Matt Shanahan warns sick pay could hit micro businesses
Matt Shanahan spoke on 18 May 2022 about the statutory sick pay scheme, welcoming its introduction but warning it could place a heavy burden on micro and small businesses. He opposed proposals for immediate 10 days' sick leave for micro enterprises and called for a six- to twelve-month review of the scheme.
Main points of the speech
Matt Shanahan welcomed the implementation of a statutory sick pay scheme while arguing that discernment is required according to employer size. He told the Tanaiste that measures seeking immediate ten days' leave are wholly inappropriate for micro enterprises and said the government should consider targeted amendments.
Impact on micro and small businesses
He highlighted practical costs for small employers when a single staff member is absent - for example a delivery company needing a short-notice substitute. He warned that substitution costs plus the capped payment of 70% of wages would be substantial for micros and small businesses, and that escalating entitlement levels would increase the burden.
Call for review and amendments
Shanahan recalled an undertaking from the minister in committee to examine the issue and said an amendment might be tabled to protect micro enterprises. He asked for a review process after six to twelve months to assess how the scheme is felt by SMEs and to consider adjustments.
Context on business viability
He emphasised wider headwinds for small and micro firms in creating margin and remaining commercially viable, noting recent work with Walford Leo on new applications as evidence of start-up difficulty. He warned that the SME community employs close to a million people and urged policymakers to protect employers and jobs.
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The Honourable Chair, Tanaiste, I, like many others, and yourself included, welcome the implementation of a statutory sick pay scheme, but I said at committee that there is an issue of discernment here, and discernment is in terms of the scale of the size of the employers, and what some of the amendments are speaking to here tonight, looking for 10 days immediate sick leave, is wholly inappropriate for micro enterprises, and I think that needs to be said first and foremost, and the second issue for small businesses is that you have a small amount of staff, and if you lose one of your staff members to sickness that day, if you want to carry on your business, let's say you're a delivery company, and you need a delivery driver, how are you supposed to operate that day without bringing in an additional work person to substitute, so you need that substitute, you're going to have to pay for it, if you get them a short notice, I can tell you, you'll pay pretty handsomely for their day service to cover that, and there's no support within this scheme for micro enterprises in that situation, we all understand that a company that implies a couple of hundred people, if one person is out on a statutory sick pay scheme, that the company can cover them, and as we know, most companies already have that in place, but I think when the Minister was in committee with us, he did give an undertaking of sorts, that this was something that he would have a look at, and that potentially an amendment might be tabled to that effect, and that's what I'd be asking for, Tanaiste, in terms of this, I think that we all agree that a sick pay scheme is right, we all agree that we want to bring ourselves up to European norms, although I would point out that the headwinds that are to business in this country are not the same as they are in Europe, and they're similar, but they're not the same, the headwinds to small and micro enterprise in this country at the moment, in terms of trying to create margin, in terms of trying to remain viable and profitable, are very, very difficult, and even though people might say, look, it's only 70% of the pay, and it's capped a small business, and small news agents, and you're paying for that, plus you're paying for the substitution of a worker, that's not small money, and if that's to be done over a number of employees, over, and we go from, whatever it is, from three to five to seven to ten, that would become a pretty onerous cost, and maybe I'd ask you, Tanaiste, to look at some kind of a review process of this scheme, after the first six to twelve months, to see how it is being felt by small to medium enterprises, so I think a number of the amendments that are being tabled here tonight, particularly in terms of immediate ten days, that's just totally unacceptable, from my point of view, to small employers, and by the way, people might say, you know, private employers are getting out like bandits, they certainly are not. Secondly, it is very difficult, and it's becoming even more difficult now, to start a viable business in this country. I was with Walford Leo the other day, and we were looking at new applications, in terms of applications to Leo, it is very, very difficult. A lot of businesses that unfortunately are probably not going to be viable over the long term. People have great ideas when you actually try to put them into practice and make a commercial business out of them. It is extremely difficult and people need to remember in this country the SME community employs close to a million people here and if we do not look after these businesses there will be no employment and therefore you will not have to worry about sick days because there will be no employment and there will be no employers to pay for it. So it is a welcome and tarnished but I think some of the amendments being tabled here tonight are wholly inappropriate and I would ask that you would take cognizance of the SME communities, the micros in particular, and I would ask that you would put some review process in place to see how the scheme is operating after six months.
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