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Occupational sick pay
[ch 7: pages 207-209]An employer can provide an occupational sick pay scheme. This must pay at least the SSP rate. As sick pay is a contract term, the employer can set its own rules. For example, contractual sick pay can be conditional on consenting to a medical examination by a company doctor (Stirling & Mair v Meikle EAT/27/02).
An employer’s failure to follow its own rules on sick pay is likely to be a breach of contract and an unlawful deduction from wages (see Chapter 4). Here is a good example, in which organised action by UNISON members defeated an attempted sickness absence-related pay cut by an NHS Trust:
In February 2012, health workers’ union UNISON defeated a move by Central Manchester University Foundation Trust to cut staff pay if they took too much sick leave, by supporting multiple individual employment tribunal claims.
The Trust had introduced a new rule that employees who were sick on four or more occasions a year or 18 days would be penalised by losing their incremental pay rise. As UNISON pointed out: “The nature of working in a hospital, surrounded by ill people, means you are more likely than in other jobs to become unwell”. The tribunal agreed that the new Incremental Pay Progression Policy was a breach of contract and the Trust withdrew it.
Bent and others v Central Manchester University Hospitals NHS Foundation Trust ET/2400833/11
In 2015, the Public and Commercial Services (PCS) union overturned cuts to sick pay and annual leave imposed on employees at the National Audit Office, in a test case brought after negotiations broke down:
In late 2012, the Cabinet Office began to put pressure on different divisions of the civil service to cut civil service terms and conditions, including sick pay. They wrote to all government departments asking them to ensure civil service terms and conditions matched those of a “good modern employer”. The NAO is independent of government and not a government department but even so, it decided to cut the terms and conditions of its workforce.
PCS organised a national response, with a campaign under the umbrella “Don’t rip up our rights”. The union also coordinated a joint grievance by 84 PCS members (10% of the NAO workforce), a motion from the PCS group of MPs and industrial action. When the NAO continued to refuse to negotiate, the union supported test litigation.
The NAO won its case before the employment tribunal but the employees appealed and in December 2014, the EAT ruled that the NAO was not entitled to change the contract terms of its staff without their agreement and made a declaration under section 12 of the ERA 96 confirming that the claimants’ particulars of employment still included their original contractual sick pay rights (six months full pay and six months’ half pay), as well as the original annual leave rights.
(1) Norman and (2) Douglas v National Audit Office UKEAT/0276/14/BA
It is a fundamental breach of contract not to pay contractual sick pay when due, even if non-payment is due to a mistake. This is because there is an implied duty to pay wages to any employee who is ready, willing and able to work. This duty can only be overridden by a clear express contract term:
A governing body committed a fundamental breach of contract when it paid only half pay sick pay instead of the full pay to which the claimant, a teacher off sick with work-related stress, was entitled. It made no difference that the school’s actions were due to an honest mistake, based on wrong advice about the contractual sick pay entitlement under the relevant collective agreement, the Burgundy Book.
Roberts v the Governing Body of Whitecross School [2012] UKEAT/0070/12/ZT
LRD has many examples of collectively agreed occupational sick pay schemes on its Payline database (www.lrd.org.uk/index.php?pagid=18).
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.
Sometimes sick pay is discretionary. The employer must not exercise that discretion arbitrarily or inconsistently or be “irrational or perverse” (Commerzbank v Keen [2007] IRLR 132 CA), In addition it must not withhold sick pay to victimise a worker or engage in discrimination (see Chapter 6). Finally, the employer must comply with the implied term of trust and confidence (see page 69).