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Budget 2021 – What are the changes to employment law?

The Budget plan for 2021 which was announced in October 2020 focused on the impact of the pandemic on businesses and workers. The Irish Government committed to delivering one of the largest budget packages in the history of the State.

In terms of employment law, there were a few notable changes:

For Employees

  • Pension Age – The government decided not to go ahead with the increase in pension age to 67 in 2021, so the pension age has remained 66 for now. It was announced that a Pension Commission would be established, and it is expected that a report will be produced by the commission in June 2021.
  • Parent’s Leave – This was increased to 5 weeks for parents of babies born after 1 November 2019. The period during which you can avail of this leave was also extended from 12 months to 24 months meaning that you can apply any time up to your child’s second birthday or within two years following adoption. This new entitlement is expected to kick in in April 2021, as there is legislation required to implement it.
  • Minimum Wage – This has increased to €10.20 per hour from 1 January 2021. There were no changes announced to income tax, USC or PRSI rates, but the government decided to raise the ceiling of the second USC band from €20,484 to €20,687 so that minimum wage workers will not be brought into this band in light of the increase. These new USC bands came into effect from 1 January 2021.
  • Illness benefit – employees can now avail of the illness benefit after 3 days of absence from work, previously this was 6 days of absence.
  • Employees may claim a tax deduction in respect of certain utility bills if they have been working from home as a result of Covid-19.

For Employers

  • In September, the VAT rate was reduced from 23% to 21%.
  • The Wage Subsidy Scheme shall continue until March 2021, when it shall then be replaced by a subsequent scheme for the remainder of 2021.
  • The Covid Restrictions Support Scheme was introduced to offer supports for businesses which have been impacted by Level 3 or higher restrictions. This will consist of a payment based on 2019 turnover levels of up to €5,000. Business which are closed due to restrictions can make a claim for each 3-week period during which they are forced to remain closed.