7. Sick pay and sickness absence

Statutory sick pay

An employer must provide employees with details of their sick pay entitlement as part of the written statement of employment particulars, within two months of the employment start date (see Chapter 3: The employment contract). Sick pay rules do not have to be included in the written employment contract. Instead, they can be recorded in a separate document given to the employee.

Many employers provide an occupational sick pay scheme that is more generous than the statutory sick pay (SSP) scheme. Employees who are not entitled to occupational sick pay but who meet the qualifying criteria for SSP are entitled to SSP of £85.85 a week (since April 2012), for a maximum of 28 weeks. To receive SSP, an employee must earn an average of at least £107 a week. SSP is paid by the employer in the same way as wages, but it is reclaimed from the state.

Agency workers who meet the qualifying conditions are entitled to SSP. Whoever is responsible for deducting national insurance from their earnings is responsible for payment of SSP. Agency workers on contracts of three months or less are not entitled to SSP, but they become entitled if their contracts extend beyond three months (HMRC v Thorn Baker Ltd & others [2007] EWCA Civ 626).

Note that the obligation on employers to offer qualifying agency workers conditions matching those of comparable direct employees, introduced by the Agency Workers Regulations 2010, does not extend to occupational sick pay.

Workers or employees who do not qualify for SSP may qualify for Employment and Support Allowance (ESA).

Pregnant women can claim SSP, unless they are sick for a pregnancy-related reason from four weeks before the baby's expected week of birth, in which case they will start getting Statutory Maternity Pay (SMP) or Maternity Allowance (MA) (see Chapter 8: Maternity pay). Women in receipt of SMP cannot claim SSP at the same time.

To claim SSP, an employee must be ill for at least four days in a row (including weekends and bank holidays). SSP is only paid for the days the employee normally works. These are called "qualifying days". However, SSP is not paid for the first three qualifying days, which are called "waiting days". For example, an employee who works Monday to Friday and falls ill on a Saturday cannot claim SSP until the following Thursday, assuming the illness lasts that long. If the employee is ill again within eight weeks, and each period of illness lasts at least four days, the two periods are "linked" and the employee does not have to serve the waiting days again.

To claim SSP, the employee must notify the employer. While an employer can have its own notification procedure as a condition of payment of occupational sick pay, in the case of SSP the position is different. An employee claiming SSP cannot be required to notify the employer in person, and does not have to provide a doctor's certificate for the first seven days' absence.

Claims for non-payment of SSP can be pursued against the employer as unlawful deductions from wages through the employment tribunal, but a dispute about entitlement to SSP must be resolved by HM Revenue and Customs (HMRC).

The Fit Note

Since 6 April 2010, a revised sick note system has been in operation: The Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) (Amendment) Regulations 2010, introduced the "Statement of Fitness for Work" or "Fit Note". The Fit Note replaces the old certification system as the means of proving entitlement to SSP (and occupational sick pay, subject to the employer's own rules).

As with the old certification system, a paper copy of the Fit Note is issued by the GP and then handed to the employer by the worker. The Fit Note allows the GP, following discussions with the patient, to suggest a return to work based on one of four possible options:

• a phased return to work

• altered hours

• amended duties; and

• workplace adaptations.

There is no simple "Fit for Work" option. This is because, as was previously the case, where a worker is fully fit for work the GP will simply not issue a new certificate. An employer is not entitled to insist on medical confirmation of the employee's fitness to return. An employee who is ready, willing and able to return to work should be paid his or her normal wages.

An employer is not obliged to accept the advice on a Fit Note but if the employer decides not to follow GP advice (or follows it inadequately), the Fit Note must be treated as if the GP has advised that the employee is "not fit for work".

The employer should carry out a revised risk assessment of any changes or adaptations needed to implement the recommendations on the Fit Note, to ensure new risks are not introduced.

The Fit Note procedure does not change the employer's overriding statutory duty to make reasonable adjustments for a disabled employee (see Chapter 6).

The TUC guide Preparing for the new fit note: guidance for union representatives is available at: www.tuc.org.uk/extras/fitnote.pdf.

Occupational sick pay

An employer may provide an occupational sick pay scheme. This must pay at least the SSP rate. As this is a contractual term, the employer can set its own rules. For example, it is lawful for an employer to make receipt of contractual sick pay conditional on an employee consenting to a medical examination by a company doctor (Stirling & Mair v Meikle EAT/27/02). However, if the employer does not follow its own rules, this may be a breach of contract and an unlawful deduction from wages (see Chapter 4).

