ADJUDICATION OFFICER DECISION

Adjudication Reference:  ADJ-00044305

Parties:

Complaint:

Date of Adjudication Hearing:  11/12/2023

Workplace Relations Commission Adjudication Officer:  Gaye Cunningham

Procedure:

In accordance with Section 41 of the Workplace Relations Act, 2015 and   following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.

Background:

The Complainant contends that he has not been given his statutory entitlement to 3 days paid sick leave as provided for in the Sick Leave Act 2022.

Summary of Complainant’s Case:

The Sick Leave Act 2022 was enacted on 1st January 2023.  The Complainant was on sick leave on 3rd, 4th & 5th January 2023.  It is contended that in accordance with the Act, he should have received €110 per day. 

Section 5 (1) of the Act states the entitlement to statutory sick leave:

(1) Subject to this Act, an employee shall, in respect of a day on which he or she would ordinarily work but is incapable of doing so due to illness or injury (in this Act referred to as a “statutory sick leave day”), be entitled to statutory sick leave.

Section 5(4) of the Act provides that,

The first day in a year that an employee is incapable of working due to illness or injury shall be the employee’s first statutory sick leave day, and any subsequent statutory sick leave days shall be construed accordingly.

This means that the employee should be paid from day 1, not after 3 days.

Section 8(1) provides

Nothing in this Act shall prevent the inclusion in a contract of employment or provision that is

(a) as favourable to an employee as, or

(b) more favourable to an employee than,an entitlement to statutory sick leave in accordance with this Act, and any such provision shall be in substitution for, and not in addition to, that entitlement.   

This means you can have a provision in the contract of employment that is the same or better than what is in the Act.  The first three days pay has to be €110 or better.  In this case it is not the same  for the first three days.

Section 8 (2) provides

Without prejudice to Section (9), a provision in a contract of employment, that is or becomes less favourable to the employee, than a similar or corresponding entitlement, of the employee under the Act, shall be deemed to be modified so as to be not less favourable.

It is argued that if there is a provision in the contract of employment that is less favourable than that to which the employee is entitled in the Act, than it has to be modified so as to be not less favourable. Under the Act, an employee is entitled to be paid €110 per day for the first three days of absence.  This is omitted from the company sick pay scheme.  Therefore it is less favourable and must be modified.

Section (9) (1) refers to “over the course of a reference period”.

The reference period is not clearly defined.  The first reference period that is nearly always mentioned is “3 day waiting period”.

Conclusion

Under the Company sick pay scheme, the Complainant would not have been paid for the first 3 days sick leave.  The Union brought it to the attention of the company that under the Sick Leave Act he should be paid €110 per day.  The Company subsequently paid him €50 per day for the 3 days.  It is argued that this is not in line with the entitlements of the Act.  It is submitted that the Complainant is at a loss and this loss will be even greater when the Government introduces paid sick leave for 10 days as they plan to do.

Summary of Respondent’s Case:

The Respondent defends this claim in full and submits, inter alia, that the obligations under the Act do not apply to the Respondent because the Respondent provides its employees, including the Complainant, a sick leave scheme which is, as a whole, more favourable to the employee than statutory sick leave, as per section 9 of the Act.

The Respondent operates a long established sick leave scheme for its employees, which is applicable to the Complainant. This scheme is collectively agreed between the Respondent and Connect, which is recognised to collective represent the Complainant’s role.

When the Act was commenced the Respondent was in the process of reviewing its sick leave scheme in conjunction with the union and made improvements to the scheme as a result of the review process. Those changes came into operation simultaneously to the commencement of the Act and the Respondent determined its sick leave scheme was more favourable than the provisions of the Act.

Whereas previously, the terms of the Company sick leave scheme entailed a three day ‘waiting period’, this has now been revised and improved, and the terms of the Respondent/Union sick pay scheme which apply to Production Operatives such as the Complainant provide the following terms: 

Paid sick leave commences on the first day of absence. 

