Statutory sick pay in Ireland has been a source of confusion for employers since the Sick Leave Act 2022 took effect. In April 2026, a Labour Court ruling covered by HRHQ brought one of the Act’s most misunderstood provisions into sharp focus. The Labour Court overturned a WRC adjudication, confirming that an employer whose company sick pay scheme was more favourable than the statutory minimum was, in fact, exempt. It is the first successful appeal of its kind under the Act. And it raises uncomfortable questions for every employer who assumes their existing scheme has them covered.
The Quick Answer
The Labour Court has confirmed that employers with sick pay schemes that are, on the whole, more favourable than the statutory entitlement are exempt from statutory sick pay obligations under the Sick Leave Act 2022. The WRC had initially ruled against the employer, but the Labour Court reversed that decision on appeal. If you have a company sick pay scheme, you need to know whether it genuinely qualifies for this exemption, and whether you can prove it.
What the Labour Court Confirmed About the Statutory Sick Pay Exemption in Ireland
The Sick Leave Act 2022 introduced a statutory sick pay floor for all employees in Ireland. Employees with at least 13 weeks of continuous service are entitled to 5 days of employer-paid sick leave a year, paid at 70% of normal daily earnings and capped at €110 per day. The entitlement stayed at 5 days for 2026 after the Government paused the increases originally planned under the Act, and employers can confirm the current position at workplacerelations.ie.
The Act also includes a specific exemption. Where an employer already provides a sick pay scheme that is, on the whole, more favourable than the statutory entitlement, the statutory obligation does not apply. The two are not meant to be cumulative.
In this case, an employee brought a complaint to the WRC alleging their employer had failed to provide statutory sick pay. The WRC upheld the complaint. The employer appealed to the Labour Court, which examined the company scheme, found it was indeed more favourable, and overturned the WRC decision.
The “More Favourable” Test Is Where Employers Get Caught
The exemption sounds straightforward: if your scheme is better, you are exempt. In practice, the comparison involves multiple moving parts that most employers have never properly assessed.
The statutory scheme has specific parameters: a defined number of days, a payment rate of 70% of normal earnings, a daily cap, a qualifying period of 13 weeks, and a requirement for medical certification. Your company scheme needs to be more favourable when assessed as a whole across all of these elements.
Here is where assumptions fall apart under scrutiny. A scheme that pays 100% of salary sounds generous, but if it only covers 3 days when the statutory entitlement is 5, the picture changes. A scheme with no daily cap but a 6-month qualifying period may not be more favourable for newer employees. A scheme with a waiting day before payments begin introduces another variable entirely.
The WRC and the Labour Court reached opposite conclusions on the same set of facts in this case. That tells employers something about how subjective this comparison can be. A scheme you believe is clearly more favourable might not look that way to an adjudication officer reviewing the documentation cold.
In our experience advising employers across Ireland, we regularly encounter company sick pay policies that pre-date the Sick Leave Act 2022 entirely. These policies were never designed to satisfy a “more favourable” comparison. They need to be reviewed and, in most cases, redrafted. Our team at PurpleTree handles this through our HR policies and procedures service.
Documentation Decides the Outcome
The employer in this case won because the Labour Court examined the company scheme and found it stood up. Many employers would not be so fortunate. Not because their schemes are inadequate, but because the evidence is simply not there.
A situation we see frequently is employers who offer generous sick pay informally but have nothing meaningful in writing. The scheme might exist as a verbal understanding, or it might be described in vague terms in a staff handbook that has not been updated in years. When a WRC complaint arrives, the employer cannot point to a clear, current document setting out the terms.
Even for employers with written policies, the documentation often fails to reference the Sick Leave Act 2022 or explain how the company scheme satisfies the “more favourable” threshold. That gap creates real risk. An adjudication officer will look for specific evidence. “Our scheme is better, everyone knows that” is not an argument that holds up.
Consistency of application matters as much as the wording. If some employees receive the company scheme while others are placed on the statutory minimum depending on their manager or department, that unevenness becomes its own exposure. An exemption claim is far easier to defend when the scheme is applied the same way across the whole workforce, and considerably weaker when the treatment varies from team to team.
An HR audit is the fastest way to identify whether your sick pay documentation would survive WRC scrutiny. Our team reviews the policy, compares it against the statutory baseline, and identifies gaps before they become problems.
Statutory Sick Pay Entitlements Change Year to Year
The Sick Leave Act 2022 originally envisaged a phased increase in statutory sick pay entitlements over several years. The Government paused those increases, holding the entitlement at 5 days for 2024, 2025 and 2026, and in April 2025 confirmed it would stay at 5 days rather than rising to 7 or 10 days. Employers can confirm the current position directly with workplacerelations.ie or citizensinformation.ie.
Each time the statutory floor shifts, the “more favourable” comparison shifts with it. A company scheme that clearly exceeded the minimum when it was 3 days in 2023 sits closer to the line now that the floor is 5 days, and it could be caught again if the entitlement is ever increased. Employers cannot set their sick pay policy once and assume it remains compliant indefinitely.
This is one of the operational details that catches employers off guard. Sick pay compliance is not a one-time exercise. It requires annual review against a moving baseline. Our employment advice team monitors these changes and proactively updates client policies so employers are never caught behind.
Sick Pay, Payroll, and Record-Keeping
There is a payroll dimension to this as well. Under the Act, employers must maintain records of sick leave taken and sick pay paid. This applies even if you are relying on the “more favourable” exemption. If a complaint is lodged and you cannot produce records showing what was paid and when, the burden of proof falls heavily against you.
For employers managing payroll in-house, sick pay tracking adds another layer to an already complex process alongside PRSI, Revenue submissions, and pension auto-enrolment obligations. Inconsistencies between payroll records and policy documents create exactly the type of weakness that a WRC complaint exposes.
Our payroll service integrates sick pay tracking with broader payroll compliance, ensuring that every absence is documented and every payment is recorded accurately.
Why This Ruling Should Prompt Action, Not Comfort
It would be tempting to read this ruling as good news for employers with existing sick pay schemes. And it is, to a point. The exemption works. The Labour Court has confirmed it.
But the employer in this case still had to go through the full WRC process and then appeal to the Labour Court to vindicate their position. For an SME without dedicated HR or legal resources, that process alone represents a significant cost in time, money, and management distraction. Being right at the end is cold comfort when the journey to get there derails your quarter.
The takeaway is straightforward. If your company sick pay scheme is genuinely more favourable than the statutory minimum, you need to be able to prove it quickly, clearly, and with documentation that leaves no room for misinterpretation. If you cannot, you are exposed regardless of whether the WRC ultimately agrees with you.
This is the type of compliance risk that our HR Essentials service is built to manage. We ensure your policies are current, your documentation is airtight, and your business is prepared if a complaint arises. Get in touch with our team to review your sick pay arrangements before a WRC complaint forces the issue.
This article is for general informational purposes only and does not constitute legal advice. Employment law is complex and fact-specific. For advice on your specific situation, contact the PurpleTree HR team directly.
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