Entitlement to sick pay in local authorities

This article looks at factors for local authority employers to consider when determining entitlement to sick pay.

Sick pay and the disability discrimination provisions of the Equality Act 2010

The National Conditions of Service for staff employed in local government, including those covered by the National Joint Council for Local Government Services - National Agreement on Pay and Conditions of Service (the Green Book) and the Conditions of Service for School Teachers in England and Wales (the Burgundy Book), provide that, after a period of sickness absence on full pay, employees who remain off sick will reduce to half and eventually no pay. Authorities do, however, have discretion to amend these provisions in individual cases.

In considering whether or not to exercise such discretion authorities should be aware of the Court of Appeal's decision in Nottinghamshire County Council v Meikle [2004] IRLR 703 CA. Mrs Meikle was a teacher who, as her sight was deteriorating, asked for adjustments to be made to her working conditions. Many of these were not made. She went off sick and eventually went on to half pay in accordance with the National Conditions of Service. She claimed that she had been the subject of discrimination under the Disability Discrimination Act 1995 on a number of counts, including that the act of reducing her to half pay was discriminatory. The Court of Appeal held that the change to half pay was an unjustified failure to comply with the employer's duty to make reasonable adjustments, as well as unjustified less favourable treatment for a reason related to disability. If the required adjustments had been made there was, on the evidence, no reason to believe that Mrs Meikle would have been absent for the length of time it took for half pay to cut in. While this case was decided under the Disability Discrimination Act 1995, which was repealed and replaced by the Equality Act 2010 on 1 October 2010, the principles underpinning the judgment remain valid. A similar case would now be dealt with under the provisions of the Equality Act 2010 relating to reasonable adjustments and discrimination arising from disability.

At the time, the former Employers' Organisation for local government (EO) commented that the case means that an employer is under a duty to make reasonable adjustments to the sick pay schemes set out in the Green Book and the Burgundy Book, and any other national or local schemes, where they place an employee at substantial disadvantage due to their disability. In addition the employer must ensure that it has made all reasonable adjustments to the employee's current job to allow them to return to work. Where, after all reasonable adjustments, the employee would still not be able to return to their original job, redeployment should be considered. If the employee's sick pay reduces to half while these issues are being dealt with, the employer will have to consider whether in the circumstances it would be reasonable to make adjustments to the sick pay scheme.

It may be possible to argue that, as a very generous sick pay scheme is already provided, it is not reasonable to expect a local authority to provide any more. However, the EO advised that each case should be considered on its merits. Some issues that may be relevant are:

• the amount of full or half pay that the employee has already received;
• the degree of financial hardship that the employee faces, and whether or not they are entitled to State benefits;
• the cause of the disability;
• how long the employee is expected to be in their current condition;
• the extent to which discretion has been exercised in other circumstances.

Where the local authority considers that it would not be reasonable for it to make an adjustment to sick pay, it will have to justify the less favourable treatment of reducing pay. The tribunal in Meikle seemed to accept that this being the policy of the authority was sufficient justification and the Court of Appeal did not address the point. However, an authority ought to be able to rely on the above factors, where relevant, for the purposes of justification.

Sickness absence attributable to an employee's misconduct

The application of a provision in the National Joint Council for Local Government Services - National Agreement on Pay and Conditions of Service (the Green Book), para.10.10 of Part 2, that provides that an employee shall lose entitlement to sick pay if the absence is attributable to their own "misconduct" was the subject of Manchester City Council v Thurston [2002] IRLR 319 EAT.

Mr Thurston was the subject of a disciplinary investigation and hearing. Two days before the hearing he consulted his GP about symptoms of depression, which he said had begun before the disciplinary investigation commenced. Following the disciplinary hearing, he went sick and never returned to work. The council took the view that the stress was a consequence of Mr Thurston's own misconduct for which a disciplinary sanction had been imposed and that under the sick pay scheme he was not entitled to sick pay. Mr Thurston complained to an employment tribunal that his wages had been subject to an unlawful deduction.

The tribunal upheld Mr Thurston's complaint. On appeal the Employment Appeal Tribunal (EAT) supported the judgment of the tribunal. It was entitled to find, on the evidence before it, that the illness had begun some time before the disciplinary hearing and was not connected with the misconduct. The EAT also upheld a view from the tribunal that, even if Mr Thurston's absence had been due to the disciplinary sanction imposed on him, the council would still not have been entitled to withhold sick pay because the absence was not "due or attributable to his own misconduct" within the meaning of the contractual term. The term "of his own misconduct" should not be extended to include the consequences of that misconduct. Where there is a genuine psychiatric illness, even if this is a foreseeable consequence of disciplinary proceedings, it is too remote to come within the construction of the term.