An Oireachtas committee is set to recommend that businesses that cannot afford sick pay should be exempted from plans to introduce financial compensation for employees who cannot work after employers' group Ibec warned that employers will face additional costs.

The Oireachtas Committee on Enterprise, Trade and Employment will say in a report published on February9 that businesses that demonstrate to the Labour Court that they cannot make payments should be excused from offering sick pay.

Instead, staff should be compensated by the state's Social Insurance Fund, the committee will recommend after heeding concern about further burdening small and medium-sized businesses that have been hit hard by the pandemic.

Ibec told the committee during pre-legislative hearings that firms will face additional costs from replacing staff who are off sick, and that many will, in practice, have to operate the new statutory system alongside their existing occupational schemes.

Reports suggest that a draft of the committee's report outlines an exemption for companies that are unable to provide sick pay that is based on a similar provision in the National Minimum Wage Act.

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The government had envisioned a scheme whereby all employees would receive a minimum level of compensation if they cannot work, targeted at low-paid workers who currently receive no sick pay or are not entitled to illness benefits.

The legislation would act as a floor to the benefits while allowing more generous sick pay schemes to remain in place.

The government plans to introduce the statutory sick pay scheme over a four-year period, starting with an entitlement of three days per year in 2022, rising to five days in 2023, then seven days in 2024, rising to 10 days per year in 2025. Employees would be paid 70% of their daily wage or a maximum of €110.

Other recommendations include a minimum rate of sick pay, a rebate for employees to cover the cost of obtaining a medical certificate, and measures to prevent employers from putting staff on rolling three-month contracts to avoid sick pay obligations.

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