Oireachtas Joint and Select Committees
Wednesday, 24 November 2021
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
General Scheme of the Sick Leave Bill 2021: Discussion (Resumed)
I welcome members participating in today's committee meeting in line with the exceptional measures that we have to put in place due to the pandemic. Members and all in attendance are asked to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19. They are strongly advised to practise good hand hygiene and they will notice that every second seat has been removed to facilitate social distancing. I urge people not to move any chair from its current position. They should also maintain an appropriate level of social distancing during and after the meeting. Masks should be worn at all times during the meeting except when speaking. I ask for members' full co-operation in this. Any member participating remotely in the meeting can only participate from within the Leinster House complex. Apologies have been received from Deputies Paul Murphy, Louise O'Reilly and Matt Shanahan.
Today's business is to resume our discussion of the general scheme of the sick leave Bill 2021. At present, there is no statutory obligation for an employer to pay for a medically certified absence of an employee due to illness. While many employers provide such sick pay, employees who do not receive it are disadvantaged. We also know that it may encourage such employees to attend work even though they are ill. In the context of the current public health situation, this is particularly undesirable. The proposed Bill will provide for the creation of an entirely new right to sick pay, which will be legally enforceable through the Workplace Relations Commission, WRC, and the courts.
I welcome the witnesses. From IBEC, we have Ms Maeve McElwee, director of employer relations, and Ms Pauline O'Hare, senior employment law solicitor. From the Irish Congress of Trade Unions, we have Dr. Laura Bambrick, social policy officer, and Mr. Liam Berney, industrial officer.
Before we start, I will explain some limitations on parliamentary privilege and the practice of the Houses with regard to references the witnesses may make to other persons in their evidence. The evidence of witnesses who are physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Today, however, witnesses are giving evidence remotely from a place outside the parliamentary precincts and, as such, may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does. Witnesses have already been advised that they make take legal advice on this matter if they think it is appropriate.
Witnesses are reminded of the long-standing parliamentary practice that they 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 might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such directions that are given.
The opening statements from IBEC and ICTU have been circulated to members. To commence our consideration of this matter, I invite Ms Maeve McElwee to make opening remarks on behalf of IBEC.
Ms Maeve McElwee:
IBEC welcomes the opportunity provided by the joint committee to comment on the sick leave Bill 2021. In addition to the statement we will make today, we intend to provide the Department with a more detailed submission setting out the views of our members on the Bill as it progresses.
IBEC contends that the introduction of statutory sick pay poses a significant cost to employers, particularly small and medium enterprises, SMEs, and those sectors that have been most impacted by the Covid-19 pandemic. We understand that it is the Government's intention to develop a scheme that is fair and affordable with minimum complexity and administrative burden for both employers and the State. However, IBEC submits that the introduction of statutory sick pay, in the manner proposed, will give rise to a disproportionate cost burden to employers. This is at a time when businesses continue to contend with the challenges posed by both Covid-19 and Brexit. There are additional costs involved in the replacement of skills, with little or no notice, which are lost during a period of sick leave.
While the Bill provides an exemption for employers that already operate a company sick pay scheme, the criteria for determining whether an existing scheme is more favourable than statutory sick pay are so stringent that they will likely result in many employers being faced with the cost of administering a company scheme in addition to the payment of statutory sick pay. For this reason, IBEC submits that the Bill as currently drafted will place excessive costs on employers, regardless of whether businesses have existing company sick pay schemes in place.
The Bill provides that the Minister may make regulations for the purpose of prescribing the daily rate of statutory sick leave payment. As the regulations will not be published until the Bill has been enacted, we do not have full sight of what the prescribed rate will be. However, we understand from the regulatory impact assessment, RIA, and the general scheme of the Bill that statutory sick leave payment will be at a rate of 70% of the employee's normal rate, subject to a daily earnings threshold of €110. The daily threshold is based on 2019 mean weekly earnings of €786.33 and equates to an annual salary of €40,889.16. The Department has stated in the RIA that setting the rate at 70% is to ensure excessive costs are not placed on employers, which in certain sectors may also have to deal with the cost of replacing staff who are out sick at short notice. However, the proposed payment is undoubtedly favourable when compared with sick pay schemes in other jurisdictions, including Northern Ireland where statutory sick pay is paid at a rate of £95.85 per week. Further, while the Government's stated intention in setting the sick pay entitlement at this level is to provide a minimum level of protection to low-paid workers who may have no entitlement to company sick pay schemes, basing a statutory sick pay entitlement on an annual salary of €40,889.16 goes beyond protecting those who are low paid.
The Bill provides for an entitlement to three statutory sick leave days, which may be increased by ministerial order. IBEC understands from the RIA that the Government's intention is to increase the number of statutory sick leave days to ten by 2025. While the phased introduction of this cost is to be welcomed, IBEC submits that a potential increase in costs of €1,100 per employee per annum is excessive. This amount does not recognise the costs to the business of replacing staff who are absent on sick leave, often at short notice.
The entitlement to statutory sick leave in the Bill is granted on a per annum basis. IBEC submits that this entitlement should be specified to be within a rolling 12-month period rather than in one calendar year. This is a common feature of company sick pay schemes. Should an employee take three statutory sick leave days at the end of December and then become entitled to another three days of statutory sick leave a week later, in the new calendar year, this would be financially difficult for employers. The extension to ten days, as indicated, will exacerbate this issue for employers, with greater challenges again for those with peak trading over December and January. This is particularly the case for SMEs which do not already operate a company sick pay scheme and therefore may be disproportionately impacted.
The Bill provides that the entitlement to statutory sick leave arises once an employee has completed 13 weeks of continuous service, which is a significant reduction from the six-month service requirement proposed in the general scheme. This is a matter of concern for IBEC and its members as many company sick pay schemes do not take effect until an employee has six months of service and-or has passed a probationary period. A recent survey of IBEC members found that 60% of the 307 respondents who operate a company sick pay scheme had a six-month service requirement in place. Of particular concern is that the exemption in respect of company sick pay schemes only applies where the company scheme is more favourable than statutory sick pay. As a result, employers with a service requirement in excess of 13 weeks will be required to pay statutory sick pay of up to ten days per annum in addition to any entitlements arising under the company sick pay scheme.
IBEC welcomes the principle of the non-application of the obligations under the Bill to employers which operate company sick pay schemes. However, section 9 as currently drafted undermines its effectiveness. IBEC submits that an exemption from paying statutory sick pay should apply where an employer operates a company sick pay scheme that is no less favourable than statutory sick pay.
Where the employer’s scheme is at least equivalent to the statutory entitlement, it should not be required to pay twice.