LRD has many examples of collectively agreed occupational sick pay schemes on its Payline database.

Most occupational sick pay schemes set out a period of entitlement to pay. A typical scheme might pay three or six months' full pay, followed by three or six months' half pay. However, in some cases entitlement may be discretionary. If the employer has discretion whether to pay sick pay, it must not exercise it arbitrarily or inconsistently, or be "irrational or perverse" (Commerzbank v Keen [2007] IRLR 132 CA) and it must act in accordance with the implied term of trust and confidence (see Chapter 3).

If a contract states that payment for sickness absence is conditional on management being satisfied that absence is "genuine", the employer must make its assessment of the genuineness of the absence in good faith and not irrationally, taking into account the duty of mutual trust and confidence. The employer is not allowed simply to conclude that an absence is not genuine without any specific evidence to that effect.

The case of Mersey Rail Electrics 2002 v Taylor [2007] UKEAT/162/07 also illustrates the limits on an employer's power to withhold sick pay. In this case, the sickness absence rules allowed the employer to deny payment if it had "any doubt that the absence was due to reasons other than health". The employee was absent for a stress-related condition which occurred shortly after a dispute over hours of work. Given the coincidence in time between the two events, the employer refused to pay sick pay. The employee self-certified for a week, after which she obtained medical certificates recording her condition. The EAT said that although the employer might have had doubts at first, these should have been resolved by the medical certificates, which should have been accepted at face value unless there was contradictory evidence.

However, where there is good reason to suspect that sickness absence is not genuine, the employer is allowed to look beyond the sickness certificate. Misuse of a medical certificate is a disciplinary offence.

An employer is not obliged to consider an employee's financial position when deciding whether to pay discretionary sick pay:

Establishing the contractual entitlement

If there is no written term and the contractual entitlement is in dispute, a tribunal can look at what happened in the past and what the parties' understanding was to establish the contractual position.

If an employee's doctor says s/he is fit to return but the employer wants further medical checks, the employee must be paid his or her full wages while these checks are being carried out. A person who is willing to work has a common law right to be paid (Beveridge v KLM UK [2000] IRLR 765).

Occupational sick pay and disability

The duty to make reasonable adjustments to enable a disabled person to overcome a substantial disadvantage will only very rarely extend to a duty to adjust a sick pay policy to make more generous payments to a disabled than a non-disabled employee (O'Hanlon v Commissioners for HM Revenue & Customs [2007] EWCA Civ 283). However, it might (rarely) be a reasonable adjustment to pay full sick pay to a worker who has been prevented from returning to work by the employer's failure to make reasonable adjustments (Nottinghamshire CC v Meikle [2004] EWCA Civ 859 (see Chapter 6: Disability).

Occupational sick pay and pregnancy

A woman absent due to a pregnancy-related illness is not entitled to full pay just because she is pregnant, unless the contract provides for this. This is because although European law requires special protection to be given to women on maternity leave, the only requirement imposed by European law as to remuneration or wages is that pay during maternity leave must not fall below an adequate level. This requirement is met by paying statutory maternity pay.

It would be unlawful sex discrimination for a sick pay policy to exclude pregnancy-related illness.

Sickness and holiday

The law on the relationship between holiday entitlement and sickness seems to be in a state of constant change and uncertainty. The latest position is set out in Chapter 4: Holidays and sickness absence.

Sickness during notice period

An employee off sick during his or her notice period is entitled to be paid normal full pay during that period even if they have used up all their sick pay entitlement unless they are entitled to contractual notice of at least a week more than the statutory minimum notice entitlement (section 87, ERA 96).

Dismissal due to sickness

Dismissal for long-term or frequent sickness absence can amount to a potentially fair reason for dismissal. Most commonly, this will be on grounds of "capability", but in Wilson v Post Office [2000] IRLR 834, the Court of Appeal held that an employee could be fairly dismissed for "some other substantial reason" when his attendance fell below the level required by an agreed attendance procedure (see Chapter 10: Fair reasons for dismissal).

However, it is important to note that even where a negotiated absence procedure is in place, employers are still obliged to investigate all the circumstances, including the underlying reason for each absence, and to give the employee an opportunity to explain the position. A dismissal will not be fair just because the employee has breached the terms of an agreed procedure.

An employee can be dismissed even if s/he has a current medical certificate and is still receiving sick pay. The prognosis for return is likely to be central to the fairness or otherwise of most dismissal decisions on grounds of long-term sickness absence.

