Sick Leave Act 2022: WRC examines an employer’s obligation to pay statutory sick pay
The Sick Leave Act 2022 (the Act) has been in force since 1 January 2023 and provides employees in Ireland with a right to statutory sick pay (SSP) for the first time.
An employee who has completed 13 weeks’ continuous service is currently entitled to SSP of up to three days per year, on condition that the employee provides their employer with a medical certificate stating that they are unable to work. SSP is paid by the employer at a rate of 70% of an employee's pay subject to a daily maximum of €110.
The Act provides that employers may have sick pay provisions that are as favourable, or more favourable, to an employee than SSP and that any such provision shall be in substitution for, and not in addition to SSP. The Act also provides that the obligations in respect of SSP shall not apply to an employer who provides a sick pay scheme which confers, over the course of a reference period set out in the scheme, benefits that are, as a whole, more favourable to the employee than SSP. In practical terms, a lot of employers with sick pay schemes operated on the basis they were exempt from the obligation to pay SSP as they concluded their schemes were more generous than SSP, albeit there remained some doubt as to whether this was a legally robust position to adopt having regard to the terms of the Act.
The WRC has just issued its first decision under the Act, Katerina Leszczynska v Musgrave Operating Partners , in which 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.
What happened in this case?
The claimant is a shop assistant at a Supervalu branch operated by the respondent. She was absent due to illness for four consecutive days in 2023 and she claimed that she was entitled to SSP for the first three days.
The respondent’s sick pay scheme provides for eight weeks fully paid sick leave. However, the first three days of absence are considered as “waiting days” and are not paid. The claimant was therefore only paid in respect of one day of her absence.
The claimant argued the terms of the respondent’s scheme were less favourable to her than SSP. The respondent, on the other hand, maintained it was exempt from the obligation to pay SSP on the basis its scheme was a more favourable scheme.
What did the WRC decide?
In deciding whether or not the respondent was exempt from the obligation to pay SSP, the WRC had regard to the factors set out in the Act which inform the assessment as to whether an employer’s scheme is, as a whole, more favourable, than the SSP scheme. These are as follows:
(a)The period of service of an employee before sick leave is payable;
(b)The number of days that an employee is absent before sick leave is payable;
(c)The length of time for which sick leave is payable;
(d)The amount of sick leave payable;
(e)The reference period of the sick pay scheme.
The WRC considered each criterion in this case:
(a) The period of service required before sick leave is payable
SSP kicks in after 13 weeks’ service. Under the respondent’s scheme, employees require 26 weeks’ service. However, the WRC took into account that in this case the complainant and 89% of the respondent’s employees had more than six months’ service. The Adjudication Officer (AO) did comment, however, that it is a factor to be included when deciding if, “on the whole,” the respondent’s scheme is more favourable. The AO also commented that the eight weeks’ sick pay entitlement under the respondent’s scheme outweighs the requirement to have six months’ service compared to 13 weeks’ service for SSP.
(b) The number of days absence before sick leave is payable
It was acknowledged that not paying sick pay for the first three days of absence is a disadvantage for an employee who is absent for a maximum of three days in a 12 month period. However, the AO was of the view that this was outweighed by the fact the respondent pays sick pay for up to eight weeks in 12 months after three days absence.
(c) and (d) The length of time for which sick leave is payable and the amount payable
The AO commented that there can be no arguing that eight weeks’ paid sick leave is more beneficial than three days SSP and pay at 100% is more beneficial than 70%, capped at €110.
(e) The reference period
The WRC determined that in this case the reference periods were equally favourable.
While not a criterion listed as relevant in the Act, the AO did seem to have regard to the fact the respondent’s sick pay scheme was agreed by way of collective bargaining with trade union representatives when comparing the benefits of the respondent’s scheme versus the SSP scheme under the Act.
Ultimately, the WRC found that the respondent’s scheme provided benefits that, on the whole, are more favourable to the complainant than SSP. As a result, the complainant’s claim in respect of SSP was not successful.
What does this case mean for employers?
This case provides valuable insight into the WRC’s consideration of the provisions of the Act which deal with a company sick pay scheme and whether it is, as a whole, more favourable to the employee than the SSP scheme.
In determining whether a company sick pay scheme is “as a whole” more favourable than the SSP scheme, the WRC will have regard to all of the criteria (a) to (e) set out above. It also appears the WRC will critically analyse the evidence adduced by the parties in support of their respective arguments as to why a company scheme is/is not more favourable as a whole.
It should however be acknowledged this is the first decision under the Act and further litigation before the WRC and Labour Court is inevitable. We expect this litigation will tease out the weighting to be attributed to the five criteria listed in the Act (e.g. are all criteria equally important or are some more important than others) and also shed some light on whether in order to be exempt from the obligation to pay SSP, in practice, an employer’s sick pay scheme needs to be slightly or significantly “more favourable as a whole”.
Finally, SSP is due to gradually increase over time, up to ten days in 2026, so employers should bear in mind that as this entitlement increases, they will need to assess on an ongoing basis whether their company scheme remains more favourable.
For further information in relation to this topic please contact Triona Sugrue, Knowledge Consultant, Ronan McCann, Solicitor, or any member of the ALG Employment team.
Date published: 19 October 2023.