Second, the matters which are stated to be taken into consideration when determining whether a company sick pay scheme is more favourable are overly stringent and will exclude many employers that may operate very generous sick pay schemes. Specifically, as noted, company sick pay schemes often include a service requirement of six months or more. Company sick pay schemes often do not apply until the fourth day of absence, in line with the payment of illness benefit, and they often operate on a rolling basis, whereas the statutory entitlement set out under in the general scheme is based on a calendar year. While the general scheme states that the benefits must, as a whole, be more favourable to the employee, it appears likely that very generous company sick pay schemes may fall outside the scope of this section 9 exemption where certain terms of the scheme differ from the statutory sick pay requirements. This could result in employees who already have generous sick pay entitlements under their contracts of employment receiving an overlapping increased sick pay benefit at a disproportionate cost to their employer. The unintended consequence of this wording is that employers will likely seek to mitigate costs by reducing benefits over the statutory requirement or offering lesser terms to new employees. This in turn would threaten industrial relations stability in the longer term.
IBEC and its members are concerned that although the Government intends the statutory sick pay scheme to be fair and affordable, for many companies, above all SMEs, the introduction of statutory sick pay will present a disproportionate cost burden, particularly in the current environment. That cost will only be heightened where companies have the additional cost of replacing skills, with little or no notice, lost during a period of sick leave. While IBEC supports the exemption of companies that already operate company sick pay schemes from the obligations of the proposed Bill, it appears from the current drafting that many employers who already operate sick pay schemes will not be in a position to avail of this exemption, which is of great concern to our members. IBEC submits that any statutory sick pay scheme that is introduced must be sustainable and not represent a disproportionate cost. In this regard, as much of the detail that will affect IBEC members will be set out in the subsequent regulations, IBEC will be seeking to engage with the Department on their drafting. It is vital that IBEC is consulted in order to ensure that any proposed statutory sick pay scheme is fair and affordable, as well as manageable and operable, for employers across the board. The scheme should include the introduction of tools for managers to be able to operate the scheme, manage and address issues that may arise around sick pay, none of which is currently included in the legislation.
Dr. Laura Bambrick:
On behalf of ICTU, I thank members of the committee for their invitation to input in to the pre-legislative scrutiny of the general scheme of the sick leave Bill 2021, which provides for statutory sick pay. My colleague Mr. Liam Berney will join us later following his meeting with the Joint Committee on Social Protection, Community and Rural Development and the Islands, if time allows.
First, the congress wishes to acknowledge the work of Department officials and the collaborative approach taken throughout on the design of the new scheme, including by this committee. In the brief time available for my opening remarks, I will focus on key outstanding issues for ICTU and highlight differences between what is provided for in the draft Bill and what was indicated as intended in the general scheme of the Bill, which was published in June of this year.
Section 2 of the general scheme provides for the meaning to be ascribed to terms used in the body of the proposed Bill. Like all employment legislation, the scope of what is provided for extends only to those employed on a “contract of employment”. The definition of that term, for the purposes of this legislation, is taken from the Terms of Employment Information Act 1994. This is a narrow definition and confines the scope of the proposed Bill to those employed on conventional contracts of service. ICTU recommends a better and broader definition of a contract of employment, namely, those provided by the National Minimum Wage Act 2000 and the Payment of Wages Act 1991. Both definitions are much wider than the one now proposed. Paragraph (b) of both definitions extends to atypical forms of working arrangements and is more akin to the notion of a worker in European law and the definition of a worker in UK law.
Section 5(2) of the general scheme provides employees with an entitlement to up to three days of paid sick leave per year. While ICTU acknowledges that it is the clear intention of the scheme design that after 12 months, the three days will automatically move to five, then seven, and ten days in 2025, we are concerned that three days, not ten, will always be written into the legislation.
Section 5(5) provides that the service qualification for entitlement to statutory sick leave is 13 weeks’ continuous services. Head 6(2)(a) of the draft scheme provides that the entitlements created by the proposed Bill will commence when an employee has completed six months of continuous employment. Both cannot be right. The congress recommends that the qualification period be kept to a minimum so as not to stall labour market mobility or create a perverse incentive for employers to dismiss workers before they come into qualification.
We are further concerned that the proposed Bill provides that the service qualification be based on continuous service. Certain groups of workers routinely have their service broken by their employer. One example is the thousands of early years professionals working in early childhood care and education, ECCE, or preschool services on 38-week contracts, who are forced to sign onto social welfare during the summer. ICTU recommends that the wording be deleted or amended to ensure such workers do not have to build up their entitlement year after year and are repeatedly left without coverage for months on end.
Section 5(8) provides that all sick leave must be certified by a registered medical practitioner. While the requirement to have the sickness certified is common practice in statutory sick leave schemes throughout the EU, Ireland is unusual in that workers have to pay for primary healthcare. Very few people in employment are covered by a medical card or a GP visit card. The Healthy Ireland survey wave 5, commissioned by the Department of Health, shows that an estimated 14.6% of people, or one in seven, aged between 18 and 64 working for payment or profit - that is, employees and self-employed people - hold a medical card, while a mere 3.6% hold a GP visit card. In recognition that the out-of-pocket expense for a GP visit will create a barrier for workers exercising their new right to paid sick leave, the congress recommends that the final version of the Bill include provision for limited periods of self-certified sick leave. Self-certified sick leave typically costs about one tenth of the total cost of public service sick leave.
Section 7(2) merely provides that the daily rate of statutory sick leave, and the maximum daily amount payable, are to be prescribed in regulations to be made by the Minister. However, head 7(1) of the general scheme provides that the daily rate is to be 70% of the employee’s daily rate, subject to a maximum of €110 per day. This can be varied by the Minister by regulations made under the proposed Bill. We recommend that the legislation further require the Minister to consult with the social partners annually on the adequacy of the daily rate, income cap and income floor to ensure adequacy and its interaction with occupational sick pay schemes, and to report to the Oireachtas on the outcome of this consultation.
Section 9 of the draft Bill provides, in effect, that the obligations imposed on an employer are not applicable where the employer provides employees with a sick pay scheme which is more favourable than that prescribed by the Bill. Many contractual sick pay schemes provide for waiting days, typically meaning that no payment is made for the first three days of illness. ICTU recommends that, rather than excluding the application of the legislation completely where more favourable contractual schemes apply, obligations under the Bill would not apply in respect of any day on which the employee is entitled to be paid by his or her employer under the terms of a more favourable sick leave scheme.
Section 10 of the Bill provides for the granting by the Labour Court, of an exemption from the requirements of the Act. This is now a standard provision. Congress recommends that in such circumstance the employee is fully compensated from the Social Insurance Fund and a debt is raised against the employer in the same ways as when a payment is made under the redundancy and insolvency payment scheme with employers that are still trading.
Having convinced the Government of the necessity to introduce statutory sick pay, the priority for congress is now to ensure that the new scheme will protect workers' health and income and bring a basic employment right in line with European norms. It is this that informs our recommendations to the committee today. I thank members for their attention and am happy to take any questions.
I thank both witnesses for their presentations. This is a very welcome discussion. Sinn Féin very much welcomes the introduction of a sick pay scheme. It is long overdue and it is good to see employers and unions working collaboratively to achieve this goal.
