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Are employers obliged to pay people on sick leave?

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Question posted to the Financial Times and answered by Clarion...

Q: The security guard where I work is employed by a large FTSE250 company. I have just been told that he is given holiday leave - I assume by law - but no sick pay whatsoever even though he has worked for the company for some years. He is an integral part of the workplace who does his job extremely well, however, for some reason he is entitled to holiday leave but not sick leave. Is this legal? I thought employers in the UK were obliged to pay sick leave?

It is very kind of you to be concerned about your colleague. Loyal, hard-working employees are a truly valuable resource.

Whether the security guard is entitled to sick pay or holiday pay will depend on whether he is employed, self-employed or falls into a hybrid category called a ‘worker’.

If he is self-employed he should account for his own tax and would not have to perform work personally. Therefore he could turn down work and might be allowed to send a (suitably qualified) substitute instead of doing the work himself.

If he is an employee he would probably be paid via PAYE and the company would be obliged to offer him work and for him to accept it.

Workers are an intermediate category. They are normally integrated into the business but often there is no obligation for them to receive or accept work and the company has a lesser degree of control over them.

If the security guard in question is an employee or worker and his earnings are liable for Class 1 National Insurance contributions (currently this is any employee or worker who earns over £107 per week) then he should be paid sick pay. Workers and employees should also be given paid annual leave regardless of whether their earnings are above £107 per week. If, however, the security guard is self-employed then he is not entitled to either sick pay or holiday pay, and therefore his holiday leave might have been unpaid.

Businesses are of course able to offer individuals more than their minimum entitlements. However this is risky. By offering a self-employed person holiday pay or sick pay, an employment tribunal might determine that they are in fact treated more like an employee. This might entitle them to other employment rights, such as protection from unfair dismissal.

Source: The Financial Times, 11 October 2012

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