Northern Ireland - Social Security and Child Support Commissioners' Decisions

[1997] NISSCSC C2/97(SSP) (5 January 1999)

 


Decision No: C2/97(SSP)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY CONTRIBUTIONS AND BENEFITS ACT

(NORTHERN IRELAND) 1992

SOCIAL SECURITY (CONSEQUENTIAL PROVISIONS) ACT

(NORTHERN IRELAND) 1992

STATUTORY SICK PAY

Appeal to the Social Security Commissioner

on a question of law from the decision of

Coleraine Social Security Appeal Tribunal

dated 26 March 1997

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. This is an appeal by the employer concerned, the Department of Environment for Northern Ireland, against the decision of a Social Security Appeal Tribunal whereby it was held that for the period from 18 August 1994 to 1 March 1995 the employee concerned was entitled to Statutory Sick Pay from the employer. Leave to appeal was granted by the Chairman on 19 July 1997. In accordance with the provisions of Regulation 2 and Regulation 17(5) of the Social Security Commissioners Procedure Regulations (Northern Ireland) 1987, the relevant parties to these proceedings are Mr H... as the appellant and the Department and the Adjudication Officer as the respondents.
2. I arranged an oral hearing of this appeal which was heard on 10 March 1998 and 5 June 1998. The employer was represented by Mr Coll of Counsel instructed by the Departmental Solicitor. The employee was represented by Mr Gallagher of Derry Community Council at the first hearing and by Mr Daniel Breslin of the Law Centre (NI) at the second hearing. Mr S J McAvoy, the Adjudication Officer now concerned with the case, was also in attendance. As well as the oral submissions made at the

hearings, the representatives of the parties, at my invitation, also made further written submissions after the second hearing.

3. The Tribunal made the following findings of fact material to its decision:

"1. Mr H... is 49 years of age and claims statutory sick

pay from the DOE (Northern Ireland) for the period 18 August 1994 to 1 March 1995 (both dates included).

2. For the period 9 October 1992 to 12 September 1995 there is continuity of his employment as an employee of the DOE (NI) engaged as a road worker.

3. On the 17 May 1994 he was suspended from work by reason of a disciplinary matter. From then until August 1994 he was

receiving full pay. His wages exceeded ?57 per week gross and

he was liable for class 1 National Insurance contributions.

4. On 17 August 1994 he was summarily dismissed. The dismissal related to a matter of discipline and was not done solely or

mainly for the purpose of evading paying statutory sick pay.

5. Further to a civil service appeal board hearing of 24 November

1994 the DOE were prepared to accept the recommendations made

and offered the claimant employment commencing 29 December 1994 subject to downgrading and no pay from 17 August 1994 to

29 December 1994.

6. The claimant did not return to work until 2 March 1995 when he stayed for part of the day. From 3 March 1995 he was paid statutory sick pay by the DOE until 12 September 1995 when his employment ended on health grounds.

7. Over the period 18 August 1994 to 1 March 1995 Mr H... did not receive any wages from his employer except for a payment on

8 September 1994 of ?36.05 made in error as statutory sick pay.

8. Over the period 18 August 1994 to 1 March 1995 Mr H... was by reason of illness or disablement unable to do work under his

contract of service with the DOE. Evidence of his incapacity

over this period was submitted on his behalf to the Department

of Health and Social Services and to his employer. Notification

was made to his employer by his wife personally by delivering

medical certificates to the DOE's offices in Londonderry.These certificates were of 4 week duration in August and September 1994 and thereafter were of 13 week duration.

9. The claimant made an application to an industrial tribunal in

relation to his employment with the DOE (Northern Ireland) and

same was listed for hearing on 27 April 1995. Agreement was reached between the claimant and the DOE (Northern Ireland) on

2 May 1995 whereby the application was withdrawn on the following terms:

a) eg (sic) was to receive ?1500 in compensation.

b) he was not to proceed with any appeal against his

downgrading or any other matter following the findings of

the Civil Service Appeal Board or the DOE (Northern

Ireland). (sic)

c) his continuity of employment is unaffected and his statutory rights are undisturbed following his re engagement effective from 29 December 1994." (sic)

[The Tribunal has not quoted the agreement entirely accurately. The proper terms are set out at para 7 herein. However, in my view, the errors, both typographical and substantive, do not affect the issues in this case].

