Ace Payroll: Sick leave paid in first six months employment is a gift and cannot be deducted from later entitlements




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Sick leave paid in first six months employment is a gift and cannot be deducted from later entitlements

Note: The situation described in this article only applies till 31st March 2004. From 1st April 2004, sick leave paid in advance can be deducted from future entitlements as provided for by section 63(3)(b).

Question

I own a plumbing business and employ four plumbers. One of my plumbers got sick shortly after he started working for me. I paid him four day’s sick pay and deducted this from his sick leave entitlement when it became due.

Recently, the plumber again got sick and was off work for a week. I paid him one day’s sick pay because he had already used the other four days up.

However, he is now demanding payment for the whole five days. He says that he has taken legal advice and that he is entitled to five days sick leave after 6 months employment, and that any sick leave he took in advance of his entitlement becoming due cannot be deducted from that entitlement. Is he correct?

Answer

Your plumber is correct. In a case decided in 1997 the Employment Court held that the wording of the Holidays Act prevented employers from allowing employees special leave (which incudes sick leave) in advance, then deducting the amount taken from their entitlement once it became due.

In the 1997 case, Grammar Electrical employed Mr Thomas from May 1994 until May 1995.

During his first six months of employment, Mr Thomas was sick for one day and was paid sick leave in advance.

At the end of April 1995, Mr Thomas injured himself playing soccer. His doctor put him off work for one week. Following discussions, Grammar Electrical paid him four days sick pay and allowed him one day’s unpaid leave on the basis that he had already had used one of his five sick days during his first six months of employment. However, Mr Thomas resigned before he banked the cheque. Grammar Electrical immediately arranged to have the cheque stopped.

Mr Thomas complained to a Labour Inspector who filed a case against Grammar Electrical in the Employment Tribunal for unpaid sick pay.

In its defence, Grammar argued that Mr Thomas was not entitled to sick pay because he was injured, and not sick. It also argued that even if an employee was entitled to sick pay when injured, Mr Thomas was only entitled to four days sick pay because he had already used one day’s sick leave during his first six months of employment.

The Employment Tribunal held that Mr Thomas was entitled to sick pay even though he was injured, and not sick. It also held that the Holidays Act did not prevent an employer granting sick leave in advance and deducting that leave from the employee’s sick leave entitlement once it became due. It awarded Mr Thomas four day’s sick pay.

The Labour Inspector appealed the second part of the Tribunal’s decision to the Employment Court.

On appeal, the Employment Court overturned the Employment Tribunal’s decision. The Court held that the Holidays Act provided a complete code for the entitlement and payment of special leave and that this could not be changed. Mr Thomas was therefore entitled to five days sick pay, despite having used one of those days before his sick leave entitlement became due.

"One may have some considerable sympathy for employers who have acted in a kindly or generous fashion in providing sick leave in advance of an employee’s entitlement, but the wording of the [Holidays Act] has the effect of preventing such advance arrangements from being taken into account, in calculating the minimum entitlement in the ensuing 12 month period", Judge Travis said.

Given the Court’s decision, it is important for employers not to allow employees special leave before they have complete six months service. Any special leave granted in the first six months of employment must be granted again if requested.