Employees are entitled to 26 weeks’ paid sick leave in a rolling 12 month period in respect of sick leave absence. Employees who exhaust their entitlement of 26 weeks can apply for the Respondent’s income continuance cover in association with Irish Life.

The Respondent applied the terms of its collective bargained and agreed sick leave scheme to the Complainant’s January absence, retrospectively, given that the absence occurred prior to the revised changes to the sick pay scheme being communicated to employees on 16 February 2023. The Complainant received €70 sick pay at the time of his absence in or around 25 January 2023 in accordance with the terms of the original sick leave scheme, and later received €155 to make up the difference between the old and revised company scheme in or around 22 February 2023. A copy of the relevant spreadsheet showing these payments is provided. Payment was made by cheque. No tax was payable on the amount received by the Complainant as tax had already been deducted from the gross payment by the Respondent. It was also open to the Complainant to apply for illness benefit from the Department of Social Protection.

A number of employees of the Respondent have experienced periods of illness since the commencement of the Act. Several of those employees were the beneficiaries of the more favourable provisions of the Respondent’s sick leave scheme and would have been disadvantaged if they had only received the provision of statutory sick leave as provided in the Act.

Section 5 of the Act provides, inter alia:

(1) Subject to this Act, an employee shall, in respect of a day on which he or she would ordinarily work but is incapable of doing so due to illness or injury (in this Act referred to as a “statutory sick leave day”), be entitled to statutory sick leave.

(2) An employee shall be entitled to up to and including 3 statutory sick leave days in a year, or such number of statutory sick leave days as may stand specified from time to time by order of the Minister under section 6.

(3) Statutory sick leave days may be consecutive days or non-consecutive days.

(4) The first day in a year that an employee is incapable of working due to illness or injury shall be the employee’s first statutory sick leave day, and any subsequent statutory sick leave days shall be construed accordingly.

(5) Subject to subsection (7), an employee’s entitlement to a statutory sick leave day shall not commence before a time when he or she has completed 13 weeks continuous service with his or her employer. […]

The Respondent’s sick leave scheme provides a scale of payment depending on the duration of a sickness absence, with payment on a day one basis. The gross figures payable, with the Respondent deducting the tax at source and paying the employee the net amount by cheque. The figures under the Respondent scheme are less than the €110 which would be payable under the Act. It is important to note however that the Complainant would only have received statutory sick payment for only the first three days of illness absence, and under the Respondent sick pay scheme he would still have an additional 127 sick leave days remaining, which again is vastly in excess of the three days available under the Act currently. This balance of sick leave days equates to approximately a further 9.16 weeks of full pay for the Complainant, without taking into account statutory illness benefit.

For any absence in excess of the first three days of sick leave covered under the statutory sick scheme, it is readily apparent that the employers scheme provides a much greater and favourable benefit than the statutory scheme as it enables employees to continue to receive sick pay for up to 26 weeks of absence. This will continue to be the case when the statutory allowance increases to five, and eventually to 10 days absence in a 12 month period, still far below the 26 weeks sick leave provided for in the Respondent’s scheme.

The Respondent’s scheme is much more favourable when considered in terms of prolonged absences due to illness, as opposed to short absences, and as such provides much greater protection for employees in instances of serious illness which might be anticipated to last well beyond 3 days duration. In such circumstances, the Respondent’s scheme provides for much more extensive paid sick leave cover for employees, while also providing employees to apply for income continuance once they have exhausted the allocation of 26 weeks sick leave.

On the whole, the Respondent’s sick leave scheme is much more advantageous to the employee than the Act’s provisions, given the number of sick leave days available to the Complainant in total. What is essential here is that the Adjudication Officer is obliged under section 9 to consider the Respondent’s scheme “as a whole”, and it is imperative that this test be correctly applied in order for the Act to be correctly interpreted.

