Labour Court Clarifies Employer Exemption from Statutory Sick Pay

A recent decision by the Labour Court has provided important clarity for employers on how the Sick Leave Act 2022 operates, particularly in relation to when an employer may be exempt from paying statutory sick leave.

The case involved an employee who argued she should have received statutory sick pay after being excluded from her employer’s occupational sick pay scheme. While the Workplace Relations Commission (WRC) initially ruled in her favour, the Labour Court ultimately overturned that decision.

This ruling offers valuable guidance for employers operating their own sick pay schemes.

Background to the Case

The employee commenced employment in August 2023 and was due to become eligible for the company’s occupational sick pay scheme after six months’ service.

The employer’s scheme provided:

• 4 weeks’ sick pay at full pay
• Followed by 4 weeks at half pay
• Applied on a rolling 12-month basis

Alongside this, the company operated an Absence Management Policy, which set out clear trigger points for employee absences. Where these thresholds were reached, a disciplinary process could be initiated.

Under the terms of the sick pay scheme, employees with an active disciplinary sanction were not entitled to receive sick pay.

By the end of 2023, the employee had reached the absence threshold, having recorded five separate absences within a 12-month period. Following a formal investigation and disciplinary process, she received a verbal warning. This was appealed internally but ultimately upheld.

This highlights the importance of having robust absence management and
disciplinary procedures in place.

Further absences occurred in 2024, and the employee resigned later that year.

The WRC Decision

At the WRC hearing, the employee argued that because she had been excluded from the company’s sick pay scheme due to her disciplinary sanction, she should instead be entitled to statutory sick leave for part of her absence.

The WRC accepted that the employer’s scheme was more favourable overall. However, it found that the employer could not rely on Section 9 of the Act in this instance, as the employee had been disentitled from accessing the scheme at the relevant time.

As a result, the Adjudication Officer awarded the employee €500.

The Labour Court’s Decision

The employer appealed the decision, and the Labour Court took a different view.

The Court emphasised that Section 9 of the Sick Leave Act 2022 is clear:
where an employer provides a sick pay scheme that is more favourable overall than statutory sick leave, the employer is exempt from the statutory scheme.

Importantly, the Court also recognised that occupational sick pay schemes can include specific terms and conditions, such as disciplinary triggers, and that these do not invalidate the employer’s exemption, provided they are clearly communicated.

This reinforces the need for clear, well-documented policies, something businesses often address through
HR documentation and compliance support.

The Labour Court concluded that the employer was entitled to rely on its scheme and upheld the appeal, overturning the WRC’s award.

Why This Matters for Employers

This decision reinforces that having an occupational sick pay scheme in place is not enough on its own. Employers must ensure that their policies are:

• Clearly defined
• Properly communicated to employees
• Consistently applied in practice

Getting this wrong can expose businesses to disputes, claims and unnecessary risk.

Working with experienced HR professionals, such as
The HR Company, can help ensure your policies are both compliant and effective in practice.