If an employee is off sick after an accident, or after having been a victim of a crime, or even following a work-related injury, this does not mean that s/he cannot be dismissed as a result of sickness absence. However, in Frewin v Consignia EAT/0981/02, the EAT held that this is not the same as suggesting that the cause of the illness be completely disregarded. Before reaching the decision to dismiss, an employer should "go the extra mile" in investigating ways of avoiding dismissal where the absence is the result of a work-related injury or illness (McAdie v Royal Bank of Scotland [2007] EWCA Civ 806).

Where an employee is entitled to an enhanced pension for early retirement on grounds of ill-health, the employer should consider this first as an alternative to dismissal (First West Yorkshire Ltd t/a First Leeds v Haigh UKEAT/0246/07 ([2008] IRLR 182)).

In all cases, dismissal must be "reasonable in all the circumstances". Tribunals will take into account matters such as the size of the employer, difficulties in arranging for short-term replacements, the importance of the role, the employee's length of service, the nature of the illness and whether, taking all things into account, the employer's decision to dismiss was one a "reasonable" employer would have taken. The steps an employer must take before dismissal will depend on the individual circumstances, but should normally include:

• investigating the reasons for the sickness absence. This will usually include seeking expert medical guidance (with the employee's consent). That expert guidance will normally cover the employee's condition and prognosis, the likelihood of a successful return and any steps the employer could reasonably take to facilitate that return;

• consulting the employee;

• looking at alternative work; and

• warning the employee that continued or further absence may result in dismissal.

Dismissing an employee without consultation is likely to make the dismissal unfair (East Lindsey District Council v Daubney [1977] IRLR 181).

Where there is a sickness absence policy providing guidance on how absences should be dealt with, the employer should follow it. A sickness absence procedure is unlikely to be contractual. Nevertheless, an unreasonable failure to follow it is likely to make a dismissal unfair.

An employer does not need employees' consent to make changes to a non-contractual sickness absence procedure. However, a failure to consult (individually or collectively) on proposed changes may make any dismissal that results from the changes unfair.

If a policy is contractual, any departure from it could give rise to a claim for unlawful deduction of wages and/or constructive dismissal. For guidance on the factors likely to give a policy contractual status see Chapter 3: Contract terms.

Many sickness absence procedures set down rules for keeping in touch during sickness absence. These rules may require employees to contact their employer at regular, even pre-set, intervals. However, they should not be implemented in an unreasonable manner. Contact between employer and employee is generally accepted to be the best way of helping someone back to work, and many procedures are designed to encourage contact. But if the employer turns up unexpectedly or telephones too frequently or at inappropriate times of the day, this is likely to be intrusive, especially bearing in mind the human right to respect for private life.

An employer is obliged to take steps to discover the true medical position before dismissing, and it will nearly always amount to unfair dismissal if an employer does not do this. However, the overriding principle is one of "reasonableness", so a failure to consult with the employee's GP is not an absolute guarantee that the resulting dismissal will be unfair. There is no corresponding obligation on the employee to inform the employer of the prospects of recovery (Mitchell v Arkwood Plastics [1993] ICR 471; Perry v Imperial College Healthcare NHS Trust UKEAT/0473/10) discussed in Chapter 10: Dismissal).

Intermittent absence

In cases of intermittent absences due to ill health, the employer may not have the same obligation to obtain medical evidence. However, given that frequent short-term absences may have an underlying medical cause, an employer considering dismissal for excessive intermittent sickness absence would be well-advised to seek some expert medical guidance on the employee's condition and on the likelihood of further absences.

The EAT has said that the employer must consider the whole history of the employment and take account of a range of factors, including the nature of the illness and the likelihood of recurrence, the length of absences compared with the intervals of good health, the employer's need for that particular employee, the impact of absences on the rest of the workforce and the extent to which the employee was made aware of the position (Lynock v Cereal Packaging [1988] IRLR 510). Tribunals will always take into account the size and resources of the particular employer when deciding whether its actions were reasonable.

A dismissal for intermittent absence can be fair even where an individual is fit for work at the date of the dismissal (Wilson v Post Office[2000] IRLR 834).

But in Leeson v Makita Manufacturing Europe EAT/0911/00, the EAT held that the dismissal of an employee who had frequent absences for genuine reasons was unreasonable because it was motivated more by a desire to make an example of the employee and to deter others, than by a wish to deal with the employee's genuine sickness.

Disability and sickness absence

The dismissal of disabled employees for disability-related absences could amount to disability discrimination unless the employer has first made all reasonable adjustments to enable the employee to return to work.

