Sick leave entitlements for almost 300,000 public servants are to be halved following a Labour Court recommendation issued today.
The public service bill for sick pay costs around €550m a year.
Last year, €63.1m of the sick pay bill was due to illnesses not certified by a doctor.
Under the present scheme, public servants are entitled to six months of sick leave on full pay followed by six months on half pay within any period of four years.
After exhausting the first year of entitlements, they go onto a lower rate known as rehabilitation pay.
However, following today's recommendation issued by Labour Court Chairman Kevin Duffy, from 1 January 2014, the general entitlement will be halved to three months’ full pay and three months’ half pay.
Self-certified sick leave is to be cut from seven days in any year to seven days over a rolling two-year period.
This will take effect as soon as practicable.
Mr Duffy described the change as "one of major significance from the perspective of the State as an employer".
However, he also called it "reasonable and modest" compared to entitlements in other employment.
People experiencing "critical illness" will still be entitled to six months’ full pay and six months on half pay.
Today’s recommendation says that critical illness cover should be regarded as an exceptional and normally non-recurring occurrence.
The Labour Court accepts that management has discretion to decide how this is applied but recommended further talks with unions to agree a protocol including an independent appeals mechanism on how that discretion should be exercised.
It also recommends reform of rehabilitation pay.
Addressing an anomaly affecting workers recruited before 1995, it says no public servant on rehabilitation pay should receive less than social welfare benefits.
However, even where critical illness applies, the total period of entitlement including rehabilitation pay cannot exceed two years.
The court also recommends further talks regarding the entitlements of teachers.
They currently have an entitlement to one year's sick leave on full pay and different entitlements to uncertified sick leave.
Minister for Public Expenditure and Reform Brendan Howlin welcomed the proposals.
The minister said the reforms would result in increased productivity while cutting the level of absenteeism and the cost of sick leave.
However, he noted that the key challenge now was to engage line managers in the proactive management of sick leave.
He said his department intends to implement the provisions on uncertified sick leave by September.
General Secretary of the Public Service Executive Union Tom Geraghty said that the union's priority had been to maintain protection for people who were seriously incapacitated, and he believed it had succeeded in doing that.