Could both witnesses comment on why Ireland has been an outlier for so long when it comes to the provision of sick pay? We quite rightly often hear from IBEC in terms of making sure we are not an outlier in respect of investment in research and development compared to our European colleagues but we have been an outlier for decades on the subject of sick pay. Why has this been the case for so long?
One of my key concerns about this Bill is the practicalities of it, particularly regarding workers requiring certification from a GP. Let us be practical here. Right now, if a worker is sick, he or she is not going to get an appointment with a GP today. In fact, he or she will be lucky to get an appointment this week. That is the reality we must recognise. We must also recognise that unlike our colleagues across most of Europe, where there is no charge to access a GP, here we are looking at anything between €60 and €80. This means that the first day's sick leave pay is effectively gone because the person has had to pay it out for a doctor's certificate. This is clearly a barrier to workers accessing the scheme. Would it not be better to go for a limited self-certification period for the first couple of days not just because it would be the right thing to do in terms of not punishing workers by having them pay €60 but also because it is simply not practical to expect a worker to be able to access a GP on the same day he or she is sick?
Ms Maeve McElwee:
Regarding the reason why we are out of line with Europe, I know the issue of statutory sick pay has been reviewed over many years. This is not the first time it has come up for broader consideration. I presume that as with any of these issues around employment rights and terms and conditions that apply, all of these things get looked at. They look at the principle around our social protection system, the fact that illness benefit was always paid by the State and the fact that there are other provisions to support employees that may not necessarily be in place in other states. There are probably a very significant number of factors that give rise to that.
The Senator’s point about certification on day one is of considerable concern to us as well. Like the Senator, we recognise the challenge for people getting access on day one to certification in a non-emergency situation. Nevertheless what is really important to recognise here, particularly when we are overlaying a statutory sick pay scheme on existing company pay schemes is that most company sick pay schemes do require certification after the waiting days, which are typically three. They always require that certification to be produced on day three and do not accept backdated certificates because technically, it is very difficult for a GP to know how sick someone was three days ago so that certification always comes on day one.
It was recognised in a number of the initial consultation papers we received that management of sick pay also helps to manage absence and it was introduced as a positive consideration about the introduction of statutory sick pay, in that it would assist employers in managing absence. However, there are no provisions in this Bill to assist employers in managing absence and address concerns employers may have around the veracity of sick leave taken, how it is taken or whether there is an abuse of sick leave that is ongoing. Other pieces of protective legislation recognise that these situations do arise – not all of the time but they do arise and they do need to be managed and addressed. This is probably the only piece of management support within this legislation as it currently stands and I know employers would be very concerned to see it removed, albeit we do recognise the challenge around a medical practice being able to issue a certificate on the same day.
Dr. Laura Bambrick:
The last time the introduction of statutory sick pay was looked at was when the troika was in town. When it went through our books to look for potential cost savings - to put it diplomatically - it looked at how we provide workers with sick pay. The troika identified that we are really unusual throughout Europe in that our Social Insurance Fund picks up the cost of workers’ sick pay from day one – day one minus the waiting days. In other countries, the employer is entitled for a short period. If the illness lasts longer than that, the Social Insurance Fund then kicks in to cover it. The push-back was very similar to what we are hearing today, which is that now is not the time to introduce it and the country is going through so much that it is important to keep labour costs low. One of the recommendations of the troika was that statutory sick pay be introduced because the existing situation was placing a risk on the State because the Social Insurance Fund is not a fund. It is a cost that is taken out of the day-to-day outgoings of the State. That is the last time this was looked at. This time, we did not need the troika arriving in town. It was a global pandemic that brought us to this space.
Regarding the GP certificate, we must go back to the origins of this Bill. It concerned Covid clusters in meat factories. Employers in this sector are very wealthy with a mostly migrant workforce. How would that migrant workforce function under this Bill? The majority of them are on a minimum wage. The Bill will provide them with 70% of their daily rate. That is lower than the average cost of seeing a GP, which is €60. Seventy percent of an eight-hour day on the minimum wage is in or around €57 so already they are out of pocket by €3. They are also based in really rural communities. The chances of seeing a GP in a built-up environment such as Dublin are already difficult, so seeing a GP in a very isolated area would add further expense involving in travelling to see that GP as well as the practicalities of having GP certification on the first day. They would be the concerns of congress, which is why we recommend that a period be introduced where someone can be self-certified in order that people can have those one or two days and then on day three, have the time and knowledge to know if this is a sickness that will require a further period of recuperation.
I thank Dr. Bambrick. The meat factory workers are an excellent example of how, unless we move to a limited period of self-certification, this sick pay scheme will not work. It will leave them out of pocket, as Dr. Bambrick has said. Clearly, that is not what any of us wants to achieve through this Bill.
I have another concern that I want to raise with both parties, which is how we write the legislation. As Dr. Bambrick has said, it is going to be written in with just three days leave and the idea is that regulations will increase that. As we all know, there is no guarantee that those regulations will come into force as planned. We all know that there is likely to be a pushback whenever the next cycle of session comes around. Would we not be far better to write the schedule of days and increases into the legislation to ensure that we end up with a worthwhile scheme? While that would not put us on a par with our colleagues in Europe it would at least bring us some way towards that.
Ms Maeve McElwee:
We had expected that we would see something different and more than just regulations. On the other hand, it is reasonable that there is flexibility to adjust the days without having to fully amend the legislation on every occasion. I mean that the regulations give a little bit more flexibility rather than primary legislation.
I wish to take up a couple of points. Dr. Bambrick mentioned that we are saying keep wages low and do not bring in sick pay now. I wish to correct the record and I acknowledge that it might just have been the way I heard Dr. Bambrick. We are not saying not to bring in sick pay. We are saying that there are some really challenging issues and very significant costs for lots of employers at this particular time. Certainly, we are not talking about keeping wages low.
When we come to that issue of writing the days into the legislation, I think what we would all recognise is that once those days are in the legislation and are operated by contract with the employee they rarely, if ever, move back. It is not IBEC's normal operation to see those days move back on an across the board basis. For example, at the time of the national minimum wage changes many years ago, in response to the financial crisis, IBEC did not support that move at all. We do not expect to see that type of change would come about. We do recognise that it is important. It is covered in the Bill as it is currently stands. There are exemptions and exceptions albeit that they tend not to be particularly useful to employers individually but they are at least there for individual different circumstances. I am not sure that having it as a regulation or definitively in the primary legislation might necessarily be any different. We would not expect to see that being clawed back but it would be normal that regulations could amend legislation. Also, any increases could be looked at and maybe amended or introduced more slowly in the event of a negative economic situation at any particular point in time.
Dr. Laura Bambrick:
Similarly to IBEC, Congress would have expected to see at least ten days in primary legislation because the way we are interpreting this is that the ten days will be the floor of this statutory right. We absolutely understand the need for it to be gradually introduced but we assumed that it was taken as a given that it would never go below ten days.