Section 8, which is entitled ‘More favourable provision in contract of employment’ provides at subsection (1) thereof:

(1) Nothing in this Act shall prevent the inclusion in a contract of employment of a provision that is –

(a) as favourable to an employee as, or

(b) more favourable to an employee than, an entitlement to statutory sick leave in accordance with this Act, and any such provision shall be in substitution for, and not in addition to, that entitlement.

The language of the above provision is significant in its use of the word ‘substitution’ which, interpreted in its plain meaning, signifies an alternative or replacement sick pay scheme.

The significance of this point is seen when analysing the further non-application provision in the Act, which is set out in section 9 of the Act:

(1) The obligations under this Act shall not apply to an employer who provides his or her employees a sick leave scheme where the terms of the scheme confer, over the course of a reference period setout in the scheme, benefits that are, as a whole, more favourable to the employee than statutory sick leave.

(2) In determining, for the purposes of subsection (1), whether a sick leave scheme confers benefits that are, as a whole, more favourable than statutory sick leave, the following matters shall be taken into consideration:

(a) the period of service of an employee that is required before sick leave is payable;

(b) the number of days that an employee is absent before sick leave is payable;

(c) the period for which sick leave is payable;

(d) the amount of sick leave that is payable

(e) the reference period of the sick leave scheme.

The period of service of an employee that is required before sick leave is payable

Subsection 5(2) of the Act requires an employee to complete 13 weeks’ continuous service with his or her employer prior to any entitlement under the Act to come into effect.

The Respondent’s sick leave scheme requires an employee to complete 12 months (52 weeks) continuous service prior to being eligible for paid sick leave.  On this ground, whilst it could be contended that the Act’s provisions are more advantageous than the provisions of the Respondent’s sick leave scheme, this difference is minor, and does not affect many of the Respondent’s employees given its successful efforts to retain colleagues for extended periods of time. The average service of employees of the Respondent is 25 years. 100% of the Respondent’s employees have more than 12 months service.

The number of days that an employee is absent before sick leave is payable

Subsection 5(4) of the Act provides that statutory sick pay is payable from the first day in a year that an employee is incapable of working due to illness or injury.

The Respondent’s sick leave scheme provides for payment from the first day of absence within a rolling 12-month period. Waiting days were removed by the Respondent as part of its review of the company sick leave scheme, the outcome of which was collective agreed with the union.

On this ground, the Act’s provisions and the provisions of the Respondent’s sick leave scheme are equally favourable.

The period for which sick leave is payable

Subsection 5(2) of the Act that an employee is entitled up to and including three statutory sick leave days in a year.

The Respondent’s sick leave scheme provides for up to 26 weeks paid sick leave within a rolling 12-month period.

On this ground, the Respondent’s sick leave scheme is vastly more advantageous than the Act’s provisions. The Act only provides for three days’ paid sick leave, while the Respondent’s sick pay scheme provides for up to 130 days sick leave, over 40 times the number of paid days of sick leave as the statutory scheme. This remains the case even when the statutory entitlement increases to the maximum 10 days in the future.

It is submitted that this very significant difference should be accordingly weighted in the Adjudication Officer’s consideration as to whether the Respondent’s sick leave scheme is overall and “as a whole, more favourable” than statutory sick leave.

The amount of sick leave payable

Given the Complainant’s rate of pay, the €110 rate of statutory sick pay would apply.

The figures under the Respondent scheme are less than the €110 which would be payable under the Act. It is important to note however that the Complainant would only have received statutory sick payment for only the first three days of illness absence, and under the Respondent sick pay scheme he would still have an additional 127 sick leave days remaining, which again is vastly in excess of the three days available under the Act currently. This balance of sick leave days equates to approximately a further 9.16 weeks of full pay for the Complainant, without taking into account statutory illness benefit.

