Worker leave rights will add to expenses, business lobby claims

New flexible work entitlements coming into effect under a European Union work-life balance directive will place higher costs on employers at a challenging time, business groups have said.

Representative groups for employers say the additional leave entitlements come at a “very difficult time” as businesses cope with higher costs, staff shortages and increasing pay demands.

The entitlements aimed at making workplaces more family-friendly will allow parents receive five days of unpaid leave to look after sick children or those with medical needs.

Parents or carers will have the right to request flexible or compressed work hours and women will be entitled to paid breastfeeding breaks from the current six months to two years.

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Neil McDonnell, chief executive of business group Isme, said one of its frustration was the general desire "to want to introduce a cornucopia of different types of leave entitlement" without consideration being given to their cost or impact to businesses, particularly in the service industry.

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“On the one hand, everyone wants to move to a situation where there is a very elaborate expression of worker rights; at the other end those do have to be paid for,” he said.

He pointed to childcare providers who have to maintain a ratio of staff to children being cared for under law and other businesses that have to maintain services when workers are on leave.

“You don’t just bear the cost of that – whether it is paid or unpaid – you have to have replace staff, typically at premium rates, so there is a disproportionate impact on the service economy, especially among the smaller employers. That has to be recovered from somewhere,” he said.

“Our frustration is that part of the discussion is almost sort of conveniently ignored.”

Mr McDonnell said many of the new worker leave entitlements are “almost superfluous” because many small companies already have to offer leave entitlements to attract or retain staff.

‘Challenging’ times

Companies are paying a tenth of their labour costs on social protection through PRSI and “don’t see any payback for that in terms of the exchequer bearing some of the burden,” he said.

He called for a “joined-up conversation, particularly in the service economy” on the increasing cost of delivering services and the impact of the cost of delivery of those services.

Maeve McElwee, director of employer relations at business group Ibec, said the new leave entitlements come at a “challenging” time when overall costs are “quite significant for businesses”.

The new rules were “certainly not going to be practical for everybody,” she said, noting that they came at a “very difficult time” following other worker leave and work-life balance initiatives introduced in recent years.

“It is really important when we look at how this directive is transposed that it joins up with the existing legislation,” said Ms McElwee.

“It is a difficult administrative burden for employers to bear and it does have costs, so even when leave is unpaid in certain circumstances, you still have productivity loss, replacement costs and administration costs.

“Given everything that is happening, it is really important that we balance it with everything else that is already in place.”