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Withholding company sick pay is a risky business

In this week’s alert, we look at case where an employee with just under 10 years’ service resigned and claimed constructive unfair dismissal after his employer failed to pay him the company sick pay. The employer believed that the employee was not genuinely ill and was feigning sickness to avoid facing disciplinary action. Was the employer entitled to withhold sick pay in the circumstances?

Singh v Metroline West Limited

Mr Singh (the ‘Claimant’) started working for Metroline West Limited (the ‘Respondent’) in April 2007 as a bus driver.

Throughout his employment, the Claimant had an exemplary employment record without any disciplinary sanction. However, in February 2016, the Claimant was involved in an altercation with another employee which resulted in him making a complaint. The process was dealt with over several months and the Claimant felt the Respondent was not taking his complaints seriously and were taking too long to investigate.

In November 2016 the Claimant was involved in an accident. As was required, the Claimant completed a Vehicle Incident Report in which he stated that the accident had occurred as he had released his handbrake, causing the bus to suddenly move resulting in damage to both the bus and the vehicle the bus collided with.

The Respondent reviewed CCTV footage of the accident, which showed that the Claimant’s version of events were not true. It showed that the Claimant had been driving with documents on his steering wheel and had reached down to pick up a drink, unscrewed the lid and taken a drink. As the Claimant went to put the drink back down, he was looking away from the road and the bus rolled forward and into the vehicle in front.

The Claimant was invited to a disciplinary hearing in which it was found that the Claimant’s negligence was to blame for the collision. The Claimant was issued with a written warning to remain on his file for a period of 12 months.

The next issue that arose was due to reported incidents of the Claimant either running late or running early – the relevance of this is that bus drivers are required to run to schedule to meet the bus service’s passenger timetable.

The Claimant was invited to a disciplinary hearing on 25 January 2017 to consider the allegations that on specific dates he was not running to schedule. The Claimant did not attend. The Claimant subsequently provided the Respondent with a sick note dated 27 January 2017, signing him off from 25 January 2017 with workplace stress. The Claimant remained on certificated sick leave until he resigned his employment on 15 March 2017.

After receiving the Claimant’s sick note, the Respondent concluded that this was a tactic to avoid having to attend a disciplinary hearing. As a consequence of this assumption, the Respondent made the decision to only pay the Claimant Statutory Sick Pay, when he was entitled to receive Company Sick Pay.

As a result of the Respondent’s actions, the Claimant tendered his resignation on 15 March 2017 and brought various claims in the Employment Tribunal, including a claim for constructive unfair dismissal.

Decision

The Tribunal found that whilst there was a breach of contract, the breach was not fundamental in nature. It was held that withholding Company Sick Pay was not indicative of the Company’s intention to end the employment relationship, but that the Company’s aim was to encourage the Claimant to participate in the disciplinary process, which required him to remain an employee. As a result of this, the Tribunal found failing to pay the Claimant Company Sick Pay was not ‘fundamental’ in nature which is the key requirement for a constructive unfair dismissal claim to succeed. The Claimant appealed this decision.

Employment Appeal Tribunal (‘EAT’)

The EAT upheld the Claimant’s appeal. They found that the Tribunal incorrect test to determine whether the Claimant has been constructively dismissed.  The requirements to establish a fundamental breach are that the employer has shown an intention to no longer be bound by the terms of the contract and that the breach is so serious that it goes to the root of the contract. The EAT found that the Respondent had both a contractual right to suspend and a list of circumstances which permitted Company Sick Pay to be withheld, both of which required the Respondent to carry out a reasonable investigation which it had not done. The Claimant had also attended an occupational health appointment whilst on sick leave and the genuineness of his sickness has not been doubted. The Respondent’s decision to pay SSP only led to a substantial reduction in the Claimant’s wages for a period of seven weeks. The EAT found the Respondent’s behaviour amounted to a fundamental breach of contract and therefore the Claimant was entitled to resign.

Comment

Employers who have suspicions in relation to an employee’s conduct should always ensure that they conduct a reasonable investigation before taking any action against the employee.

If, as an employer, you are considering withholding Company Sick Pay, you need to carefully check contractual provisions and relevant policies and procedures to ensure that you are not breaching an employee’s contract by any reducing pay.  There are far more limited circumstances when an employer can withhold statutory sick pay, as the production of a medical certificate is evidence of genuine absence.

If you are considering withholding sick pay in any circumstances, we would suggest that you take legal advice prior to doing so.  As is illustrated by this case, failure to deal with employees appropriately, can lead to them resigning and bringing a claim for constructive dismissal and unlawful deduction from wages.

If you have any queries arising from this case or claims against your business or would like to discuss any other issue please contact one of our Employment team on 01228 552600 or 01524 548494. We also provide inhouse training on any employment law/HR related issue, so please contact the team for further information.

 

This alert does not provide a full statement of the law and readers are advised to take legal advice before taking any action based on the information contained herein.

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