Similarly, but for different reasons from Ms McElwee, we do see the benefits of regulations. I mean that if changes are to be made, it would not require the Minister having to go through the hoopla of getting primary legislation changed. I guarantee that every budget submission from now on will include a request around statutory sick pay. We will be looking at how well the economy recovers. In the same way as Ms McElwee’s members will be seeking a slow-down of the scheme’s introduction, we will be seeking for it to be brought forward.
To echo Ms McElwee, there are benefits to using regulation but our concern is that the ten-day period is not mentioned in the primary legislation. That period is an absolute floor to this right.
I thank Ms McElwee from IBEC and Dr. Bambrick from ICTU for their contributions. I noted comments from the Chartered Accountants Ireland this week to the effect that, given that it is just a few weeks away, it would be impossible for employers to implement this scheme from 1 January 2022, particularly businesses using payroll service providers, as there would not be enough time to develop or adapt software. Providers of payroll services have stated that they would need a six-month lead-in time. Will Ms McElwee advise us on whether she has similar concerns? What are her thoughts on this matter?
Ms Maeve McElwee:
I thank the Senator for his question. While I am not a payroll specialist, I know that there are considerable concerns among members about the timescale for the legislation’s introduction. There are undoubtedly any number of challenges that would arise for organisations in its implementation, how it could be managed and how employers would integrate the statutory sick pay scheme, given the complexities they already deal with in running their existing sick pay schemes. Many employers, particularly those that have grown over many years, perhaps by acquisition, do not have a single sick pay scheme. We could identify multiple schemes in a number of our larger members that have not had the opportunity to amalgamate them. There could be ten or 15 schemes still running. That poses a major challenge to trying to integrate a statutory sick pay scheme, particularly where so many questions remain. In section 9, for example, no clear understanding can be taken from the current wording as to whether an employer’s scheme can be considered better in the round or who can consider it to be better. Would one or two days’ difference in a current private scheme make it better than a scheme that the WRC adjudicated on two days earlier? The Bill provides no clarity or guidance whatsoever. For employers trying to integrate a scheme like that into their overall payroll programmes would be problematic. I can see where the body is coming from in that regard.
I thank Ms McElwee.
I appreciate the concerns that were raised by ICTU about sick leave needing to be certified. As has been outlined and as far as I am aware, the most common protocol in the private sector is that sick leave must be certified if it extends beyond two days. Would ICTU like to see limited periods of self-certified sick leave being included in the Bill? Am I correct in that?
Dr. Laura Bambrick:
There is little information on sick leave, as the officials told the committee at last week’s meeting.
The closest comparison we have is to look is how the public service sick leave scheme works. We can see that it costs about one tenth of the cost of the sick leave scheme to have those limited period of uncertified days and it would be the difference between falling ill on day one and day two and giving a worker the opportunity to see if it is something that will require a GP and an extended period of sick leave. A worker would not get those one or two days every time he or she goes on potential sick leave. It would be limited to a number of days every 12 months, as Ms McElwee suggested. A limited number of the ten days would be uncertified to allow people to see whether this was an ailment that would develop into a sickness.
I thank our guests for coming in and for their presentations. This is a big change for Ireland and we are pleased to have the opportunity to discuss this with all the actors involved because we want to get it right. Ms McElwee spoke about the sectors that have been most impacted by the Covid-19 pandemic. She might expand on that and explain what those sectors are. She also mentioned in her presentation that there are additional costs involved in the replacement of skills, with little or no notice, which are lost during a period of sick leave. Is it not the case that regardless of sick leave some employers would have to replace skills if somebody was out sick?
We need to explore the question of existing schemes being more favourable than statutory sick pay. I agree with Ms McElwee that we need to drill down into that because I do not see how people could be paid on the double. The witnesses from IBEC said they would give us more information and I would like them to give us an indication as to what sick pay schemes are out there already, how they are operated by various companies and how they work. That would help us to examine this. Ms McElwee mentioned in her presentation that 307, or 60%, of respondents came back and said that they operated sick pay schemes. Ms McElwee mentioned more than once that the bigger companies seem to be operating a sick pay scheme or maybe more than one scheme in some instances and the smaller companies will be under pressure. We are all agreed that we do not want to put pressure on SMEs to the extent that they cannot operate this. We need to find a way around that but big companies can well afford it. I have also been looking at some research, which I am not sure if IBEC has been looking at. The research maintains that paid sick leave is good for business. Rather than impacting on business, if it is done properly it can increase worker productivity, reduce the spread of contagious illnesses, keep businesses open during Covid-19, as was the case in some states in America and reduce worker turnover. There are huge positives to paid sick leave and some of the larger companies that operate such schemes probably recognise this and understand that happy workers lead to better productivity and so on. We might need to talk about that.
I have a question for Dr. Bambrick as well. I would like to further explore the issue of bogus self-employment. I was speaking with some employers recently and they maintained that were they to operate various statutory schemes like this one, they would be competitively disadvantaged by other companies that operate bogus self-employment. I would like to hear Dr. Bambrick expand on bogus self-employment because some employers I spoke with were concerned about that. The 38-week contracts are another issue we need to explore further. Dr. Bambrick mentioned that self-certified sick leave typically costs about one tenth of the total cost of public service sick pay. Where does that statistic come from? I have looked at what the HSE and others do and the HSE provides seven days of self-certified paid sick leave in a continuous two-year period. If it is self-certified then how is there a cost? Maybe I am missing something here and excuse me if I am. Dr. Bambrick also mentioned that the Social Insurance Fund should be used in some instances, which is interesting and curious, even though others have said that should not happen.
Ms Maeve McElwee:
I will take the Deputy's questions from the beginning. He asked which sectors might be most affected. We will see it in many sectors, including in our experience economy, which has been hugely impacted by Covid. The introduction of sick pay schemes there will undoubtedly create an additional burden of cost. Any businesses that do not have sick pay schemes will feel the cost but our experience economy will be hardest hit. It is also coming into its most difficult trading period early next year and there are huge challenges around the sector at that time of the year anyway and putting this on top of that provides a significant cost. There are other sectors across the board where we know that wages tend to be set at a particular rate, whether that is the national minimum wage or whether there are sectoral employment orders or joint labour committee rates in place. There will also be a requirement for us to look at how we will realign all of that so there is a significant impact across those sectors as well.
There are a couple of things to look at in the issue the Deputy raised around replacement costs and employers having to replace costs. We also have a significant challenge in respect of the availability of labour in all sectors. Not alone is it difficult to replace individuals but it is expensive to replace them. We also have considerable challenges in the negative context and climate around short-term work contracts and agency working, whereas in fact they are an important part of our workplace flexibility. The ability of employers to offer and appropriately provide statutory entitlements like sick pay, carer’s leave and parental leave relies on that flexibility. It is important that we do not perpetuate the negative narrative that these are poor employment options. They often provide a first step in the door for many individuals but it is difficult and costly to replace skills that are particularly unique. Where you might have somebody in a stand-alone role, there is an additional cost. That person will have to be replaced; otherwise the company bears the cost of either lost production or significantly reduced production over time. Employers that are not paying sick leave already bear that replacement cost or productivity loss but now they will also in many cases bear the productivity loss or cost, which is excessive in many cases, and the statutory sick pay cost as well. The more days that are introduced as we move through the system, the more costly that can become in the long term.
