Thursday, 22 March 2012
Finance Bill 2012 (Certified Money Bill): Committee and Remaining Stages
Michael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
I will read out the briefing note first and then we can talk about it. Illness benefit and occupational injury benefit are taxable by virtue of section 126 of the Taxes Consolidation Act 1997. However, the first 36 days, in practice the first six weeks of the payment, in a tax year are disregarded for tax purposes. Under certain employer and employee arrangements, an employee may remain on full salary while on sick leave. However, such an employee may at the same time also be in receipt of illness benefit or occupational injury benefit from the Department of Social Protection. In some instances, the receipt of full salary from the employer is conditional on the employee paying his or her illness benefit or occupational injury benefit from the Department of Social Protection to his or her employer. While an employee continues to be paid in full by his or her employer while on sick leave and at the same time also continues to be in receipt of illness benefit or occupational injury benefit from the Department of Social Protection, such an employee is generally better off while on sick leave than while working, even where he or she hands over the illness benefit or occupational injury benefit to his or her employer. Such a situation may reward the taking of illness leave and, in addition, has the capacity to increase expenditure on social welfare payments over and above what it should be.
The motivation for this change was not to collect extra revenue, but to do something about the widespread absenteeism that prevails in our society, particularly absenteeism in the public service. This is noticeable in rural Ireland more than in urban Ireland, although that is not to say there is not a similar problem in urban Ireland. However, it is more noticeable in rural areas. It is the practice now for young people to do quite long commutes. If we take a situation where a person takes the full sick leave allowance allowed under the terms of employment, taking six weeks in the year intermittently, the person gets paid illness benefit and gets full salary. On top of that, the person does not pay for the 30 mile or 40 mile journey to work. This is a serious problem that fuels absenteeism. Statistics across the public service demonstrate that absentee levels are much higher than in the private sector. This is one of the reasons for that.