Case law update - What is ‘pay’ under a sick pay scheme?

Facts 

In this case, the company sick pay policy entitled B to the payment of six months’ full pay and then six months’ half pay but did not go as far as describing how pay was to be calculated. The issue in this case was whether B’s sick pay should be calculated on the basis of her 15 contracted hours per week or based on the actual hours she worked. In practice, B regularly worked over 30 hours each week.

EAT's findings

The EAT held that the 'purpose generally understood of a sickness payment scheme is to benefit the employee by enabling him to have a continuation of the money upon the basis on which his liabilities have been contracted'. Therefore, in this case, ‘pay’ did not relate simply to the minimum guaranteed hours, but to the hours B actually worked.

Comments

To avoid any such dispute like this arising, member companies should clearly define how pay is calculated in any sick pay policy applicable to employees with variable hours of work.