Court finds employee excluded from company sick pay scheme due to level of absence has no right to statutory sick pay

Ibec recently represented our member company, SK Biotek Ireland, before the Labour Court in a successful appeal of an Adjudication Officer decision under the Sick Leave Act 2022 (the “Act”). The appeal represents an important outcome for employers as it dealt with section 9 of the Act, and the extent to which the Act applies to employers who provide occupational sick pay schemes which on the whole provide greater benefits to employees than statutory sick leave.

Background

The employee had started working with the employer company in August 2023.

The employer had an occupational sick leave scheme in place, which employees were eligible to join once they had completed six months’ service with the company. Sick pay was payable on a day one basis. Employees were entitled to full pay up to a maximum period of four weeks, and could be further eligible to receive 50% of basic pay for a further four weeks, on a rolling twelve-month basis.

The employer also operated an Absence Management Policy (the “Policy”). The Policy set out trigger points that would result in an investigation, and potentially disciplinary action, where certain thresholds of absence were reached. Employees were not entitled to receive sick pay under the occupational scheme where they had a live disciplinary warning arising from excessive absence.

The employee in this instance had triggered the Policy as she had five separate absences in a twelve-month period, to the end of December 2023. The employee was invited to an investigation meeting, subsequent to which a disciplinary process was initiated. She was issued with a verbal warning in line with the Policy. The employee appealed the sanction internally, the warning was upheld.

The employee had further absences in May and June 2024. The employee was invited to an investigation meeting but resigned her employment in July 2024.

Sick Leave Act 2022

In a nutshell the Act sets out that, once they have 13 weeks service with their employer, employees shall be entitled to receive up to 5 statutory sick leave days in a year, at a rate of the lesser of €110 or 70% of their basic daily wage per day.

Section 8 outlines that it is open to employers to provide for sick leave provisions that are more favourable than statutory sick leave, and where more favourable provisions are provided, they will be in substitution for, rather than in addition to, statutory sick leave.

The key section of the Act for the purposes of this appeal is section 9, which provides that the obligations under the Act will not apply to an employer who provides employees with a sick leave scheme, the benefits of which are as a whole more favourable than statutory sick leave.

Whether an occupational sick leave scheme is more favourable than statutory sick leave depends on a comparison of a number of factors, namely:

• the period of service of an employee that is required before sick leave is payable;
• the number of days that an employee is absent before sick leave is payable;
• the period for which sick leave is payable;
• the amount of sick leave that is payable; and
• the reference period of the sick leave scheme.

Section 9 is silent on the proportionate weighting of each of these factors. Section 9(3) of the Act provides that entitlement to an occupational sick leave scheme can be subject to conditions set out under a contract of employment or a collective agreement.

The practical effect of section 9 is that where an occupational sick leave scheme is deemed to be, on the whole, more favourable to the employee than statutory sick leave, the Act – in its entirety – will not apply.

Workplace Relations Commission Complaint

Before the WRC the employee’s claim was that she should have received statutory sick leave for those absences when she was dis-entitled under the employer occupational scheme due to her absence levels. The absences which fell within the requisite time limits were from 13-17 May 2024.

The Adjudication Officer accepted the position as previously set out in Karolina Leszczynska v Musgrave Operating Partners Ireland (ADJ-00044889) that an employee is not entitled to payment under the Act where an employer provides employees with a sick leave scheme that provides benefits which, on the whole, are more favourable.

The Adjudication Officer stated however that the employer in this instance had, by operation of its absence management policy, “specifically excluded the Complainant from being in any way eligible to any entitlement to the workplace sick pay scheme for a period of six months from January of 2024.” As a result, the Adjudication Officer felt that any attempt to try and compare the benefits provided by the company scheme with statutory sick leave was moot, and that the employee was protected by the Act during her absence in May 2024. The AO made an award of €500.

Labour Court

In addressing the central question of whether the employee was entitled to statutory sick leave for the period of 13-17 May 2024, the Court noted that the employee was at that time ineligible to receive company sick pay as she had been found to be in breach of the Policy.

Looking at section 9 of the Act, the Court stated that the words used in section 9(1) were “clear and unambiguous” and should be ascribed their ordinary, plain meaning – “relieving an employer of any obligation to pay statutory sick leave” where the employer had an occupational scheme in place which over a given reference period conferred benefits that were, as a whole, more favourable to an employee than statutory sick leave.

The Court noted that the employee herself had agreed that her employer’s scheme did confer more favourable benefits, and equally she had agreed that she did not meet the eligibility criteria of the occupational sick leave scheme in May 2024 due to the extent of her illness related absences.

On balance the Court was satisfied that, as the employer’s occupational sick leave scheme fell “squarely within the parameters of section 9”, the employer was absolutely exempted from the obligation to apply statutory sick leave.

The Court also noted the definition of a sick leave scheme under section 9(3) of the Act stated that access to an employer’s sick leave scheme can be subject to conditions – which in this instance were the absence management provisions set out under the Policy.

Takeaways

This decision provides helpful clarity on the application of section 9 of the Act, where an employer has an occupational sick leave scheme in place for employees, namely that there is no obligation on an employer to apply statutory sick leave under the Act where they have a sick leave scheme that on the whole confers greater benefits on an employee.

Equally this decision is helpful for employers who operate absence management systems which may disentitle employees to sick pay for periods of time. In accordance with section 9(3) of the Act, occupational sick leave schemes can be subject to such conditions. Any conditions which may impact on the entitlement to paid sick leave under an occupational scheme should ideally be set out in a contract of employment, collective agreement or similar arrangement.

Harry Wall, Associate Legal Director, Ibec.