An Employee Claiming Full Pay During Sick Leave Asserted to be Caused by Work

Employees often assert that they are only on sick leave arising from some fault on the part of the employer (for example, as a result of work-related stress) and, on that basis, should be paid their full pay during the entirety of their period of sick leave – regardless of what is provided for in the employer’s sick leave policy.  This is not in fact the case – it is the fact of the sick leave that is relevant for payment under the employer’s policy and not the reason for the sick leave.

Employees should be treated consistently in terms of periods of sick leave regardless of the reason for the leave and any exceptions to the general employer policy should only be made in the full knowledge that any such exceptions may set an unintentional precedent and may in fact expose the employer to legal risk.  This was the case in Charlton v HH The Aga Khan’s Stud Société Civile (1999) ELR 136 where the employee successfully argued that it was an implied term of her contract that she be paid her salary in full during a period of sick leave, as it was custom and practice for long standing employees to receive this when absent through illness – notwithstanding that the terms of her employment contract did not expressly entitle her to payment of her full salary in such circumstances.

Accordingly, employers should pay employees during periods of sick leave in accordance with the employer’s policy in place at the time of the leave.  If the employer does not have a policy in place, or the policy is to pay sick pay in line with statutory entitlements, the entitlement is to five days certified sick leave in any twelve month calendar period, paid at 70% of employees’ normal wage during periods of statutory sick leave, capped at €110 per day.

Employees’ Sick Leave Entitlement Whilst They Are Performance Managed

Statutory sick leave

Employees continue to be entitled to statutory sick pay, regardless of whether they are subject to performance management.  Employees who have been employed for at least thirteen weeks are entitled to five days’ statutory sick pay per calendar year, provided they provide a medical certificate to their employer.  Employees may take days of sick leave consecutively or in separate blocks.  As above, employers must pay 70% of employees’ normal wage by way of statutory sick pay, capped at €110 per day.  

More beneficial sick leave policy

For employers who provide a more beneficial sick pay policy than the statutory minimum, there is no express statutory requirement to maintain this benefit for employees who are subject to performance management, provided employees continue to receive statutory sick pay.  

However, there are risks associated with removing the employee’s access to the company’s sick pay policy during performance management, as follows.  

Removing access to the company’s sick pay policy could amount to a sanction and therefore, removing access to sick pay during performance management could allow the employee to argue that the employer has imposed a disciplinary sanction without affording procedural fairness by way of a disciplinary process.  

Further, there are often disability discrimination risks associated with managing an employee’s performance who is also taking sick leave. This could expose the employer to an employment equality claim under the Employment Equality legislation.

In light of these risks, we would recommend that the benefit of any company sick pay policy be maintained during performance management, unless the policy or the contract of employment provides for different treatment in terms of sick pay during that performance management process.

The Redundancy of an Employee on Permanent Health Insurance

Some employers provide employees with access to permanent health insurance (“PHI”) as part of employees’ terms and conditions of employment.  The employer enters into a contract with an insurance provider, whereby the employer pays a premium to secure the continuance of income and payment of benefits for an eligible employee during disablement through accident, injury or sickness.  Generally speaking, the right of an employee to apply for PHI will kick in after a certain period of absence from work following accident, injury or sickness, such as a six-month period, but it will depend on the specific circumstances of the insurance policy.

In a redundancy situation, generally speaking employees who are in receipt of PHI benefit should be the last ones to be made redundant, given that termination of their employment will generally speaking disentitle them to receive any further PHI benefit. Employers should consider the following issues that arise for an employee in receipt of PHI at the following four stages of a redundancy process.

(a) Selection

First, receipt of PHI is generally conditional on the employee remaining employed and therefore, an employee in receipt of PHI should be the last to have their employment terminated, to ensure they are in receipt of PHI for the longest possible time.

In addition, the employee who has been in receipt of PHI should not automatically be the employee selected for redundancy. To select on that basis alone could constitute unfair selection on grounds of disability contrary to the provisions of the Employment Equality legislation.  Employers should engage in fair selection as between all employees carrying out the role previously occupied by the absent employee, as is the case with all redundancies.

(b) Consultation with the employee

Secondly, employers must consult with the employee who has been in receipt of PHI as it usually would.  There may be some complexity around managing this process, including where there are concerns about the employee’s fitness to engage in consultation and/or where an occupational health assessment recommends adjustments to the consultation process.  For example, consultation may need to occur exclusively in writing or the employee may require some additional time relative to other employees.  If anything is raised by the employee as part of the consultation process, this should be genuinely considered by employers as they would with any other employee.

(c) Alternative employment

Thirdly, the employee in receipt of PHI must be offered alternative employment, in accordance with statute for a collective redundancy or case law for non-collective redundancies.  The employer may face practical and commercial difficulties where an alternative position is available but the employee would not continue to be absent and unable to perform the duties of this new alternative role.  Further, it is possible that an employee in receipt of PHI would be favoured over an ‘at risk’ employee, despite the other ‘at risk’ employee being able and available to perform this role in the immediate.

The employer should consider arranging a further occupational health assessment to understand the employee’s prognosis and seek legal advice to assess whether offering the new alternative role would amount to a reasonable accommodation in the circumstances.

(d) Termination of employment

Fourthly, employers must keep in mind that termination risks are heightened for employees who are in receipt of PHI given receipt of PHI is generally conditional on them remaining employed with the employer.  There is a much greater financial incentive for employees to make a claim, and therefore, employers should be particularly mindful of their dealings with such employees.  There is also a much greater risk of disability discrimination where the employee could assert that the reason for their selection or dismissal was on account of their accident, injury or sickness and/or associated absence.

Conclusion

Manging a redundancy process where there are one or more employees in receipt of PHI is a tricky area for employers and can throw up many issues.  Employers should be mindful of the impact of such employees’ selection and dismissal, and the associated risks particularly of unfair dismissal and/or discrimination claims.