Six recent and upcoming changes to Irish payroll legislation

The past 12 months have seen the Irish government negotiate its way through the difficult challenges presented by the coronavirus pandemic, and introduce multiple schemes and provisions, such as the Employment Wage Subsidy Scheme, Pandemic Unemployment Payment (PUP), and more, to help support employers during times of financial stress and workforce disruption. 

And now, as we pass a whole year since the COVID-19 crisis started, further legislative updates have been announced that employers in Ireland must understand to be prepared for the year ahead. 

Here are six important recent and upcoming changes to Irish payroll law.

Introduction of Statutory Sick Pay 

Currently, Ireland doesn’t operate a Statutory Sick Pay (SSP) scheme. This lack of sickness support for employees was highlighted significantly as a result of the ongoing pandemic, with only 44% of employers providing any form of paid sick leave at present.  

Employees can claim an Illness Benefit provided by the government, however, there’s currently no legal requirement for businesses to contribute sick pay to their employees. In fact, the Republic of Ireland is one of only three EU member states not to have an SSP scheme in place. 

That said, it’ll come as a great relief to many employees that a new Sick and Parental Leave scheme is set to be enacted sometime this Summer, ready to commence in early 2022. Under the new scheme, once an employee has four weeks’ service with their employer, they’ll be entitled to sick pay paid at their normal weekly rate of pay. This can be paid from their first day of sickness for a continuous period of six weeks, or up to 30 days in any 12-month period.  

Extension of the Employment Wage Subsidy Scheme (EWSS) 

The Employment Wage Subsidy Scheme (EWSS) first came into effect on 1^st September 2020. Since then, over 45,900 employers have benefited from the flat-rate subsidy provided by the scheme, with €1.8 billion in subsidies having been disbursed to 505,600 employees. It’s clear how much of a lifeline the EWSS truly is for many individuals. 

And although the scheme was originally due to end on 31^st March 2021, at the end of February, an extension until 30th June 2021 was announced. During this time, the existing subsidy rates paid to employers will continue. In addition, it’s expected that the government will continue to support employers after this date – but unfortunately, we don’t yet know what form this support will take. 

Change in waiting days for Illness Benefit payments 

When applying for Illness Benefit, you must first go through a period of waiting days before receiving payment. And from 1^st March 2021, this period was permanently changed from six days to just three. This means that Illness Benefit payments now commence on an employee’s fourth day of sickness absence, as opposed to the seventh.  

The enhanced Illness Benefit of €350 per week for those diagnosed with COVID-19 will remain in place until 30^th June 2021 and is not affected by the change in waiting days for the standard Illness Benefit. 

Introduction of EHECS supplementary returns 

Most employers across the Republic of Ireland should be familiar with the Earnings, Hours, and Employment Costs Survey (EHECS) required by the Central Statistics Office (CSO) on a quarterly basis.  

From 28^th February 2021, the CSO are accepting supplementary EHECS returns for large organisations who may be sourcing their data from more than one payroll or HR provider – if the processing of payroll for executive members is completed on a separate system to the rest of the company’s payroll, for example. 

To put it simply, an employer will now be able to file an original return, and then if required, can also file a supplementary return. Plus, specific indicators will be instated within payroll software to enable supplementary runs to be flagged as such. 

Cessation of Public Sector Pension Reduction 

Since January 2011, Public Service Pension Reduction (PSPR) has been in place to help stabilise the public finances. The percentages of these statutory pension deductions have been reviewed and changed three times over the last 10 years but, in January 2016, the unwinding of PSPR commenced. 

In December 2020 it was confirmed that from 1^st July 2021, Public Service Pension Reduction will cease to apply to any public service pensions. This is a massive change that will affect a high proportion of the public sector, with approximately 4,000 current retirees due to be impacted. 

Introduction of the auto-enrolment pension system  

This last piece of legislation isn’t due to commence this year but is worth having on your radar. Back in November 2019, the Irish government published key elements of its new auto-enrolment defined contribution (DC) pension savings system, due to come into effect in 2022. Unfortunately, with the major disruption caused by COVID-19, it’s likely it’ll be pushed back a year and will instead commence in 2023. 

A few key elements of the proposed system include: 

• Automatic enrolment will apply to those in employment between 23 and 60, earning at least €20,000 per annum, and not in an equivalent employer’s scheme. 
• Opt-in option for employees under 23 or over 60 or earning under €20,000 per annum. 
• Contributions will be compulsory for the first six months of membership, followed by a two-month opt-out period, and some limited savings suspension periods. 
• Employers must make a matching, tax-deductible contribution at a specified rate, with a qualifying earnings limit of €75,000. 

To find out how our market-leading payroll software and trusted managed payroll services can support your operations through these legislative changes, contact us today.