4. The Tribunal gave the following reasons for its decision:-

"The DOE (Northern Ireland) have advanced three reasons as to why

they are not responsible for payment of statutory sick pay during

the period in dispute, viz, 18 August 1994 to 1 March 1995. Their

first and in our view most meritorious argument is that even had the

claimant not been sick he would not have worked as he had been

dismissed on 17 August 1994 because of misconduct. The second

argument is that the claimant failed to provide notice that he was

sick. Finally, it is argued that as he was receiving no wages on

the 18 August 1994 he was not entitled to Statutory Sick Pay as his

earnings were therefore below the level at which statutory sick pay

was payable.

It is necessary to look at the legislative background contained in

the Social Security Contributions and Benefits (Northern Ireland)

Act 1992 and the Social Security Administration (Northern Ireland) Act

1992.

The liability of an employer to pay Statutory Sick Pay is by

reason of Section 147(1) of the Social Security Contributions and

Benefits (Northern Ireland) Act 1992. It states,

where an employee has a day of incapacity for work in relation

to his contract of service with an employer that employer shall

(if the conditions in Section 148-150 are satisfied) be liable

to make him ... a payment (to be known as statutory sick pay)

in respect of that date.

Section 147(4) states '....a day shall not be treated as a day of

incapacity for work in relation to any contract of service unless on

that day the employee concerned is ...incapable by reason of some

specific disease or bodily or mental disablement of doing work which

he can reasonably be expected to do under that contract.

The Act lays down qualifying conditions. Section 148(1) states;

The first condition is that the day in question forms part of a

period of incapacity for work.

Section 149 deals with the period of entitlement. Section 149(2)

states that the period of entitlement begins with the period of

incapacity and ends with whichever of the following inter alia

occurs first;

(a) the termination of that period of incapacity;

(b) the day on which the employee's contract of service with the

employer concerned expires or is brought to an end.

Where an employee's contract of service is brought to an end by the

employer during a period of entitlement solely or mainly to avoid

liability for Statutory Sick Pay the employer remains liable to pay

Statutory Sick Pay (General) Regulations (Northern Ireland)

regulation 4.

Whether there existed a contract of service over the appeal period

of 18 August 1994 - 1 March 1995 is a Departmental matter and one

over which the Tribunal has no jurisdiction - see section 15(1)(g)

and (h) of the Social Security Act (Northern Ireland) 1992.

It is clear to the Tribunal that receipt of statutory sick pay pre

supposes the person claiming is still in employment. By virtue of

section 149(2)(c) entitlement ends when the contract of service is

brought to an end providing it is not done to evade Statutory Sick

Pay. An example of this would be where the contract of employment

is frustrated by a supervening act, for instance the employer's

factory is burnt down and operations cease permanently. In that

scenario the employee's entitlement to Statutory Sick Pay would end

when his contract ended. See also CS/221/94 where the Commissioner decided that an employee employed on a daily basis could have no

contract of employment after the end of that day and consequently

her 'entitlement' to Statutory Sick Pay would end on that day.

See also page 268 Bonner, 'Non-means Tested Benefits - the

Legislation' 1996. In the present case the claimant was dismissed

on 17 August 1994 and we accept the dismissal cannot be overlooked

at in isolation but must be placed in the context of the agreement

between the parties of 2 May 1995 preserving the continuity of

employment.

Schedule 11 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 lists circumstances in which periods of entitlement to Statutory Sick Pay does not arise. Paragraph 2(f) states;

The employee has done no work for his employer under his contract of employment.

The issue here is whether work has been done rather than whether

there (sic) a contract of employment. Mr H..., apart from a part

day on 2 March 1995 did no work for his employer from 17 May 1994.

