reviewed, starting early on in the roll-out of the scheme. We will be keeping a very close eye on it to see how it is working and whether it can or should be refined. I am sure that, as the scheme is rolled out, we will find things that we did not think of or that we should have done differently. We will then move to change those aspects. It is a starting point.

I thank Ms Dunne. May I further explore the issue of the plan to move from three days to ten? I note that, in response to Deputy O'Reilly, Ms Dunne said the process will be basically automatic. She also set out that we will reach ten days by 2025. However, it is a bit concerning that the draft Bill only legislates for the initial three days, with the others to be brought in by ministerial order. Section 6 of the draft Bill says that, in considering whether and by how much to increase the number of days, the Minister has to have regard to the state of the economy, the potential impact on employers, data on earnings and labour costs and other matters he or she considers relevant. Is it therefore not the case that the Government and the Minister can decide that, due to the economic environment or whatever, we will not go to ten days by 2025?

Ms Clare Dunne

In theory, the answer is "Yes". If some external shock kicks the economy then everything will have to be back on the table. The clear stated policy intention is to start at three days and move to ten. There is the break in the legislation in that we are proposing, to protect employers, in particular, that there will be no move greater than an additional three days per annum. We believe that this is the most prudent way to proceed. We have found in the past that putting the operational details of a scheme into primary legislation can tie the hands of the policymakers who may want to move faster than the legislation allows and we find then that we have to go back to the drawing board and amend primary legislation to move more quickly.

I thank Ms Dunne. I hope that we will have governments that will want to move more quickly on workers’ rights but generally we have not and have had ones that want to move more slowly.

I make a similar point as to why the 70% is not being specified in the draft Bill. Again the 70% with a maximum of €110, is not in the Bill itself but will simply, presumably, be put there by ministerial order. Does that not raise the possibility that a ministerial order could specify even less than the 70%?

Ms Clare Dunne

Again, we are working on the advice of the parliamentary counsel and of the legal side who advised not to put these details into primary legislation so that they can be varied by regulation. The figure of 70% was arrived at, as the Deputy will be aware, because he appears to have read the various documents we have developed, through the RIA and the international review. There is a wide range of schemes available out there. Some are less favourable than what we are introducing and some are more favourable, which I accept. Our intention and ambition is to be among the best in class in the developed world in protecting employees. We are starting modestly, but I reiterate very firmly and very clearly, with a path set out moving relatively quickly to ten days. It is a first step and is a model that can be built upon and refined over time.

Clearly, we have to have due regard to the plight of small and micro businesses at this particular point in time, many of whom were not very pleased that the Government is introducing this measure. Many businesses we have spoken to are pleased and say that they recognise the benefits of businesses providing sick pay to their employees and the fact that this will improve relationships, reduce employee turnover and all of that.

Much of what we do in public policy and in devising legislation, as the Deputy knows well, is about striking a balance between various stakeholders as to where we are in the economic cycle. We in the Department believe that this Bill strikes the right balance at the moment but sets a clear level of ambition that the Government will be minded to follow to ensure that we are best in class when it comes to these types of protections.

I thank Ms Dunne and Deputy Murphy as the Deputy’s time is up. I call now Deputy Flaherty who has seven minutes and will be followed then by Deputy Shanahan.

I thank the Chairman. I will probably take a different view from Deputy Murphy but I am very pleased to see the legislation coming through. The Government is responding to the needs of low-paid workers.

The officials may not have the information to hand but it would be good if they could share with us subsequently the position as to what is available across Europe at the moment where sick leave ranges from two days per annum at the lower end to 104 weeks at the upper end. Some of those countries also operate a state illness benefits scheme. Can the officials share with the committee in an email later on, please, a breakdown by country of the position as to sick days and what these states are offering by way of state illness benefit?

I also have a concern regarding small businesses, which might traditionally be referred to as the mama and papa shop, family-run business. Regardless of how much they champion and look after their workers, this measure has an additional cost implication for them. I know that they will step up to the plate and will meet their responsibility, but this is coming on the back of Covid-19 and will be difficult in many instances. We have to be mindful of them. Is there any provision, and there may well be but I have not seen it, to address an instance where a small one-person operation is not in a position to pay this money? Is there any recourse for that company? I know that there is something that they may be able to be do through taxation but is there any recourse for a very small business in that instance?

