Statutory v Company Sick Pay Schemes

Introduction

The Sick Leave Act 2022, in effect since 1 January 2023, grants employees in Ireland the right to statutory sick pay (SSP) for the first time. An employee who has completed 13 weeks of continuous service is entitled to up to three days per year, provided they provide their employer with a medical certificate stating they are unable to work. SSP is paid at a rate of 70% of an employee's pay, subject to a daily maximum of €110.

Statutory v Company Sick Leave Schemes

The Workplace Relations Commission (WRC) has recently issued a decision under the Act, which examined what factors should be considered when there is a conflict between the statutory and employer provisions (Katerina Leszczynska v Musgrave Operating Partners (ADJ-00044889)).

In this case, the WRC analysed the obligation to pay SSP and the circumstances in which an employer with a company sick pay scheme is exempt from the obligation to pay SSP. The complainant, a shop assistant at a Supervalu branch, claimed that she was entitled to SSP for the first three days of her absence. However, the respondent's sick pay scheme provided eight weeks fully paid sick leave, but the first three days were considered "waiting days" and not paid. The claimant argued that the terms of the respondent's scheme were less favourable to her than SSP.

More Favourable Sick Leave Scheme

Section 5 of the Act provides that employees are entitled to three statutory leave sick days. The first day of absence due to illness or injury is the first statutory sick leave day. Counsel for the respondent submitted that this provision must be read in the context of two subsequent sections in the Act. Section 8, entitled, “more favourable provision in contact of employment,” provides, at subsection (1) that,

(1) Nothing in this Act shall prevent the inclusion in a contract of employment of a provision that is -

(a) as favourable to an employee as, or

(b) more favourable to an employee than, an entitlement to statutory sick leave in accordance with this Act, and any such provision shall be in substitution for, and not in addition to, that entitlement.

Counsel for the respondent submitted that the use of the word “substitution” must be given a plain meaning, signifying an alternative or replacement sick pay scheme. The significance of this point is seen when analysing the further non-application provision at section 9 of the Act:

(1) The obligations under this Act shall not apply to an employer who provides his or her employees a sick leave scheme where the terms of the scheme confer, over the course of a reference period set out in the scheme, benefits that are, as a whole, more favourable to the employee than statutory sick leave.

(2) In determining, for the purposes of subsection (1), whether a sick leave scheme confers benefits that are, as a whole, more favourable than statutory sick leave, the following matters shall be taken into consideration:

(a) the period of service of an employee that is required before sick leave is payable;

(b) the number of days that an employee is absent before sick leave is payable;

(c) the period for which sick leave is payable;

(d) the amount of sick leave that is payable;

(e) the reference period of the sick leave scheme.

To determine if the respondent’s sick leave scheme confers upon its employees benefits that are, “as a whole more favourable,” respondent counsel said that the following matters must be taken into consideration:

1.     The period of service of an employee before sick leave is payable;

2.     The number of days that an employee is required to be absent before sick leave is payable;

3.     The length of time for which sick leave is payable;

4.     The amount of sick leave payable;

5.     The reference period of the sick pay scheme.

Each of these matters were addressed in turn, in the respondent’s submission.

Conclusion

The WRC found that the respondent's scheme provided benefits that were more favourable to the complainant than SSP, and as a result, the complainant's claim in respect of SSP was not successful. This case provides valuable insight into the WRC's consideration of the provisions of the Act dealing with a company sick pay scheme and whether it is more favourable to the employee than the SSP scheme. Further litigation before the WRC and Labour Court is inevitable, and employers should assess their company scheme on an ongoing basis as SSP increases over time.