knowledge | 1 April 2020 |

COVID-19: Employer’s Obligations to Pay

We have set out below a number of scenarios and some practical guidelines for employers in relation to the payment of their employees during the current public health crisis.

As matters rapidly progress, employers should remain aware of their obligations regarding paying employees. We have set out below a number of scenarios and some practical guidelines for employers.

Where an employee has been diagnosed with Covid-19:

  • No statutory entitlement to be paid by an employer during a period of sick leave.
  • Normal company sick pay policy (whether paid or unpaid) applies.
  • Employee can claim the enhanced statutory Illness Benefit from the first day of absence.
  • However, the Department of Employment Affairs and Social Protection has urged all employers to support national public health objectives by continuing to pay employees who cannot attend work due to Covid-19 illness the difference between the enhanced Illness Benefit rate and their normal wages. Where employers are in financial difficulty, the Temporary Wage Subsidy Scheme may apply (see below).

Where an employee is medically-certified self-isolating:

  • If in good health, employees can work from home where possible and if working they should be paid as normal.
  • If unwell or unable to work from home:
    • no statutory entitlement to be paid by an employer during a period of sick leave
    • normal company sick pay policy (whether paid or unpaid) applies
    • employee can claim the enhanced statutory Illness Benefit from the first day of absence.
  • However, the Department of Employment Affairs and Social Protection has urged all employers to support national public health objectives by continuing to pay employees who cannot attend work due to self-isolation the difference between the enhanced Illness Benefit rate and their normal wages. Where employers are in financial difficulty, the Temporary Wage Subsidy Scheme may apply (see below).

Where a workplace is closed but employees can work from home:

  • Where business is as usual, albeit with staff remaining at home in line with the Government’s direction, employees who can work from home should be paid in the normal manner. Where employers are in financial difficulty the Temporary Wage Subsidy Scheme may apply (see below).
  • We have a briefing on practical steps for remote working which is available here.

Where a workplace is closed but employees cannot work from home:

While some employers may continue to pay employees in full, many employers may not be able to do so. Employers may consider the following options:

  • Temporary Wage Subsidy Scheme
    • A Temporary Wage Subsidy Scheme has been established and applies in scenarios where employers whose businesses have been adversely affected by Covid-19 are unable to pay normal wages to employees. 
      We have a briefing, which sets out further information on the Temporary Wage Subsidy Scheme and amendments to the Redundancy Payments Act 1967, which is available here.
  • Lay-off or short time
    • Lay-off occurs where an employee’s employment ceases by reason of the employer being unable to provide the work for which the employee was engaged. Short time occurs where there is a reduction in the amount of work available, resulting in a reduction of weekly earnings to less than half the normal weekly earnings or the reduction of weekly hours to less than half the normal weekly hours. 
      Employers must comply with the provisions set down in the Redundancy Payments Act 1967 in respect of short-time or lay-off.
  • Payment during lay-off
    • If there is a provision in a contract providing for lay-off and it details whether it is paid or unpaid, the provisions of the clause should be followed. If a lay-off clause is silent on the question of payment during lay-off, there is no right to pay during this time.
      Where the contract makes no provision for lay-off, the employer must then look to custom and practice and where there is an established custom and practice in an industry of lay-off without pay then this can be relied upon.
      Where there is no established practice in the industry and the contract does not address the point, the position is less clear but there is support for the proposition that the custom and practice generally in Ireland is such that lay off is without pay.  However the authorities in this respect are not definitive and each case must be judged on its own particular facts. Special consideration is required when drafting a notice to employee putting them on lay off to ensure statutory compliance and advice should be sought in this regard.
      Employees who are laid off temporarily, without pay, due to a reduction in business activity, can apply for a COVID-19 Pandemic Unemployment Payment. This new payment quickly delivers income support to the unemployed for a 12-week period.
  • Payment during short-time
    • Employees should be paid for whatever hours are worked during a period of short-time. They may apply for a Short Time Work Support payment, a form of Jobseeker’s Benefit, if working three days per week or less, having previously been employed on a full time basis.
  • Parental leave, paternity leave, parent’s leave or carer’s leave
    • Depending on the employee’s individual circumstances and what type of leave is appropriate and applicable to them, employees may wish to avail of parental leave, paternity leave, parent’s leave or carer’s leave. While all are unpaid by the employer and parental leave does not qualify for state benefit, the other types of leave qualify for state benefit once the qualifying conditions are satisfied.  
  • Annual Leave
    • An employee may agree with their employer to use accrued paid annual leave during this period.
  • COVID-19 Pandemic Unemployment Payment
    • A new social welfare benefit, the Covid-19 Pandemic Unemployment Payment has been introduced.  The payment amounting to €350 per week is available to both employees and self-employed individuals who have lost employment due to the COVID-19 pandemic and will be in place for the duration of the crisis.

How can we help?

The Employment, Pensions and Incentives Group at McCann FitzGerald can assist organisations in developing its response strategy, drafting communications and policies and advising on specific risk situations arising.

This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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