I suspect many of you have been there.
You have an employee who you suspect is abusing the company sick pay scheme. You believe they are not really sick or that they avoiding a forthcoming disciplinary or capability hearing. Whilst you may well be right, should you take any decision which will detrimentally affect that employee based on your hunch that they are playing the system?
The following decision of the Employment Appeal Tribunal is a stark word of warning as to whether you should exercise your discretion not to pay company sick pay and place an employee on SSP only, if you have that discretion and makes the wider point that taking the law into your own hands effectively, may give the employee a claim for constructive dismissal.
The case of Singh v Metroline West Ltd , decided that a fundamental breach of contract can be established even where the employer’s actions do not indicate an intention to end the employment relationship.
The claimant, Mr Singh was invited to a disciplinary hearing by Metroline West Ltd. The next day, Mr Singh was signed off sick by his doctor. Whilst absent, he was examined by occupational health who did not suggest his sickness was not genuine.
However, Metroline thought Mr Singh was trying to avoid the hearing. It was therefore decided that he would be paid SSP only, instead of company sick pay. Mr Singh brought a claim for constructive dismissal, alleging, among other things, that the failure to pay him company sick pay was a fundamental breach of contract.
The employment tribunal found that Metroline had contractual power to suspend Mr Singh without pay if it thought his absence was not genuine, but this power had not been exercised.
Mr Singh’s contract also allowed company sick pay to be withheld where, after investigation, absence was found not to be genuine.
However, no investigation had been conducted in this case and there were no other relevant contractual grounds on which company sick pay could be withheld.
There was therefore clearly a breach of contract.
However, the tribunal found the breach was not fundamental. By withholding pay, Metroline had not indicated an intention not to be bound by the employment relationship; rather, its intention in withholding pay was to “encourage” (pressure?) Mr Singh’s participation in a disciplinary process integral to that relationship.
The EAT upheld Mr Singh’s appeal on this issue. It was mistake for the tribunal to adopt the approach that, for the breach of contract to be fundamental, there must have been an intention by the employer not to be bound by the contract in a manner that meant that it no longer wished to continue with the employment relationship.
What is required is rather that the employer demonstrates an intention to no longer comply with the terms of the contract that is so serious that it goes to the root of the contract. In this case, there was a deliberate decision to withhold pay to which Mr Singh was entitled, resulting in a significant reduction in pay, in circumstances where there were other contractual provisions which would and could have allowed Metroline to deal with suspicions about his absence. This was the fundamental breach.
So, before taking any decision to withhold discretionary sick pay or taking any other action which may constitute a fundamental breach of contract in the context of conduct which as an employer you wish to address directly it is vital to consider whether such action might result in such a claim. In this case had Metroline used the contractual provisions it had and followed its own process it may have been able to withhold company sick pay without breaching the contract. As always, it is how you do things in employment law that matters.
For further information, please contact Zoe in the employment team on 0203 858 7965 or email email@example.com. Mulberry’s has offices in Brighton and London.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.