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Sick Pay Scheme

Dáil Éireann Debate, Tuesday - 17 July 2012

Tuesday, 17 July 2012

Questions (2)

Barry Cowen

Question:

15Deputy Barry Cowen asked the Minister for Social Protection if she will outline her plans to introduce statutory sick pay on employers for the first four weeks of illness; and if she will make a statement on the matter. [35041/12]

View answer

Oral answers (11 contributions)

From 2008 to 2011, inclusive, total expenditure on illness benefit, invalidity pension and disability allowance was €10.6 billion, of which €3.6 billion related to illness benefit. It is estimated that expenditure on illness benefit in 2012 will be €847 million. The introduction of a scheme of statutory sick pay, whereby employers would directly meet the costs of illness-related absence for an initial period of illness, is being considered in the context of the need to reform the social welfare system to bring it into line with practices in other countries in this area, the need to address the deficit in the social insurance fund and the need to limit progression from short-term illness to long-term illness or disability, as well as in the wider context of enhancing the health of the workforce and addressing absenteeism levels.

Most other European countries, including all of our major competitors, oblige employers to pay for some sick pay costs. The extent of this obligation varies considerably. For example, it is two years in the Netherlands, 28 weeks in Northern Ireland and the UK, six weeks in Germany and nine days in Finland. I will circulate a table with the Official Report which illustrates in a concise format the statutory sick pay arrangements in a range of other countries.

A range of complex issues needs to be addressed before any decision can be taken by the Government on the possible introduction of such a scheme. These include the extent of coverage, the duration of payment, the rate of payment, compensation mechanisms for smaller scale employers and how to ensure such a scheme would be enforced and policed.

Earlier this year, I hosted a consultative forum on the feasibility and implications of introducing a scheme of statutory sick pay. This afforded an opportunity to key stakeholders to discuss the complex issues involved. All of these issues will be discussed in the course of the wider process associated with the preparation of the 2013 budget.

Additional information not given on the floor of the House.

Any decision which might be taken by the Government on the possible introduction of a scheme of statutory sick pay will be considered in that context. One of my priorities in this regard is to promote wellness in the workplace and to address levels of absenteeism generally.

Table: Statutory sick pay in a range of countries

Country

Statutory Sick Pay

Details

Australia

Yes

10 days per annum

Austria

Yes

6 – 12 weeks on full pay plus 4 weeks at half pay

Belgium

Yes

4 weeks full pay

Czech Republic

Yes

2 weeks @ 60% of average pay

Denmark

Yes

Top-up of illness benefit to normal pay

Finland

Yes

9 days

France

Yes

Top-up of illness benefit to normal pay

Germany

Yes

6 weeks on normal pay

Hungary

Yes

15 days at 80% of salary

Iceland

Yes

1 month at normal salary

Italy

Yes

180 days (6 months) per year

Luxembourg

Yes

13 weeks

Netherlands

Yes

2 years at a minimum of 70% of salary plus 1 year funding of disability benefit

New Zealand

Yes

5 days for each year of service

Norway

Yes

16 days at full pay

Poland

Yes

33 days at 80% of pay based on previous 12 months

Spain

Yes

15 days (1st 4 unpaid)

Sweden

Yes

14 days at 80% of pay

Switzerland

Yes

3 weeks at full pay, then 80% for up to 2 years

UK

Yes

28 weeks at sickness benefit rate

The Minister said there needs to be more consultation in Government on this proposal. Is she aware, however, that some Government backbenchers and one Cabinet member have stated they do not agree with her proposal? Last week, the Deputy behind the Minister, Deputy Harris, said that the sick leave situation in Departments was three times more serious than in the private sector. He suggested this should be dealt with before we examine sick leave arrangements in the private sector. Is the Minister aware that small businesses and the self-employed are still awaiting legislation on upward-only rent reviews and proposals for new methods by which rates are calculated, let alone paid? Is she aware that many of those whom she implies should be brought into this sick pay arrangement - taxation by the back door – cannot afford an arrangement which could possibly amount to €89 million in new taxation?

Thank you, Deputy.

Earlier this month, the Minister said she was considering raising employer PRSI in the budget, a move which would further undermine confidence in the private sector and small and medium-sized enterprises.

I have stated on a number of occasions that in the context of the consultative forum held a short time ago, a statutory sick pay scheme would have to take into account the needs of different sectors of employment, particularly those small businesses, and other specific situations. The costs relating to illness benefit, disability allowance and invalidity pension are enormous. The number of people claiming these payments and the costs relating to them have soared in recent years. I wish to put a point to Deputy Cowen. All of our principal competitors have statutory sick pay systems and they have found - this is evident from published information and from conversations I have had with people from other countries - that it improves matters and provides for a much better atmosphere in places of work. In other words, these systems lead to employers being interested in both the health and welfare of their employees and in promoting a wellness environment in the workplace. The most up-to-date international research, including that compiled by the OECD over a protracted period, indicates that this is good for everybody. It is a win-win situation for employers and employees. It is particularly positive for employees who may develop problems and who, together with their employers, can actually access assistance in order to provide for their good health.

I welcome that there has been some movement on this issue. That is evident from the Minister's initial reply and her comment to the effect that proposals in this regard will be categorised. In other words, the scheme will be based on an ability to pay and the needs of different categories of businesses to which it apply will have to be taken into consideration. She also indicated there would be a saving of €89 million if employers paid the first four weeks of sick pay.

When the Minister first mentioned this matter last year, she stated the saving would be €150 million.

That is in a full year. It would be introduced halfway through the year.

At this stage of the Minister's quest to bring this scheme forward, is it the case that, in light of the dissent that is obvious within the ranks of Government backbenchers and among some of her Cabinet colleagues, the saving involved has been watered down by half? What is being proposed does not go far enough. It is not enough to state that everything will be categorised. How is it proposed to categorise the scheme? Will a table be produced - well in advance of any decisions the Minister might make - which will give an indication of who exactly is going to be lumped with paying this?

I return to my initial point that this is merely taxation by the back door. What provision will be made in respect of PRSI contributions, over and above those statutorily required, for self-employed people whose businesses might fail and who may need to claim benefits from the Department?

The savings indicated have been exactly the same on every occasion on which I have commented on this matter. As stated earlier, introducing a statutory sick pay scheme involves a series of very detailed steps and an in-depth examination must be carried out. Both the dialogue and the consultation process which have taken place indicate that all sick pay schemes generally take into account the needs of smaller firms. There is no doubt, and the OECD frequently reports this fact, that Ireland is probably the only country which does not have a statutory sick pay scheme.

I reiterate what I stated previously, namely, that except where companies, Departments or whatever have sick pay schemes in place, most employees, regardless of whether they work for small or large employers, pay for the first three days of their illness. There is no proposal to change that. The first three days of sick leave are not paid for by the employer, they are paid for by the individual. Following this initial period, an employee is obliged to obtain a medical certificate from his or her doctor to claim illness benefit. One of the issues some employers raised during the consultation - individuals dealing with occupational health issues were among the most prominent speakers - was the perception among employers, which I share, that there were serious issues about the way in which some medical practitioners issued sick notes. This emerged as a significant issue for employers during the consultation process. Having examined what employer groups such as Retail Ireland have stated about this issue, it is an important point. At the end of the day we want to have good sick pay schemes for persons who are ill, while reducing the overall level of absenteeism. I acknowledge that absenteeism is a significant problem in large parts of the public sector, although generally not among all employees but often among less than 25% where a pattern has been formed. This information gathering is part of the process of looking at this important issue.

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