An Initial Judgement Regarding Ireland's Sick Pay

Employers have faced uncertainty as to what they could do due to the lack of clarity in the Sick Leave Act 2022, especially regarding the legal stance when an employer operates their own sick pay scheme.

The Sick Leave Act includes a thirteen-week service as a prerequisite, before providing payment from the initial day of absence. Currently, it allows for three days of sick pay within a twelve-month timeframe. The daily pay rate is set at 70% of the average daily wages earned in the thirteen weeks preceding the illness-related absence.

In the case of Karolina Leszczynska v Musgrave Operating Partners Ireland (ADJ-00044889), the employee had been with the company since 2007 and was absent for four days in January 2023. However, the company only paid for one day of this absence, which was in accordance with their own sick pay scheme. The company argued that their scheme was more favourable than statutory sick pay. Their scheme included a six-month service requirement, three days of a waiting period (unpaid), and eight weeks of full pay in a rolling 12-month period.

The Sick Leave Act allows for provisions in the employment contract that are as or more favourable than statutory sick pay to apply instead. The Act stipulates that entitlement to statutory sick leave should replace any other provision, not add to it. Additionally, the Act does not apply if a company's sick pay scheme offers benefits that are “as a whole” better than statutory sick leave.

To determine if a company's sick pay scheme is indeed more favourable, several factors are considered, including; the service requirement, waiting period, duration of paid sick leave, the amount of sick pay, and the reference period of the scheme.

In this case, the Company did not pay for the first three days of sickness absence, and there was a six-month waiting period, as opposed to the 13 weeks required under the Ac. The good news for employers was that the Adjudicator determined that the benefits conferred under the company sick pay scheme, were “as a whole” more favourable than the Statutory Sick Pay.

Furthermore, it was recognised that the primary purpose of the legislation was to provide a benefit to employees who did not have a contractual entitlement to sick leave.

This decision has provided some much-awaited clarity for companies that offer their own sick pay scheme.

We would remind employers that statutory sick pay is due to increase, on the 1st of January 2024, to five days, and so this may mean reassessing whether their scheme continues to be as favourable or more favourable than Statutory Sick Pay in light of these additional entitlements.

Employers should consider whether they need to make any adjustments, amend any sick pay policies, and take steps to plan for the five-day entitlement in January 2024.

For further guidance and information in relation to sick pay, as always, our team here MSSTheHRPeople are here to help!

By Tara Daly