Looking at how sick pay schemes operate, the vast majority of members who we have surveyed tell us they have waiting days in place.
There is initially going to be a service element. Most employers do not start incorporating people into sick pay schemes until they have passed their probation, which is typically six months. After that, there will be service days and, therefore, there are waiting days where people can take a couple of days' sick leave without the requirement to be paid but also without the requirement to produce any certification for those particular days. They are still considered to be authorised leave, however. They are out sick and that is recognised.
When we look at organisations and how sick pay works, however, the Deputy is quite right. Employers see sick leave as being a benefit. They see it as an opportunity to attract people to their organisations where they can afford to put something in place. It is not just larger companies. Many smaller companies offer sick pay benefits to their employees where, again, they can afford it.
The challenge, particularly with this proposed Bill, is that in terms of offering a benefit, it often has to be managed so that it is not actually just a right, it is a benefit of one's employment and it operates to be beneficial and fairly and effectively. There is nothing that employees hate more than that sense that people are getting away with stuff where others are operating very effectively. We know that the unions support and have always supported employers on this piece. As a result, it will be critical to look at sick pay schemes and say that almost every existing sick pay scheme has a disqualification cause; a reason to say that an employer is not actually operating the scheme fairly and we are disqualifying them from it. There will be clauses within it which state that the company will review a person's sick leave if it feels that there is a pattern to it or that there is an ongoing problem with the potential to be able to restrict a person's usage of it.
There are abuse clauses, as there are in other items of statutory legislation, relating to people who it is felt are not operating it in line with the principle that it is there to support. All those things are very important clauses in the context of sick pay. Then there are other situations where organisations will run sick pay. There will be issues around whether a person will be eligible to earn a bonus, what schemes are in place and other company benefits that will be dependent on sick pay, particularly where the sick pay is going to be put on a statutory leave footing and how that will interact with other company benefits and schemes, such as, for example, those relating to attendance bonuses. Were we to suggest that a person is not deemed to be absent on a day that he or she is on statutory sick leave, how will that have an impact? There is much complexity regarding how sick leave schemes operate within the environment at present.
On the Deputy's final point to the effect that big companies can well afford it, big companies that have put in place sick pay schemes can afford the schemes they have budgeted for and are operating. If we are now layering on additional costs, that will be challenging for many organisations if we are now referring to day one and, again, the lack of clarity around section 9 as to whether it is better in the round or on the whole and how that will operate may actually increase costs. The last thing we want to do is to be seen through statutory legislation to drive a race to the bottom where employers step back and say they have actually put in place some significant benefits for employees, including sick pay but often many other benefits. If this is layered on top and represents an additional cost, employers may say they are able to afford it but are being penalised for putting more favourable policies in place because everything that comes a statute is now layered on top of it instead of being taken in the round, which I think the proposed Bill is trying to do. That really needs to be made clear because, otherwise, employers will retrench and say that if the cost is going to be added on, they have to be sure and have some certainty regarding what the cost will be. If, therefore, there are no management clauses in the legislation and no overarching ability to be able to say that an employer has something that is better overall, then employers, quite reasonably, will rely on the legislation and say that that is what they will implement.
That final point was well made. We do not want to have a situation where we have ambiguity and uncertainty with respect to schemes. That needs to be very clear. I am not sure if Dr. Bambrick wishes to come in on the question I asked with respect to the 10%. I am just curious about that.
Dr. Laura Bambrick:
I will comment quickly on the questions put forward by the Deputy; I know we are short on time. Our two big concerns for trade unions in winning the right for statutory sick pay, forgetting about the details of the proposed Bill, are what Ms McElwee talked about whereby it could lead to a displacement of existing occupational sick pay at company level, which, at ten days, actually has ended up being more generous than what is in the proposed legislation. All of a sudden, instead of the proposed legislation becoming a floor it becomes a ceiling.
The second issue we had, to which the Deputy drew attention, is whether this will incentivise more bogus self-employment because there will be an incentive for some employers to avoid the costs that will be imposed on them. That is why we made our first recommendation in respect of changing the definition in section 2 as to who is covered. That would take in many of those workers who are providing services rather than under a contract of employment.
The Deputy referred to people who are working in ECCE, also known as the free year or playgroup year. If early years professionals are working for the service providers that just provide those playgroup years, they have to sign on for the summer. They do not have continuous contracts of employment because the facility is not getting the funding through the Government scheme. Under this proposed Bill, they would have to build up their entitlement again. A person who starts back in September would not be eligible until December under this Bill.
The reason self-certified sick leave is still creating a cost in respect of the scheme is that the worker would still get paid for those pays but he or she would not be obliged to provide the employer with a GP certificate. Self-certified and uncertified days still operate the same costs to the scheme. The difference is having to provide a GP certificate for those days or not. That is where the 10% comes.
On the Social Insurance Fund, as I mentioned earlier, it is recommended - and we support this - that where an employer has shown an inability to meet the costs of the scheme, they can go to the Labour Court. To ensure that the employee is not left out of pocket, however, in the same way that we do with redundancies in the context of companies that are letting workers go but are still trading, the Social Insurance Fund picks up the cost and then the charge is imposed on the employer. Over time, the Department works with that employer to ensure that the money is paid back. This means that neither the employee, in the first instance, nor the Social Insurance Fund, in the medium to long term, are out of pocket.
I thank ICTU and IBEC for attending. As I said at the previous meeting, I am relieved and frustrated in equal measure that we are eventually having the pre-legislative scrutiny of this important proposed legislation. Enormous credit goes to ICTU and to my union, SIPTU, in terms of putting this issue very much on the map some 12 months ago. My big regret, perhaps, is that it has taken until now for us to talk about introducing this proposed legislation. Nonetheless, we are here today.
I have a number of questions. It is important for me to mention the importance of hardwiring some of the detail into the legislation, which I believe Senator Gavan, the ICTU and others also spoke about. I am very supportive of that. I will turn to IBEC first regarding the question of replacement costs and productivity losses or, as Deputy Stanton alluded to, long-term productivity gains.
I note that IBEC undertook a survey of its members with regard to sick pay arrangements within their workplaces. Was a question about the replacement cost of a person being out of work because of illness asked in that survey? It is important that we understand there is a replacement cost but we must also understand the extent of that replacement cost in any one workplace.
As a follow-up to that, has IBEC looked at research on the productivity loss from staff members being out ill? Is the loss linear? To me, the loss from a staff member being out one day is not the equivalent of his or her being out six days. It seems to me the loss would be much greater if somebody was out of work for a protracted period of time as opposed to one or two days. I know that the productivity loss is a concern to IBEC. What research has it looked at to quantify the scale of the loss within workplaces?
