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Home / 2005 / April 2005 / Sick Leave - To Pay or Not to Pay

When it comes to sick pay, having a clear policy and sticking to it, is important. If you don’t already have a policy in place, now is the time to think about it. Don’t wait until you are faced with dilemma like the one described here.

Picture the scene: John, a fee earner on a salary of €65k, who is a loyal and dedicated member of staff, becomes sick and has now been absent for eight weeks with little hope of his returning to work over the next two months. He has been on full pay, an outlay the practice cannot afford for much longer. John has a serious and very genuine illness, and to stop pay will seem both personal and uncaring. It may even be illegal.

You reach for John’s employment contract, noting with relief that there is a 'no sick pay' clause within it. However, this has been negated by years of custom and practice whereby staff have always been paid during periods of illness. Typically, staff heretofore have only been out of work for short periods so it has not become an issue - until now.

If the firm's stated 'no sick pay policy' has not actually been implemented for other employees, any approach to John now to stop his sick pay could be legally questioned.

It is also likely to be taken as a personal affront, not just by him but also by his colleagues and friends. Then there is also the matter of how John is to be told his sick pay is stopping - do you write him a letter, does one of the partners call to see him?

Both approaches could seem heartless and even threatening. However, the alternative of continuing to pay John his full salary may be untenable. Faced with such a conundrum, what will probably happen is that the partner will pop out to visit John, will take the legal risk, will drink his tea and admire his children before breaking the news to him.

Key to avoiding situations such as the above is a clear and thorough analysis of the issues and a clear statement of the firm's policy in relation to 'sick pay'. This needs to be done at a time when judgement is not clouded by an actual instance of long term sickness.

Issues to consider Is it a legal requirement to pay sick pay? No, currently it is not. However, where it has been the norm to pay sick pay to staff, a right to same may be established under custom and practice.

What currently happens in the firm in relation to sick pay? Is there a sick pay policy in place? Is it adhered to? What is custom and practice?

Is the issue of sick leave addressed in the firm's standard contracts of employment and firm policies and procedures?

Is there a stated requirement to follow certain procedures if absent e.g. contact his or her manager by 10.00 am, submit sick leave certification details, recoupment of social welfare provisions, the firm's right to seek an independent medical examination?

How much did absenteeism cost the firm in the last five years in terms of sick pay and lost chargeable time? This is a useful exercise in that it forces an examination of the current cost of absenteeism to the firm and puts the whole issue in context of cost. Many firms will be surprised to see just how much they are already paying in sick leave. Many of these firms may also be opposed to introducing a 'sick pay' scheme - another conundrum. It will also give an idea of what a sick pay scheme is likely to cost.

Does the firm have systems in place which effectively track absenteeism? This sounds so simple but it is surprising how many firms don't track absenteeism effectively.

If the firm was to introduce a sick pay scheme, could it be perceived by employees as permission to be absent and actually increase absenteeism?

This is one of the most frequent arguments against introducing a sick pay scheme and one which carries some weight. However, an effective performance management system, including the use of an independent medical assessment where necessary, will ensure that this is not the case.

If patterns of sick leave build up that are unacceptable, all that the employee needs to be told is that that level of sick leave is not acceptable to the firm.

The firm may not be questioning for one moment that the staff member was genuinely ill (thus negating the 'but I had a sick note' argument) only that the firm cannot operate with this level of absenteeism.

It also makes sense to include an analysis of sick leave patterns for each employee at annual and quarterly reviews. This acts as a healthy disincentive to the taking of arbitrary 'sick' days. It comes across as 'fair', rewards those that have good 'attendance' records and promotes a culture that actively discourages absenteeism.

The professional services environment is one that does not generally have a culture of absenteeism due to sick leave, and in this context a gentle 'nudge' at performance review time is enough to ensure the pattern of sick leave is broken. Where this does not work, the practice also has recourse to the firm's 'disciplinary' procedures.

How much sick pay should be paid? As you can imagine this is a very key issue in deciding whether to go ahead with a formal sick pay scheme and will largely depend on what the firm feels is fair and what the firm can afford. You will find that sick pay schemes vary from very limited to the very generous. IBEC's Sick Pay Schemes Report 2004 (available to IBEC members) details a number of company sick pay schemes by varying company sizes and industries and provides useful further information for companies who are designing sick pay schemes.

Benefits of having a sick pay scheme The benefits of having a sick pay scheme in place may be summarised as follows:

4It formalises the 'unofficial' policy that most likely is in place already in your firm. A sick pay scheme will place definite parameters on this and may ultimately save your firm money. - It will help you to avoid having to face the 'John' scenario outlined above. - It is good practice and will help you to attract and retain high calibre staff. - It allows the firm to put in place procedures that develop a 'culture' of non-tolerance towards absenteeism while still being 'caring' employers.

In conclusion, a clear statement of your firm's policy in relation to 'sick pay', drawn up at a time when judgement is not clouded by an actual instance of long term sickness, will be well worth the investment if and when you need to call on it in the future.

An employee has been on unbroken sick leave since start Nov 08 to date therefore has used up the 4 weeks paid sick leave pa leave year is a calender year. Employee now seeking a further 4 weeks paid leave in 2009. Emp contract gives no guidance in this situation so we propose paying one twelfth of annual entitlement for each month elapsed off sick. Is there any custom/practice relevant to this case ?

I work for a small company, if someone shows for work and works 4 hours and then goes home sick what are the entitlements for pay under this scenario?