On the whole, the Respondent’s sick leave scheme is much more advantageous to the employee than the Act’s provisions, given the number of sick leave days available to the Complainant in total. What is essential here is that the Adjudication Officer is obliged under section 9 to consider the Respondent’s scheme “as a whole”, and it is imperative that this test be correctly applied in order for the Act to be correctly interpreted.

The reference period of the sick leave scheme

The Act does not provide for a “reference period” in its own terms. However, section 5(2) provides for three days paid sick leave in a year

The Respondent’s sick leave scheme provides for 26 weeks paid sick leave in any rolling 12- month period. This 12-month period is the “reference period” for the purpose of the Respondent’s sick leave scheme.

The terms of the Act do not specify whether the provision of three days paid sick leave in a year is in reference to a “rolling” year period or a calendar year period. However, in either case, the length of the reference period in the Act and the Respondent’s sick leave scheme is the same. It therefore must be said that the reference period in the Act and the reference period in the Respondent's sick leave scheme are equally favourable.

Further non-statutory considerations – Industrial Relations

In addition to the considerations required by the Act, it is respectfully submitted that the Adjudicator may consider other matters in determining whether the Respondent’s sick leave scheme is more favourable than the Act’s provisions.

The Respondent’s Company/Union sick leave scheme is a collectively-bargained and agreed scheme, developed in collaboration with its employees and their trade union representatives. It should be a policy objective of the Workplace Relations Commission to facilitate collective bargaining and to respect collective agreements where possible.

This is particularly the case where the Respondent and union entered a collective review of the existing Respondent sick leave scheme and the Respondent implemented improvements to the scheme on foot of those negotiations with Connect, including improvements over and above those sought by the union.

Declaring that the Act’s provisions are “more favourable” than the Respondent’s sick leave scheme would de-stabilise industrial relations in the Respondent's business and would likely result in the necessity to re-negotiate and agree a new sick leave scheme which mirrors the terms of the Act.

Such a newly-bargained sick leave scheme would likely require the Respondent to take a bargaining position of significantly reducing the length of time it can provide sick leave, or other cost-saving measures to make the first three days of statutory sick leave payable on a cost-neutral or cost-effective basis. This is particularly so in circumstances where the Respondent has estimated the cost of paying the first three days sick leave absence at the rate of €110 would add an unsustainable additional annual cost to the total cost of providing paid sick leave under the Respondent’s current scheme.

Case law

Karolina Leszczynska and Musgrave Operating Partners Ireland, ADJ-00044889is relied upon to support the Respondent’s positionwhere the employer sick leave scheme is more favourable to the employee than statutory sick leave per section 9 of the Act.

Conclusion

The Respondent has shown that its sick leave scheme is “as a whole, more favourable” than the provisions of the Act. As a result, the Act can have no application to the Respondent. Accordingly, the Respondent is not obliged to provide payment for statutory sick leave under section 5 of the Act, due to the provisions set out in section 9 of the Act.

It is therefore respectfully submitted that the Adjudication Officer should dismiss the claim before the Workplace Relations Commission as not well founded.

Findings and Conclusions:

The purpose of the Sick Leave Act 2022 is to provide that employees shall, subject to certain conditions, be entitled to up to and including 3 statutory leave days.   I note the point made by the parties that the entitlement to paid sick leave will increase over the next two years.  However, this complaint refers to the situation that existed following the enactment of the 2022 Act and it is to that situation I must address my findings and decision. 

The basis of the Sick Leave Act 2022 is to confer a benefit on employees with no contractual entitlement to paid sick leave.  The basic right to paid sick leave for a certain limited period is contained in the Act subject to certain provisions.

Statutory Instrument 607 of 2022 fixes the daily rate of statutory sick pay at €110 or 70% of the employee’s gross daily rate of pay, whichever is the lesser.  In this instant case, the Complainant, by virtue of the pay he earns, would be entitled to the rate of €110 per day for the three days of sick leave if the provisions of the Act apply.

