Establishing a contractual entitlement to sick pay

If there is no written employment contract and the contractual entitlement to sick pay is disputed, a tribunal must work out the contract term by examining all the circumstances, including the parties’ past conduct and any documents or discussions (see Chapter 3).

In Secession Ltd t/a Freud v Bellingham EAT/0069/05, the employee, a financial controller, had no written contract. She had always received full pay sick pay over 15 years of employment, with no indication that it was discretionary or capped in any way. Her employer then refused to pay her more than SSP when she was signed off work for a month. The EAT decided that the fact that she had always received full pay sick pay was evidence of an implied term obliging the employer to pay sick pay at this rate. Failure to pay it was a fundamental breach of contract entitling her to resign and claim constructive dismissal.