Ms Clare Dunne

I thank the Deputy for his question. We will certainly email the Deputy details of the operation of the schemes and the precise details in other countries. Most of that information is available in the international review that we conducted in January and is available on the website, but I will ensure that a copy of that is sent around this afternoon to Deputies.

As to the micro businesses described by the Deputy that employ one or two people, we have provided for an inability-to-pay clause that is similar to the provision that is provided for in the National Minimum Wage Act and in the Industrial Relations Act, which provide for sectoral employment orders. The inability-to-pay provision is where an employer can go to the Labour Court and seek a derogation from paying illness benefit to their employees for very specific reasons that they can prove to the court. We do not envisage that this provision should or will be needed very much in the first year of operation because we are setting the sick pay entitlement at three days and we are capping it at 70% and €110 per day. That means that the maximum that an employer could be liable to pay for an employee who was out on certified sick leave in year one is €330.

I have spent many years on the enterprise side of the Department and I appreciate that many businesses operate at very low margins, but at €330 in a calendar year, this should be manageable for most businesses. Clearly, as the sick pay entitlement increases, there is a need to have that provision and, therefore, there is an inability-to-pay provision in the legislation.

Is that provision retrospective? Is there nothing at the time for the employer, for example, when it reaches the ten-day provision, in that the employer will have to go to the Labour Court at that point to seek a derogation, or for such an employer, if this is a one-person operation, where that person will probably have to get other or part-time staff to come in? Strictly speaking, the employer will probably double the cost over those ten days. Is the employers only option then a retrospective one?

Ms Clare Dunne

I suppose the nature of illness is that we can never, unfortunately, predict when we are going to fall ill or have an accident and, therefore, it is hard to look into the future and make provision for something that might not happen. It probably would be retrospective. By the time this provision reaches ten days, we will have had a great deal of time to examine the operation of the scheme to talk to businesses, employees, and the representative bodies to get a feel for how the scheme is operating out on the ground. We are genuinely committed to doing that to ensure that this scheme, as it is rolled out, is fit for purpose, doing what it is supposed to do, and is not imposing an undue burden on businesses or not providing a generous enough benefit to employees.

We will be keeping all of that under review, including the element the Deputy has referred to.

I agree very much with the spirit of what the Department is doing. I am aware that the Department will be engaging with many employer organisations, but a lot of those small and micro organisations will not get in the door and will not have a representative body. Ultimately, the potential cost for a small business is north of €2,000 when it gets to the ten days. Perhaps it is an issue to which the Department can give consideration as it evolves, and introduce a mechanism for small businesses, rather than looking at it retrospectively.

I thank the Department officials. I think everybody accepts that this legislation is very timely, the scheme is long overdue and people need these supports. As a number of other Deputies have expressed, I have a concern about the smaller businesses and how they will support the costs involved. As has been pointed out many times, the small business owners have to look to other resources on the day to help fill the gaps that sick leave creates. Has the Department engaged with the Department of Finance on looking at the idea of introducing either a tax credit or some kind of a tax supplement for small businesses? For example, let us say that there is a business owner who runs a small carriage company and the forklift driver is out for the day. The business owner will have to get one of the other staff members to cover for the driver on top of doing their other work late into the evening, which will involve overtime payments. Could the business owner make a claim against the tax for that expenditure based on the fact that a vital employee was out and that they incurred that additional cost to run their business that day? Many small businesses are not in a position to go to the WRC or to pay this money without significant difficulty. Ultimately, it is going to impinge on them, as the proposed number of days increases. I think there should be some ability for small threshold businesses to make a claim against this cost and to have it recognised under some financial instrument.

Ms Clare Dunne

The answer is that yes, we have considered this. We have done some preliminary thinking and we have had some preliminary discussions about this, and about how it might operate along with the tax code, etc. It is something we will continue to pursue. It would have delayed the introduction of the Bill for longer than the Tánaiste would have wanted for us to finalise all of these discussions and reach a position on issues like this. However, it is something we have thought about and we have had some discussions on it. It is why we are introducing the Bill with the entitlement to the fairly initial low level of three days' sick leave, working upwards. We believe that three days should be manageable for most businesses in the first year of operation. Matters such as those discussed by the Deputy are matters that we will continue to pursue as we review the scheme during its first year of operation.

