Ireland: Changes to sick pay rules worry employers

Changes to rules on state sickness benefits have caused friction between employers and unions. The changes came in the 2014 budget, with new rules meaning workers can only claim state illness benefits from the government after six days of absence. Previously they could claim after three days off sick.

Introduction

Irish employers have expressed concern over a major change to the state Illness Benefit scheme for workers introduced in 2014 as part of the government’s budget.

The change means sickness benefit is not paid until a worker has completed six days of sick leave absence. This is double the length of the time it used to take for the benefit to commence. 

The main social partner group, Ibec, previously known as the Irish Business and Employers' Confederation, claims the changes 'may place some additional burden on employers with existing sick pay schemes'.

The government has pointed to expected savings of €22 million for the Exchequer as a result of the changes.

Under the new rules, an employee seeking state Illness Benefit must apply within seven days of becoming ill. No payment is made for the first six days of illness, which are known as ‘waiting days’. It is specifically this period that was extended from three to six days, with the new rules coming in to force on 6 January 2014.

Employers are not obliged to operate their own sick pay schemes. Company sick pay schemes are more likely to be found in larger employers than they are in smaller firms. 

A survey conducted by Ibec a month after the measures were introduced showed that just 9% of its members planned on increasing the number of ‘waiting days’ for sick pay to be applied. A majority, 72%, said they would not increase the waiting days period. Figures showed 14% of respondents were undecided as to what they would do in response to the state Illness Benefit changes.

Unions challenge retail giant

A number of cases reported on by the independent weekly Industrial Relations News (IRN) illustrate some of the different approaches being adopted by larger employers, including the retail giant Tesco, Beaumont Hospital, a large Dublin hospital, and in the CIE Group, which includes Dublin Bus, Irish Rail and Irish Bus.

Tesco, which employs around 15,000 people in Ireland, was the first company in the retail sector to review its sick pay scheme in response to the 2014 changes to Illness Benefit. The company changed its rules so that employees would not receive any sick pay for the first six days of their absence. Previously employees had received sick pay after three days of absence.

Two unions, Mandate and the Services, Industrial, Professional and Technical Union (SIPTU), opposed the move and won their claim against Tesco in the labour court. The ruling was made on the basis that the employer was not supported by collectively agreed terms in continuing to make social welfare deductions from sick pay for the fourth, fifth and sixth days of illness.

Tesco, which has 26 different sick pay schemes, due to what is referred to as 'legacy' factors, is currently seeking to establish a standardised sick pay scheme for all employees.

Mandate and SIPTU argued that Tesco, by continuing to make social welfare deductions in the four to six day sick leave period, was unilaterally altering an established collective agreement. The labour court concluded that the terms of Tesco’s sick pay schemes 'do not support management’s contention'. 

Mandate Divisional Organiser Brendan O’Hanlon welcomed the court’s recommendation, saying it was a 'clear message for retail' given Tesco’s influence in the industry.

Other agreements

At Beaumont Hospital, a sick pay scheme established for contract cleaners employed by the Resource Group provides for sick pay benefit after an absence of three days, despite the changes in the state Illness Benefit. The deal was struck between Resource and SIPTU at the Labour Relations Commission, and applies to about 150 workers. The agreement acknowledged an additional cost to the company 'that it had not previously reckoned on'. The agreement states that:

the company is willing to pay benefit after three days’ absence notwithstanding that it will not receive any refund of social welfare benefit until after six days’ absence due to recent change in the payment of disability benefit. This will therefore be an additional cost to the company that it had not previously reckoned on.

At the CIE Group, management has proposed changing its sick pay scheme. The company has been in talks with several unions, including SIPTU, the National Bus and Rail Union (NBRU) and the Transport Salaried Staff Association (TSSA), in a bid to resolve the issue.

Since the CIE sick pay scheme had always paid the first three days of illness in full anyway, the change would not affect these days, but it would reduce sick pay by the amount of the state benefit for the fourth, fifth and sixth days. Even before the 2014 budget change was announced, CIE had raised the possibility of reducing its general sick pay entitlements.

It is understood the company may now seek to raise these issues again, in the context of maintaining the full sick pay for the first six days of illness. However, according to IRN, the unions hold the view that the two issues should not be linked, pointing out that unlike many public servants, CIE employees who go off sick are already earning less, as their sick pay is only based on a 39-hour week and many work overtime.

A spokesperson for CIE told IRN that the budget increase to six waiting days would 'impose significantly increased costs on companies in the CIE Group which are already in an extremely difficult financial situation'.

A temporary continuation of the status quo for three months had been maintained, said the company, 'to enable discussions to take place on how the additional costs can be mitigated'.

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