A phased return to work is capable of being a reasonable adjustment (London Borough of Hillingdon v Morgan ([1999] UKEAT 1493/98/2705). In this case, there was evidence that a couple of months spent working from home might have been sufficient to enable this ME sufferer to return to work. The council had this kind of work available but failed to investigate it properly. This failure amounted to disability discrimination.

But in Salford NHS Trust v Smith (EAT05/07/10), the EAT reminded tribunals that the duty to make reasonable adjustments is limited to a duty to consider changes that may enable an employee to remain in or return to work. There is no general duty to focus on promoting rehabilitation for its own sake.

In the Salford case, Ms Smith, who suffered from chronic fatigue syndrome, asked to be provided with non-productive rehabilitative work, in the form of light duties or a career break. Her occupational health adviser supported her case. She was not fit for any productive work and neither adaptation would have enabled her to return to her role. The tribunal concluded that neither proposal was a reasonable adjustment (see Chapter 6: Reasonable adjustments).

Some (increasingly rare) employers provide permanent healthcare insurance (PHI), which insures against the financial costs of long-term illness and provides a financial safety net for employees. The employer's obligations will depend on the contractual terms of the scheme. The High Court has held in Aspden v Webbs Poultry ([1996] IRLR 521), that there is an implied term in a contract that an employee will not be dismissed, except for redundancy, if a PHI scheme requires the individual to remain an employee in order to receive the benefit.

Sickness absence and strike action

Workers off sick before the start of a strike are not viewed as taking part in it. This is because workers who are off sick have no obligation to supply their labour and therefore cannot be said to be withdrawing it. This would not apply, however, where the sick employee was somehow actively participating in the strike.

However, if the sickness begins after the strike has started, a worker who is already participating in industrial action will usually be considered to be continuing to take part in the strike.

Sickness absence and redundancy selection

Employers can use sickness as a method of selecting for redundancies (see Chapter 11: Selection for redundancy). However, reasonable adjustments to the selection criteria should be considered in relation to disabled employees (see Chapter 6: Disability discrimination).

Any award of compensation made by a tribunal in an unfair dismissal claim can be reduced to take account of SSP, incapacity benefit or Employment and Support Allowance received (Morgans v Alpha Plus Security EAT/0436/04 ([2005] IRLR 234).

Medical reports

The Access to Medical Reports Act 1988 gives employees (and prospective employees) the right to see medical reports prepared by their own GP, or any other medical practitioner responsible for their care, in connection with their employment. The Act says that the employer must obtain the individual's consent before seeking a report from her/his doctor; that the individual has the legal right to have a copy of the report before it is forwarded to the employer and to query items in it; and that if the doctor refuses to accept it, the individual's objection may be appended to the report.

Individuals who want to see records relating to them that are not prepared by someone responsible for their care (for example, an occupational health consultant) can make a request under the Data Protection Act 1998.

Medical information held by the employer is sensitive personal data and the employer must comply with all the requirements of the Data Protection Act (including, in particular, express informed consent) and Part 4 of the Information Commissioner's Code of Practice: Information about Workers' Health. Further advice and guidance, along with a copy of the Code, can be found at the Information Commissioner's website at: www.ico.gov.uk

Pre-employment health checks

The position of jobseekers with a record of sickness absence will be made slightly easier by a change introduced by the EA 2010 to ban pre-employment questions to job applicants about their health (including whether they have a disability and their previous sickness absence record), before they are offered a role. Once offered the role, a reference request asking for a candidate's sickness record is theoretically possible. However, employers are likely to be discouraged from doing this because of the risk of a claim (See Chapter 6: Disability discrimination).

Surveillance of employees on sick leave

Notwithstanding the Human Rights Act, tribunals are increasingly willing in principle to view secret video footage collected by an employer of a person's activities. This kind of evidence usually aims to prove that an employee claiming sick pay is not as impaired as s/he has represented. It is up to the tribunal to decide how much weight to give the footage (Pendragon Motor Co v Ridge EAT/962/00).

Following the leading case of McGowan v Scottish Water (EATS/0007/04) (discussed further in Chapter 10: Dismissal), the EAT concluded that the secret use of private investigators in this case was "proportionate", and not a breach of Mr McCann's right to privacy (McCann v Clydebank College UKEATS/0061/09).

An employer is likely to be able to justify dismissing an employee who carries out paid work for a third party during working hours while on paid sick leave, without the employer's permission (McCann v Clydesbank College above). However, a dismissal on this basis must satisfy all the tests of a normal fair dismissal for misconduct (see Chapter 10: Dismissal).