In a recent decision, the Workplace Relations Commission (WRC) found that the Sick Leave Act 2022 (Act) permits an employer to substitute more favourable sick pay terms for the statutory sick pay scheme under the Act, in circumstances where the employer’s terms are, as a whole, more beneficial to employees.
This decision has brought an employer’s obligations under the Act into practical focus and serves as a welcome authority on the circumstances in which those obligations can be disapplied.
As of the date of writing, the statutory allowance under the Act is three days per year, payable at the lower of 70% of any employee’s basic pay or €110 per day (statutory sick pay). The number of paid statutory days is set to increase over the next 4 years, or as otherwise determined by the Government. For more information on the Act, click here.
Background
The complainant, a shop assistant, has been an employee of Musgrave Operating Partners Ireland (respondent) since 2007. The complainant was absent from work for four days in January of this year and sought statutory sick pay, as provided for under the Act, for three of the four days that she was absent.
The respondent, however, has a company sick pay scheme in force that it claimed was more favourable than the provisions under the Act and the complainant was instead paid in line with the respondent’s sick pay scheme.
The respondent’s sick pay scheme, which had been agreed with Mandate and Siptu, provides for up to eight weeks’ full pay to employees on sick leave, subject to the following conditions:
- Employees must have 26 weeks’ service before the sick leave is payable;
- Payment of the sick leave commences on the fourth day of absence and as such, there is a three-day “waiting period”; and
- Employees must submit sufficient medical certificates weekly.
Due to the respondent’s three-day “waiting period”, the complainant received payment for only one of the four days that she had been absent.
The complainant, who argued that she should have been paid for three of the four days (under the Act) claimed that the respondent’s sick pay scheme was not more beneficial to her and that she felt discriminated against on the basis that she was a hard-working employee who was seldom absent from work and had never been on long-term sick leave.
What does the Act say?
Section 8 of the Act provides that nothing in the Act shall prevent an employer from including a contractual provision that is:
- as favourable to an employee as the statutory entitlement to sick pay; or
- more favourable to an employee than the statutory entitlement,
and any such provision will be in substitution for (and not in addition to) an employee’s entitlement to statutory sick pay.
Section 9 of the Act expands section 8 by providing that the obligations under the Act will not apply to employers who provide their employees with a sick pay scheme that is, as a whole, more favourable to employees than statutory sick pay.
In determining if an employer’s sick pay scheme is more favourable, the following matters must be taken into consideration:
- If there is a period of service requirement before sick leave is payable;
- If there is a period of “waiting days” before the sick leave is paid;
- The period during which the sick leave is payable;
- The amount of sick leave payable; and
- The reference period of the sick leave scheme.
Was the respondent’s sick pay scheme more beneficial than the statutory sick pay scheme?
To answer this question, the Adjudication Officer (AO) had to consider, in detail, all aspects of the respondent’s sick pay scheme and whether, on balance, the respondent’s scheme was more favourable than statutory sick pay.
In comparing the benefits of the respondent’s sick pay scheme with those of the Act, the AO carried out a detailed analysis of the matters listed in section 9 of the Act, including:
| The statutory sick pay scheme provided: | The respondent's sick pay scheme provided: | |
|---|---|---|
| Service Requirement: | An employee must have 13 weeks of service before being entitled to paid sick leave | An employee must have six months' service before being entitled to paid sick leave. |
| Period of Waiting Days: | None. Payment from the first day of absence. | The first three days of absence are unpaid "waiting days", with paid sick leave commencing on the fourth day of absence. |
| Period during which the sick leave is payable: | Employees are entitled to three days' paid leave. | Employees are entitled to eight week's paid leave. |
| Amount of sick leave payable: | The daily rate of pay is based on 70% of an employee's average daily wages in the 13 weeks preceding the first day of absence or €110, whichever is lower. | Essentially full pay - The daily rate of pay is based on the average of the employee’s weekly hours in the 13 weeks preceding the fourth day of absence, divided by five. |
| The reference period of the sick leave scheme: | The Act does not explicitly provide for a reference period but in section 5(2), it provides for three days' paid sick leave in a year. | Employees are entitled to eight weeks' full pay in a rolling 12-month period. |
What did the WRC decide?
Having looked at the legal framework and in particular, sections 8 and 9 of the Act, the AO found that ultimately, the Act was intended to confer a benefit of paid sick leave on employees who otherwise have no contractual entitlement to be paid during periods of sick leave.
However, although the respondent did provide the complainant with a contractual entitlement to be paid sick leave, the primary issue, in this case, was the three-day waiting period and the fact that the complainant was not eligible for payment under the respondent’s sick pay scheme until the fourth day of absence. The AO was therefore tasked with considering whether this condition of the respondent’s sick pay scheme had the effect of making the entire scheme less favourable than the statutory benefit under the Act.
The AO noted that the complainant’s case was “not unreasonable” and her claim raised an “important legal point”. He recognised that the three-day waiting period was not uncommon in company sick leave policies and acknowledged that it was a “disadvantage” for an employee who is absent for a maximum of three days in a 12-month period. However, the AO concluded that ultimately, eight weeks paid sick leave at 100% of wages, after three days of absence, was still more beneficial than three days’ pay at the lower of 70% basic pay or €110.
Of interest in this decision is that the respondent’s sick pay scheme is the outcome of a collective bargaining process which had been reached between employees and their trade unions (of which the complainant was a member). The AO commented that if he were to find that the provisions of the Act were more favourable than the respondent’s sick leave scheme, it could destabilise industrial relations within the organisation and could potentially result in the need to re-negotiate a new scheme.
The AO, having considered all aspects of both the statutory sick pay scheme and the respondent’s sick pay scheme, concluded that, as a whole, the respondent’s sick pay scheme was more favourable and provided a greater level of benefit to employees and as such, the obligations under the Act could be disapplied.
Key takeaway
This decision underscores the importance of viewing the Act holistically and meaningful engagement with employees to ensure that they are well informed of their entitlements, be that under the Act or a separate company sick leave policy.
While the clarity this decision brings is certainly welcomed by employers, it does beg the question of whether the AO may have taken a different approach, had there not been a trade union presence and the respondent’s sick pay scheme not been negotiated and agreed between the employees and trade union.