Has he done any work under his contract of employment? Para 6 states;

For the purpose of paragraph 2(f) above, if an employee enters into

a contract of service which is to take effect not more than 8 weeks

after the date on which a previous contract of service entered into

by him with the same employer ceased to have effect, the two contracts

shall be treated as one.

The claimant began work in 1972 and did work under his contract of

service up until 17 May 1994. His contract terminated on

17 August 1994 when he was summarily dismissed. By agreement of the parties dated 2 May 1995 he was re engaged effective from the

29 December 1994. Although the DOE's letter of 22 December 1994

refers to reinstatement the claimant was in fact re engaged. In the

former situation the claimant would be treated as if he had never

been dismissed. With re-engagement an employee is re employed but

not necessarily on the same terms and conditions. This occurred

here as the claimant was downgraded in the new employment. It

appears to the Tribunal that the claimant is not assisted by para 2(f)

as more than 8 weeks elapsed between the two contracts. The terms of

the settlement however preserve the claimant's continuity of

employment. The nett effect of this is that the parties have agreed

to treat the claimant as if there were no break in his employment

from 1972. As the contract is unbroken then he has done work under

it, viz, pre 17 May 1994.

An employee is required by section 152 and the regulations thereunder

to notify his employer of his incapacity and if he fails to do so

then by 152(2) payment can be withheld. This is an important

requirement so that an employer can make the necessary adjustments

to the work schedule and also monitor the individual workers progress.

The employer can specify the requirements subject to certain

statutory exceptions (Regulation 7(4-5) Statutory Sick Pay (General) Regulations (Northern Ireland). The DOE have produced an extract at

paras 78 to 90 of the civil servant's notification requirements.

The requirement includes evidence of incapacity and the cause

throughout the period of sickness by self certification or doctors

certificate. The DOE say they have no notification for the entire

period and point out that the claimant would have no reason to notify

them post 17 August 1994 as he was dismissed. We have found as a

fact that they were notified. We say this having regard to the fact

that the claimant appears to have been a thorn in the Department's

side and he was contesting throughout the DOE's actions by resorting

to advice centres, trade union representatives and solicitors. With

this background we feel he is unlikely to have been casual about the

matter of notification. The claimant's wife was specific about the

persons she spoke to when delivering the sick notes. We felt the

DOE's internal enquiries about the notification they received rather

casual.

The final point raised by the DOE is whether the claimant is entitled

to Statutory Sick Pay in the light of the absence of wages from

August 1994. By schedule 11 paragraph 2 entitlement to Statutory

Sick Pay does not arise if; (c) at the relevant date the employee's

normal weekly earnings are less than the lower earnings limit then

in force under section 5(1)(a) (being the lower earnings limit for

class 1 contributions - ?57 per week). The relevant date is the

commencement of the period of incapacity. An employee's normal

weekly earnings are calculated in accordance with regulation 17(2)

of the Statutory Sick Pay (General) Regulations. Earnings mean

gross earnings. The period of calculation is the last normal pay

day before the first day of the period of incapacity and the last

normal pay day at least 8 weeks earlier (regulation 19(3) Statutory

Sick Pay (General Regulations). The claimant received his full pay

up to August 1994 and he would have been liable to National Insurance contributions. Consequently his level of earnings would be such as

would make him liable to class one contributions. The exception is

really aimed at low paid part time workers."

5. The unanimous decision of the Tribunal was in the following terms:-

".....for the period from 18 August 1994 to 1 March 1995 (both dates included) the claimant is entitled to Statutory Sick Pay from his employer as, whilst he has done no work under his contract of service with his employer, the DOE (Northern Ireland) from May 1994 he is not precluded for that reason as there has been continuity in his employment from 1972 until termination on 12 September 1995 and he has done work and over the period 18 August 1994 - 1 March 1995 he was incapable of doing work under his contract by reason of a specific disease and proper notification of his disability was given and he was earning sufficient amounts and in all other respects qualified for Statutory Sick Pay over this period. Appeal dismissed".

[The Tribunal in its findings of fact, reasons and decision has referred to the employee as "the claimant". In accordance with the provisions of Section 21(2)(b) of the Social Security Administration (Northern Ireland) Act 1992 (as compared to Section 21(3)(b)) it seems that the proper appellation is "the employee concerned" rather than "the claimant"].

