Labour Court reverses WRC sick pay decision

The Labour Court has overturned a WRC award under the Sick Leave Act 2022, confirming that employers with more favourable sick pay schemes are exempt from statutory sick pay. As the first successful appeal under the Act, our Employment Law & Benefits team outlines what this means for employers.

What you need to know

• The issue: Under the employer’s sick pay scheme, the employee was not paid sick pay during a period in May 2024. This was a result of her having been involved in a disciplinary procedure on foot of several absences in late 2023.
• WRC decision: In the WRC, the employee argued that where she became disentitled to benefit from her employer’s scheme, the employer was obliged to apply the terms of the statutory scheme to her. The Adjudication Officer agreed and the employee was awarded €500 in compensation.
• Labour court decision: On appeal, it was held that where an employer’s scheme was “as a whole” more favourable to the employee than statutory sick leave, the obligations to apply the statutory sick leave scheme did not apply.

Background

The complainant[1] was employed by the respondent as a Quality Control Analyst. She was provided with a contract of employment which sets out the company’s sick pay scheme. It provided that sick pay was payable subject to eligibility conditions and in compliance with the company’s Absence Management Policy.

The employee had six separate periods of sickness-related absence between August 2023 and December 2023. This triggered the Absence Management Policy and led to:

• An investigation meeting
• A referral of the complainant to Occupational Health, and
• A disciplinary meeting

The employee received a verbal warning for breach of the Absence Management Policy. She appealed but was unsuccessful.

The employee was subsequently absent in May 2024. She was not paid sick pay under the employer’s scheme during that time. This was because she had been found to be in breach of its Absence Management Policy.

WRC claim

The employee brought a complaint to the WRC and was successful. She argued that in circumstances where she became ineligible to be paid under the employer’s scheme during the period in question, the statutory regime should apply to her. She was awarded €500 compensation.

Labour Court appeal

On appeal, the Court noted that section 9(1) of the Sick Leave Act 2022 relieves an employer of the obligation to pay statutory sick leave. This applies where the employer has a sick leave scheme which is “as a whole” more favourable to the employee than the statutory sick leave.

In this case, both parties had acknowledged that the employer’s scheme was “as a whole” more favourable and so the obligations under the 2022 Act did not apply to the employer.

The Labour Court held that section 9(3) of the 2022 Act makes clear that employer sick pay schemes may be subject to conditions. In addition, access to an employer scheme can depend on compliance with those conditions. It was not disputed by the employee that she did not meet the eligibility criteria of the employer’s scheme in May 2024 due to the extent of her illness-related absences from the workplace.

It was held that the employer had no obligation to participate in the statutory scheme given that section 9(1) applies. The provision “absolutely exempts” an employer in these circumstances and allows for no exceptions.

Key takeaways for employers

This decision is a significant result for employers with generous sick pay schemes.

It dictates that, so long as an occupational sick pay scheme is holistically better than the statutory minimum, an employer is not required to provide statutory sick pay. An employer’s internal conditions for the scheme, such as withholding pay from employees who are under disciplinary sanction, can therefore be maintained without breaching the Sick Leave Act 2022.

It also highlights that section 9(1) of the Act provides an absolute exemption to the employer from the obligation to apply the statutory leave scheme. This applies where the employer’s sick pay scheme is “as a whole” more favourable to the employee than the statutory sick leave.

It is vital that employers still ensure that their disciplinary processes are fair to avoid claims of discrimination, penalisation and unfair dismissal.

For expert advice to help you navigate the Sick Pay Act 2022, please contact a member of our Employment Law & Benefits team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] SK Biotek Ireland Ltd v Shannon Reina SLD262