Ask the expert: Reducing sick pay

Q. A COUPLE of employees in our practice have particularly high absence levels. This has increased pressure on their colleagues who cover the work while they are off sick. At present, the practice provides contractual sick pay of six months full pay followed by six months half pay in a 12-month rolling year period.

The partners at the practice have discussed how to best address the high levels of absence by reducing the contractual sick pay down to three months full pay only. Can we enforce this change on all employees?

A. This is a difficult situation for practices as high levels of absence can put an additional strain on colleagues and affect morale within the practice. However, it is important not to have a knee-jerk reaction and make decisions that could have serious consequences for the whole team.

If there is an issue with an employee’s absence level, then the best way to handle it is through an absence management process. This will involve sitting down with the employee and discussing their absence levels, reasons for absence and highlighting any patterns emerging.

If there is an ongoing medical condition, then an occupational health referral or a doctor’s report, with the employee’s consent, will provide further information and help determine whether any adjustments need to be made.

If the reasons for the absence vary then it becomes a conduct issue. The employee should be advised that their attendance levels will be monitored and it could lead to disciplinary procedures if there are no signs of improvements.

One way for the practice to change the amount of contractual sick pay is to keep the current entitlement for existing staff but to offer any new employees the three months at full pay. They may discover that they are on different terms but this is fine as long as they agree to these terms before commencing employment.

If the practice wants to go a step further and reduce sick pay entitlement for all staff then, while it is difficult to do, it is not impossible.

Sick pay entitlement forms a fundamental part of the contract terms. Contracts of employment are legally binding and therefore care is needed when looking to change fundamental terms. If the situation is not handled well, then it could lead to breach of contract, constructive dismissal or a claim for an unlawful deduction from wages.

Such claims can be extremely expensive if the changes are also linked to direct or indirect discrimination. It may be possible to change a term with the correct wording in the existing contract but these are usually related to hours and it is rare for any contract to include wording about changing sick pay. Therefore, consultation and agreement with employees are required in order to change these terms.

Some things to consider before going down this route include:

1. The business reasons for the proposed changes

2. The impact the change will have on the employees

3. The need for consultation meetings with each employee to discuss the proposed changes and if the reasons for the proposals are related to the financial position of the practice, being prepared to provide relevant financial information

4. Giving employees time to consider the changes and to put forward any objections, concerns or alternatives to be considered.

A full and frank discussion may be enough to reach an agreement. If an employee does agree to the change, the practice should confirm this in writing within a month of the change taking effect. The employee should then sign and return a copy of the letter to indicate their acceptance.

If agreement cannot be reached, then the next step will be to terminate the original contract, giving the proper notice, and offer re-engagement under a new contract, with the revised sick pay entitlement. In this situation the termination of the old contract will be regarded as a dismissal and therefore it will be open to an unfair dismissal claim for any employee with over two years’ service.

If the employee chooses not to accept the new offer of employment, they will be dismissed and the practice will need to prove that the dismissal was fair and lawful.

When considering whether a dismissal has been fair, an employment tribunal would consider whether:

• Any alternatives to dismissal were considered

• A fair procedure has been followed

• The majority of other employees accepted the change

• The benefit to employer was balanced against the adverse impact on the employee

• Reasonable notice had been given of the changes.

This process is all about consultation and negotiation. Sometimes you may find that a 'sweetener' may help you achieve the agreement you need, for example, offering an extra day’s holiday in exchange for the reduction in sick pay entitlement.

Changing contractual terms is a tricky situation and advice can be sought from our employment law advisers on 0333 043 4444 or advice@mddus.com.