I thank Ms Dunne for her response, but I would like the Chairman to note on the record that I feel that some sort of financial instrument will need to be introduced to support smaller businesses and SMEs. When they have people out, they cannot afford to hire in. They do have costs and I do not think it is feasible, as this scheme ramps up. I accept and support the idea that we have a sick pay scheme, but I think there has to be some deferment for small businesses in terms of the cost that it is going to introduce.

Does anyone from the Department want to respond?

Ms Clare Dunne

It is certainly an issue that we will be looking at. We have not ruled out the Deputy's suggestion. It is something that we will discuss further as the sick pay scheme begins to operate.

I have a quick question on the issue of sick certificates. I wish to flag an issue that some members have already raised, namely, the difficulty people experience in getting an appointment with a GP to obtain a sick certificate. We have heard from many people in the last number of months, in particular, that they are not even registered with a GP and cannot do so. An issue such as that needs to be taken into consideration. Perhaps employers could be given discretion as to whether they require the sick certificate or not. It is an issue that needs further scrutiny. People who have come to my own constituency office have told me that they cannot get in touch with their GPs, never mind get an appointment to go and see them.

Moving on to the second round, Deputy Stanton has seven minutes.

Where employers already have schemes in place - and I know section 9 of the Bill mentions that - and where it is more favourable than the scheme that is being introduced, the employers will not have to get involved in this particular procedure. What steps are in place to ascertain which employers have schemes in place and which do not, when this comes into effect?

Mr. Paul Norris

The plan is to introduce the scheme as a floor-level protection, like all other employment rights. If a company is offering a more favourable scheme, it can continue to do so. Employers and employees are free to negotiate more favourable terms as they wish. In terms of how we would know which employers have schemes in place, it is up to the employer to be in line with employment rights legislation. The employer would have to inform the employee that they are on a more favourable scheme and, as a result, they are not receiving the statutory entitlement. However, that would be quite apparent. If an employer's scheme is offering two weeks' paid sick leave, that is automatically above what we are providing for at the outset.

Could Mr. Norris comment on the requirement of 13 weeks' continuous service? Where did that come from and what was the Department's thinking behind putting that in place?

Mr. Paul Norris

It is not uncommon in other employment rights legislation for there to be a requirement for a length of service. In respect of both parental leave and carer's leave, there is a requirement of 12 weeks' continuous service before the worker can access those benefits. The general thinking behind the requirement is to allow time for an employment relationship to develop between the employer and the employee. The requirement of continuous service comes from existing legislation that sets out a definition of continuous service.

I thank Mr. Norris. Some employees and companies will be involved in accident and sickness schemes, income protection schemes, company income protection benefits, and so forth. In some instances, employees will contribute towards such schemes. Will the new legislation have any implications for those schemes?

Mr. Paul Norris

We have tried to work the legislation in such a way that if an employer is offering a more favourable scheme in the round, that that will still continue to apply. We do not want to undermine any existing schemes that are offering more favourable terms. It is certainly not the intention of the legislation.

Where an employee contributes to an income continuance protection scheme for insurance purposes, as it were, will he or she still be entitled to this particular support from the employer if they have their own private schemes to cover sickness and absence?

Mr. Paul Norris

There should not be any impact on income continuance plans. They should remain in place, as is. The legislation will offer a floor-level protection for employees who currently have no access to a company or sectoral level sick pay leave scheme.

So, the schemes will run in parallel with no overlap. My final question concerns penalties in respect of employers who fail to adhere to the conditions of the scheme. What are they, and how are they to be implemented?

Mr. Paul Norris

In the case of non-compliance, an employee would take a complaint to the WRC. The WRC will be charged with enforcement, as it is with other statutory employment rights. The exact penalty is set out under section 14. I might have to take a quick look to check what the penalty is.

Employers would have to retain records of their employees' sick leave for a period of four years.

We can look that up ourselves. If it is there, that is fine.

Mr. Paul Norris

It is included and there is a penalty. I think it might be a class C fine.

That concludes our consideration of this matter for today. I thank the officials from the Department, Ms Dunne, Ms Gray and Mr. Norris for their contributions. We will suspend the meeting for a few minutes to allow the witnesses to leave and the Minister of State, Deputy Troy, to come in.

The joint committee suspended at 11.01 a.m. and resumed at 11.31 a.m.
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