Ms Maeve McElwee:
I think that question was for me. We did not specifically ask member companies in that particular survey to try to quantify the productivity loss because we understood that a different number would have come back from every respondent. The scale of productivity loss would depend on the role each company was trying to replace and the specific skill set involved. It also might depend on the area of the country the company is in. What we know is that depending on that skill set and depending on the availability of labour, it can be a very different cost and a difficult challenge for many employers. That is the case now. It was also the case before the pandemic and it remains the case since the loosening of some restrictions. The availability of talent continues to be the number one concern for employers. The absence of people within that talent pipeline in the organisation does matter.
The Senator asked whether a longer, more protracted absence is more difficult and costly to manage. In actual fact, many employers find that short-term absences are much more disruptive because staff members are much harder to replace. If we know somebody is going to be unwell and out of work for a longer period of time, it is easier to make sure a replacement is in place. It is easier to plan and manage if somebody is likely to be out for six days, ten days or whatever it might be than it is if somebody is out for multiple, very short periods, which tend not to come with a great deal of notice. There is a cost associated with bringing in somebody from an agency, moving somebody within the business or just doing without and addressing the productivity loss. It is different depending on the role but short-term absences are much more disruptive for organisations.
At the start of her submission to the committee, Ms McElwee indicated that IBEC intends to provide the Department with a more detailed submission setting out the views of its members. I would like to understand a little more about the timing of that. I am conscious that there was a quick turnaround between the invitation to appear before the committee and our guests' appearance. I appreciate there are many calls on their time. However, this has been the subject of many discussions at the Labour Employer Economic Forum, LEEF, over many months. When does IBEC propose to make that submission to the Department? Some of us believe there is an urgency with regard to progressing the Bill. Is IBEC going to produce the submission quickly or is this going to delay the overall passing or progressing of this Bill through the Houses of the Oireachtas?
Ms Maeve McElwee:
Our intention is not to try to delay the legislation unnecessarily. Looking at the Bill as it is currently drafted and given the lack of clarity we have, we feel a lot of information is missing. As I have already outlined, there are a number of clauses, including anti-abuse clauses and companies' ability to be able to manage this system appropriately, as one would expect any organisation to manage an absence policy, in which there is a lack of clarity. The definitions within sections 8 and 9 are very unclear. We are expecting that as the Bill moves forward, we will see more clarity around its drafting. We hope that as a result of our interventions at the committee today, some of the concerns we have around the lack of clarity in the legislation will be reflected as the Bill progresses and it will be amended and updated to address some of those concerns.
I have listened to the points Dr. Bambrick has raised this morning about, for example, the definitions within the initial sections. We have a different sense and a different feeling around the whole issue of who is going to be captured by it. We have had some discussion around bogus self-employment and who would be captured. The real concern for employers is that we do not have a definition of "worker" in Irish legislation. One is either an employee or is not an employee. We have plenty of case law and legislation that allows us to determine who is an employee and who is not. We have adequate and ample mechanisms, in our view, for how that gets done. The challenge with legislation like this is that if we have people who are not in a traditional employment contract, that opens up a whole question as to how an employer would understand to whom they have responsibilities. How would the employer apply existing sick pay schemes to somebody who is not on an existing contract of employment, as we understand it? How are we going to deal with people who have multiple part-time roles, that is, people who are not just in the employment of one employer? What happens when a worker's illness might arise from an injury or occupational illness suffered while working for one employer? How are we going to manage such a situation, even for payroll or reporting purposes, and determine who is paying that sick leave and how it will be structured? We have no clarity at all around how part-time sick pay is going to be managed, accrued or calculated. To answer the Senator's question, there is still a major absence of information that will require remedy before we think this Bill is ready to be enacted. However, we do not intent to delay it. We will continue to bring forward all of the concerns, as we have been doing, to try to make sure we have the best and most appropriate legislation when it passes.
I will be brief and will come back in during the second round of questioning, when I will ask questions of the congress. I want to finish with IBEC. I will turn to the issue of financial sustainability, which is, of course, something we must look at. Ms McElwee said in her opening statement that it would be financially unsustainable for a worker to take three days' sick leave at the end of December and three days' sick leave in the new calendar year. How is that different from a person taking three days' sick leave because he or she falls ill in September, that person having taken another three days' leave in July? I ask that mindful of Ms McElwee's previous comments about six days' absence being easier to plan for compared with a day here and a day there. I want to understand more about what makes the last week of December and the first week of January less financially sustainable, relative to taking sick pay at other times of the year. I apologise if the answer is obvious but I think it would be useful to clarify the point.
Ms Maeve McElwee:
I will be brief in my reply. From our perspective, I am probably looking at particular sectors that were impacted here. There are two issues. One is the fact that most sick leave schemes, as they currently operate, are on a rolling basis. This entitlement arises every year from January to December but it rolls, depending on when sick leave might have been first activated within the rolling period. The calendar period presents a unique challenge for many sectors, particularly those in our experience economy and those in retail because many of them have extraordinarily busy times. During those times, those employers would not offer annual leave on a regular basis. Taking retail as an example, that would be true as we come into the Christmas trading period and the new year's sales period. It is often a challenge for other employees when people are absent or not around. Three or four days' absence is disruptive during that period. If sick pay is available for ten days, somebody could potentially disappear for ten days before Christmas and another ten days during the January sales period.
We were looking at it in the context of the experience economy element across entertainment, hospitality, retail, restaurants and bars, with all those sectors hitting that critically important trading period in December and January. All these things wrap back up. That covers the issues of the rolling 12 months and the absence of any management clauses within this proposed legislation that all lead to it being problematic.
I thank Ms McElwee for her response. Senator Sherlock’s time is up. That concludes the first round of questions. Does anyone want to indicate and start the second round of questions? Senator Ahearn has indicated. The Senator will have seven minutes.
I probably will not need all that time. I thank Ms McElwee and Dr. Bambrick for their contributions and for their work on this matter. The draft legislation is important and welcome. As previous speakers said, it is about time we discussed it and tried to get it put in place.
To pick up on Ms McElwee's response to Senator Sherlock, I do not think anyone is trying to delay legislation coming through the Houses. This is about working together to make sure it is right. The intentions on both sides is to make sure this is done correctly. Ms McElwee expressed concerns about the draft legislation and ensuring it is right. She gave the example of a person who has two jobs who gets injured in one job and how would that would affect his or her other job. All the examples she gave would have happened in other countries when sick pay was introduced. How did they manage? Has IBEC researched how it has been managed in other countries in the context of the various concerns Ms McElwee raised? Are there good examples of how other countries managed in that regard?
