Minister for Social Protection Joan Burton has begun consultation on her plan to make employers contribute to paying for illness benefit for employees.
Addressing a forum in Dublin, Ms Burton said the number of people claiming illness and disability payment had risen from 173,000 in 2001 to 242,000 last year - an increase of 40%.
During the same period, Exchequer spending on illness benefit alone has risen from €330m to €876m.
The Government hopes to make employers pay illness benefit of €188 per week per employee for part of their period of incapacity.
However, it has not yet been decided whether they will pay for the first one week, two weeks, three weeks or four weeks.
The savings to the State would be €23m if employers had to pay for one week, €52m if they had to pay for two weeks, €73m if they were liable for the first three weeks, and €89m if they had to pay for the first four weeks.
Ms Burton said she hoped to complete the consultation period and had the proposals finalised in time for the next Budget.
She said the department wanted to move to a model based on "wellness" and to focus on capacity to work rather than incapacity.
She said that in most other countries employers carry responsibility for some of the cost of illness benefit.
IBEC said any move to add additional costs for sick leave pay onto employers was at odds with the Government Action Plan for Jobs.
IBEC Director Brendan McGinty said the Government needs to come up with economically sound ways of reducing employment costs, instead of just shifting costs onto employers.