The Complainant’s representative argued that it is a matter plain and simple that the Respondent has failed to apply the provision of the Act, specifically to pay the Complainant the sum of €110 for each of the 3 days sick leave he incurred in January 2023.

The Respondent’s representative argued that the sick pay scheme which was negotiated with the Union, provides benefits in excess of the Act’s provisions. When taken as a whole.  The Respondent further argues that in accordance with the provisions of Section 9, the obligations under the Act do not apply to an employer who has provided a sick leave scheme where the terms of the scheme confer, over the course of a reference period set out in the scheme, benefits that are, as a whole, more favourable to the employee than statutory sick leave.

I have examined these issues under Sections 5, 8 and 9 of the Act.

Section 5 of the Act provides, inter alia:

(1) Subject to this Act, an employee shall, in respect of a day on which he or she would ordinarily work but is incapable of doing so due to illness or injury (in this Act referred to as a “statutory sick leave day”), be entitled to statutory sick leave.

(2) An employee shall be entitled to up to and including 3 statutory sick leave days in a year, or such number of statutory sick leave days as may stand specified from time to time by order of the Minister under section 6.

(3) Statutory sick leave days may be consecutive days or non-consecutive days.

(4) The first day in a year that an employee is incapable of working due to illness or injury shall be the employee’s first statutory sick leave day, and any subsequent statutory sick leave days shall be construed accordingly.

(5) Subject to subsection (7), an employee’s entitlement to a statutory sick leave day shall not commence before a time when he or she has completed 13 weeks continuous service with his or her employer. […]

Section 5 of the Act confers the basic right to 3 statutory sick leave days which the employee can benefit from once they have accrued 13 weeks continuous service.  I note the requirement to have 12 months service in the Respondent employment.  Therefore the provision of the service requirement may be said to be disadvantageous in relation to what is contained in the Act.  However, as stated in the Respondent’s submission, this requirement does not disadvantage any of the employees, as 100% have over 12 months service.

Section 8 of the Act provides:

(2) In determining, for the purposes of subsection (1), whether a sick leave scheme confers benefits that are, as a whole, more favourable than statutory sick leave, the following matters shall be taken into consideration:

(a) the period of service of an employee that is required before sick leave is payable;

I have examined the Sick Pay scheme in the Respondent employment, and compared it with the statutory sick leave.  I find benefits conferred as a whole more favourable or not as follows:

(a) the period of service that is required in the Respondent employment before sick leave is payable is less favourable than the statutory requirement.  However, this is not a disadvantage in practice as 100% of the employees have more well more than the statutory service requirement.

(b) the number of days that an employee is absent before sick leave is payable is the same for both statutory and Respondent sick pay scheme.

(c) the period for which sick leave is payable in the case of the Respondent sick pay scheme is far in excess of the period for statutory sick leave pay.

(d) the amount of sick leave that is payable in the Respondent sick pay scheme when taken over the period is far in excess of that under the Act.

(e) The reference period of the Respondent sick pay scheme provides for 26 weeks paid sick leave in any rolling 12- month period. 

I have considered the employer’s sick pay scheme and I have compared its benefits with those of the Sick Leave Act.  It is my view that the duration of paid sick leave in the employer’s scheme and the amount of sick pay, combine to provide benefits that, on the whole, are more favourable to employees than the benefits provided in the Act.  As provided for in Section 8 of the Act, these benefits are in substitution for, and not in addition to the entitlements under the Act.                    Further, I find, that as contained in Section 9, the obligations under the Act do not apply to the Respondent who provides the employees a sick leave scheme where the terms of the scheme  benefits that are, as a whole, more favourable to the employee than statutory sick leave.

Based on the findings and reasoning above, I find the Complainant’s complaint to be not well founded.

Decision:

Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Section 41 of that Act.

Based on the findings and reasoning above, I have decided that the Complainant’s complaint is not well founded.

Dated:   13th of February 2024

Workplace Relations Commission Adjudication Officer:  Gaye Cunningham

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