This is a question for Dr. Bambrick and Ms McElwee regarding medical certificates. One of the main concerns about getting a doctor’s certificate is the cost for the employee. Almost 50% of people either have a medical card or a GP visit card. It would not be 50% because many retired people would have medical cards. Has any research been done on the percentage of employees who hold a medical card or a GP card? I know from my constituency office that many people who are entitled to a GP card are not aware of that. Perhaps we need to get that message out. It certainly protects the lowest paid. When we talk about the cost of paying a GP for a medical certificate in respect of sick pay being a significant barrier, I would be interested to know the percentage of employees who hold a GP card or a medical card. If it is 50%, which is the highest it would have ever been in the history of the State, common sense dictates that we have probably the highest percentage of employees who have ever held a medical card or a GP card. That goes some way to supporting employees. I would interested to hear our guests’ comments on that.
Dr. Laura Bambrick:
I can respond on those figures. As the Senator said, we have good coverage of the population as a whole with respect to medical cards and GP cards. The officials mentioned the working-age population in this context last week. Many people in that cohort are outside the workforce. I refer to those with disabilities and many lone parents. If one’s youngest child is under the age of eight, one is not required to be looking for work and one is therefore not counted as part of the labour force. The Department of Health conducts a Healthy Ireland survey every two or three years of a sample of 7,500 people. It is representative, which means it is similar to the Red C poll one would read about on a Sunday. It is a snapshot of the population. We can note from it that one in seven people who are actively working, being either self-employed or employees, has a medical card and one in 27 has a GP card. When we narrow it down and examine the people not only of working age but who are in employment or self-employed, it is very narrow and the reason for that is the income is based on the household, not on what the individual earns. We know from research on minimum wage workers that many of them do not live in low-income households because they are either living with their parents, who have their own income, or they are living with a spouse, and the minimum wage earner is a second earner who might have a part-time entry job. We have very few people who are in work who have the cost of going to a GP covered. One in seven of them has a full medical card and one in 27 has a GP card. Many people of working age have a medical card but very few of them who are actively working today will have the €60 cost of a GP visit to get medical certificate covered.
Dr. Laura Bambrick:
It think it is done every two years. I will check that. There may have been a time lag in doing one. The figures I quoted are from 2019, when those data were collected. There may have been a delay because of Covid-19 because of the way those data are collected. Unlike the financial crash, during Covid-19 we have not seen a big increase in the number of applicants for medical and GP cards. That is to do with how comparatively generous our Covid income supports were. Even if one was in receipt of a pandemic unemployment payment, one was still not eligible because that €250 level would have pushed one over the income allowance even if one was not in a low income household or was living with other people.
Has Dr. Bambrick got the results from previous years to check the number of people per ratio? She said one in seven people has a medical card and one in 27 has a GP card, which seems very low for GP cards when it should be easier to get that card. What were the figures going back two, four or ten years? I do not have the figures but it seems obvious that if we are issuing more medical and GP cards to the nation, more employees will have them. I understand that someone's GP card or medical card takes account of the household income. There is an obvious reason for that. Dr. Bambrick gave the example of a person who might be living with a parent. People who live with their parents often might not pay rent and their expenditure would be less. Has the number of employees with a GP card or medical card increased during the past ten or 20 years?
Dr. Laura Bambrick:
I cannot answer about employees. The extension of coverage with respect to medical cards has tended to be include the very youngest and the eldest, the over-70s. GPs cards were introduced for people with both a State pension and an occupational pension. GP cards were also introduced for under eights and moving on to the under-12s. A single person living on his or her own with an income over €184, is not eligible for a medical card. If one is on the minimum wage and one works more than 17 hours, one is not entitled to a medical card. If one earns more than €304, one is not eligible for a GP card. If one works 28 hours, long part-time hours, one is not eligible for a GP card. Hands off, we have been very good at expanding coverage but the coverage is not hitting the working population.
A big working age population is included in it but those people are outside the labour market. We hear conversations about work disincentives, such as the fear of losing a medical card because that is a gateway into many other services such as the back to school allowance, transport and so on. People are reluctant to take on work because of that expense. To drive home that point, it is not necessary to earn a great deal of money not to have primary healthcare covered in this country.
I have an additional question for Ms McElwee. She said in her submission that additional costs are involved in the replacement of skills with little or no notice which are lost during a period of sick leave. If a person is sick, he or she will not be able to go to work regardless of whether we have schemes in place or not and that will have to be replaced anyway. Can Ms McElwee tease out what she means by that particular statement? If a person is sick surely we should not encourage him or her to go to work?
Ms Maeve McElwee:
If somebody is sick and really needs not to be at work then of course he or she should be on leave. When we talk about the costs for employers of replacing somebody, particularly for short periods of time, we are not talking about serious illness here, there are challenges. It depends on whether somebody can be moved from another area, or there may be a skills training issue. Generally there is some loss of productivity and cost to the business as a result. There is a management cost of moving people around, potentially a replacement cost or an agency cost if someone is brought in externally. There is also an administration cost of addressing and person-managing the salary, engaging with the agency, paying it and so on.
Perhaps I am missing this completely but if somebody is actually sick, he or she will not be there and all that moving around and replacement will have to happen anyway. Whether or not we introduce a sick scheme of any sort, if a person is sick he or she cannot go to work and should not be there. Am I right in saying that introducing this particular scheme should not have an impact in additional costs involved in replacing skills? If people are sick, they should not be at work. If they have to go to work their productivity will probably drop, they will probably be quite upset and also may infect other workers. I just do not get that. If someone is sick, he or she is sick and needs to be out and that is that.
Ms Maeve McElwee:
What we are recognising now is that on top of all the other costs facing employers at the moment, if employers are not already paying a sick pay scheme, paying for sick pay is now an additional cost for those employers on top of the other management costs of managing the absence. What we are trying to reflect and recognise here, particularly where it is important that we see this brought in on a phased basis, is a recognition for employers that it will be a significant additional cost because they would not ordinarily be paying the second salary if they do not already have a sick pay scheme in place.
If a person is out sick and is not being paid, the employer will have to replace him or her, regardless of sick pay. Okay. The other question is, with respect to the current sick pay schemes in operation by the companies Ms McElwee cited earlier, are there any reports of abuse of those schemes? Would that be a concern? Would Ms McElwee give us an indication of what that is? I have looked at some of the international research here which indicates that when good relationships prevail between workers and employers that abuse does not happen. In some instances in America these schemes have been expanded because it was found that productivity went up.
Regarding the other point Ms McElwee mentioned in regard to competition for workers, would some employers use the presence of a sick pay scheme as an extra way of attracting workers to their companies?
