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Occupational pay schemes
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.
In some cases, sick pay may be discretionary. If an employer has discretion whether to pay sick pay, it must not exercise that discretion 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).
Can an employer make sick pay conditional on being satisfied the sickness is “genuine”?
Yes, a contract can state that occupational (as opposed to statutory) sick pay is conditional on management being satisfied that an absence is “genuine”. However, the contractual rule must be clear and unambiguous, and 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 to decide that an absence is not genuine without proper evidence. For example:
Ian Guthrie was off sick after a work accident. There was a contractual sick pay policy that said sickness absence would be paid if it was genuine. The employer withheld sick pay because the company doctor disagreed with Mr Guthrie’s GP as to his fitness to return. However, as the tribunal pointed out, there is a big difference between a genuine disagreement as to whether or not an employee is fit for work (which should not impact on an employee’s sick pay entitlement) and doubts as to the genuineness of an absence, based on evidence of dishonesty or an intention to mislead.
Scottish Courage Ltd v Guthrie EAT/0788/03
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 off work with a stress-related condition that occurred shortly after a dispute over hours of work. Given the coincidence of 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 (while she was self-certifying) those doubts should have been resolved by the GP certificates, which should have been accepted at face value unless there was some contradictory evidence.
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:
Mr King worked for the fire service. He took long-term sick leave due to depression. His wife was also off sick, so that their family income was reduced. King believed his employer should have exercised discretion to extend his period of full pay because his illness was work-related and his financial situation was poor. The EAT held there is no such requirement.
West Yorkshire Fire and Civil Defence Authority v King EAT/0961/0