Ms Maeve McElwee:
I wholeheartedly agree with the Deputy that sick pay schemes are a benefit and an attractive feature in many organisations. I would also say that there can be increased productivity where there is good management of those schemes and where there are good relationships, but I would also tell the Deputy that the bread and butter of the IBEC executive's role is often dealing with the day-to-day issues that arise around absence and absence management. Without a doubt we regularly have issues and concerns that arise around ongoing sporadic absences. They may be around managing issues where perhaps somebody has an underlying concern but often they can be linked to other issues. It is an ongoing matter for employers to deal with. It is important that they deal with it fairly and have a process for dealing with it but there is no doubt these are the daily questions that come through around managing that sporadic absence. Questions arise on how to implement the company's sick pay scheme if people are not providing medical certificates, if employees are always missing on a Monday or if somebody is routinely gone after a bank holiday weekend? HR departments are occupied with such issues on an ongoing basis and that is one reason we say it is so important that there is governance, because the management of those schemes appropriately and fairly within a process is what makes them work. It is what makes them attractive and makes other employees feel that everybody is being treated the same way. Everybody knows when somebody is abusing a sick pay scheme. When employers do not deal with it it becomes a really significant industrial relations problem. That is why schemes can be seen as a benefit. Where they are well managed they address those issues. Where people are not operating in good faith they can be managed within the provision of the scheme.
I thank Ms McElwee. She might come back to us later and let us know if they have carried out any research with respect to abuse. I ask Ms Bambrick, in light of what Ms McElwee said, to outline the position of the trade union movement with regard to abuse of schemes. If a person in a company is abusing a scheme and we do not know to what extent that might be, that other workers actually have to pick up the slack and might feel discommoded which may lead to people being disgruntled which is understandable. Would Ms Bambrick comment on that please?
Dr. Laura Bambrick:
I will qualify my answer by saying I am not involved in industrial relations and unfortunately my colleague who would be better able to answer this, is dealing with the State pension at the moment. As Ms McElwee mentioned earlier, trade unions are very supportive when there is genuine abuse happening because these have to date been voluntary arrangements by the employer and so we wanted to see these schemes work both for good worker-employer relations but also to protect the sustainability of the scheme. I will also point to other international research. The findings are somewhat paradoxical. They show that the more generous a sick pay scheme is, the fewer waiting days, the higher the replacement rate cost, the easier it is to access it with those uncertified days, and the less absenteeism we see. It sounds contradictory, that if one gives people easier access to paid days off, the expectation might be that they might abuse it and take the time. What the research finds when it digs down is that it allows people to take days off when they have a minor ailment and it stops the condition festering into something more serious that a longer spell of absenteeism is needed to recuperate. This is what we have seen during the outbreaks of Covid-19. People had minor coughs and colds, were not sure if it was Covid-19 and took the gamble to go to work because they did not have the safeguard of a sick pay scheme, and within that time whole companies had to be shut down. Real research exists which says that a generous scheme can be more beneficial and less costly than being very tight about who can access it and the terms under which they can access it.
I thank the Chair.
I direct my questions to Dr. Bambrick of the Irish Congress of Trade Unions, ICTU, this time. I was glad the interaction between Senator Ahearn and Dr. Bambrick on clarifying who is entitled to a medical card and GP card took place. It was really useful. Officials from the Department of Enterprise, Trade and Employment made a number of comments two weeks ago that were not reflective of the reality on the ground with regard to the working age population and their entitlement to medical cards. I thank Dr. Bambrick for providing the detail on who does and does not qualify and on the number who have an entitlement or have qualified for the GP card.
In her submission, Dr. Bambrick mades a number of very important points on who the legislation would apply to in terms of the definition or the relevant benchmark legislation. The definition of "employee" and the comments on self-certification were very important points. I ask about the minimum service period because she raised that concern as well. There are certainly those who have a break in their employment in a particular year. When the Labour Party put forward its Bill on sick pay last September, there was a provision for a four-week minimum service period. Dr. Bambrick made the point that effectively a period of 13 weeks is too long. What does congress propose the minimum service period should be? What is it recommending?
Dr. Laura Bambrick:
I apologise to Senator Ahearn if I used up all of his time in answering the detail about the difference between the working age population and workers within that population. However, I hope it helped the him in his deliberations.
When we talk about the minimum service, we absolutely acknowledge the need to establish a relationship between the employer and the worker. We accept that is a principle that is already established in other legislation. Our concern around this is the wording of continuous service. That is where it causes difficulties. Our colleagues in SIPTU, who represent the early years, drew our attention to the thousands - we are not talking about a niche group here - of workers in the early years whose employment does not exist for 52 weeks of the year. Under this existing draft legislation, they would start off again as a new entrant employee even though they have established that relationship with that employer. They would have to build it up from 1 September, not coming into qualification until December, if the 13 weeks are accepted.
Where we lie on what the appropriate minimum of service is, we wanted to emphasise that we identified the difference between what was said in the draft that was published in June that suggested six months and what is proposed now. We came out strongly against that initially, saying it was too long and it would lead to some employers letting people go before they built up their entitlement. We are glad to see it has been reduced down to 13 weeks. We want to put it on the record of this committee that it was not an oversight. We think less time is better and we are not at this stage looking for it to be narrowed down again. Our emphasis, though, is on that wording on the continuous period of employment.
Another very important point was made. A discussion took place earlier on the 70% replacement rate. Of course, for a minimum wage worker working a full day at €56 per day of gross income, one day's wages is not even sufficient to pay for a GP visit. Of course, there is a need to have a floor or certainly a minimum guaranteed entitlement. Dr. Bambrick talked about the importance of consulting with the social partners and certainly from a Labour Party perspective we would very much echo and support that. She talked about the need to consult with the social partners and to report back to the Oireachtas. Should those details be delegated by way of that consultation and then regulation by the Minister or be hard wired into the legislation?
Dr. Laura Bambrick:
Our preference is that the legislation would have a requirement for the Minister to consult with the social partners on an annual basis about things. Ms McElwee highlighted much of the potential around how this Bill will interact over at least the next four years as it is gradually introduced. It will be important to look ahead. Hopefully, we are pre-empting much of this now. Once this gets out into the field, many things will arise and it will be important there is an opportunity in this regard, rather than us of each separately having to lobby the Minister to say that something is an issue. For example, we might find that some workers will be worse off than they would have been if they had got the illness benefit after day four. We want to make sure that there are no unintended consequences. It is not the intention of congress to see employers who moved early and established good company policies being in any way penalised by this legislation. That would be a big concern. Equally, bogus self-employment, which was mentioned earlier, would be a concern.
For some people the 70% replacement rate will be a disappointment. However, we are comparing it to the replacement rates in European countries that have had those schemes in place for decades, and some for centuries. The schemes we are looking at today did not exist from day one. The really important part of this legislation is it is putting in place the principle that employers are responsible for their workers for a fixed period of time if a worker is too sick to work. We can look at tinkering around the edges and hopefully improving the scheme in terms of replacement rates, the timing and the certified and non-certified days as it progresses. We think it is important, especially in the four years as the scheme is rolled out, that there is a commitment that the social partners will be listened to and our opinions taken into account, even if it is done through this committee.
Senator Sherlock, your time is up.
That concludes round two and our consideration of the matter today. I thank the representatives of IBEC and ICTU for coming in. I really appreciate it and appreciate their assisting the committee in its consideration of the matter. I thank both organisations very much.
That concludes the committee's business in public session for today. I propose the committee goes into private session to consider other business. Is that agreed? Agreed.