6. The original grounds of appeal were amended after the first hearing before me and were finalised in the following terms:-

"1. That the Tribunal erred in failing to recognise that its jurisdiction in this matter had been abrogated by virtue of an agreement entered into on 2nd day of May 1995 between the appellant and the respondent.

2. That the respondent is estopped from pursuing his claim for Statutory Sick Pay from the appellant by virtue of the aforesaid agreement.

3. That the Tribunal erred in law in holding that an employee is entitled to Statutory Sick Pay for a period during which he was on disciplinary suspension notwithstanding that he was also incapable of doing work under his contract during that period by reason of specified disease."

7. Mr Coll submitted the following on behalf of the employer in relation to the final ground of appeal:-

"It is common case that, in the context of an application to an Industrial Tribunal, Mr H... and the Department of Environment for Northern Ireland (DOE) entered into an agreement dated 2 May 1995. Mr H... (for the purposes of the agreement, the applicant) was to withdraw his Industrial Tribunal application on the following terms;

"(a) That the respondent (DOE) will pay to the applicant the sum of ?1500 as compensation within 4 weeks from the date of signing hereof.

(b) The applicant will not proceed with, withdraw and discontinue any appeal to the respondent as to his regrading or any other matter following the findings of the Civil Service Appeal Board or the respondent.

(c) That the applicant's continuity of employment is not effected (sic) and his statutory rights are agreed by the respondent as being intact and undisturbed following his reingagement (sic) by the respondent effective from the 29th December 1994"."

Accordingly he submitted that:-

"(a) the SSAT erred in law in upholding Mr H...'s claim for Statutory Sick Pay as this involved a breach of his contractual obligations to the DOE, and as such he is estopped from making the claim.

(b) the SSAT acted in breach of public policy in upholding Mr H...'s claim as this results in an employer (DOE) having to pay an employee for a claim it had already settled with him by virtue of an agreement. In other words, the responsible employer which settles all outstanding claims the employee might have against it, can still be penalised and, in effect, be forced to pay twice.

(c) Section 147(2) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 provides that,

"Any agreement shall be void to the extent that it purports -

(a) to exclude, limit or otherwise modify any provision of this part of the Act."

("....this part of this Act", being Part XI which governs Statutory Sick Pay). The agreement entered into on 2/5/95 does not exclude, limit or otherwise modify any provision regarding Statutory Sick Pay. Rather, it merely settles any outstanding claim that Mr H... may have had regarding Statutory Sick Pay entitlement arising before 2/5/98. (sic)"

Consequently, Mr Coll submitted that the 2 May 1995 agreement is a valid settlement of Mr H...'s Statutory Sick Pay claim, and the SSAT erred in law in failing to take account of this.

8. Mr Breslin on behalf of the employee submitted that if the employee has breached the terms of the agreement of 2 May 1995, which he was not conceding, any remedy for the employer would be by way of civil action in the civil courts for breach of contract, and that the statutory jurisdiction of the Appeal Tribunal did not give it any powers to adjudicate on any such alleged breach. He also submitted that Section 147(2) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 specifically prevents, in any event, any such agreement interfering with the employee's rights to Statutory Sick Pay. He also submitted that it was relevant that there is no mention of Statutory Sick Pay in the agreement. In addition he submitted that it was inconsistent for the employer to argue that the 2 May 1995 agreement is a valid settlement of the employee's Statutory Sick Pay claim while at the same time submitting that the employee was not entitled to any such Statutory Sick Pay.
9. Mr McAvoy submitted that the effect of Section 147(2)(a) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 is to ring-fence statutory entitlement to Statutory Sick Pay. In any event clause 1(c) of the agreement clearly purports to protect the employee's statutory rights to Statutory Sick Pay. The effect of Section 147(2)(a) in any event renders void any agreement to prevent the employee obtaining his statutory benefits.
10. In rebuttal Mr Coll submitted that the agreement of 2 May 1995 merely settled any other matters still outstanding between the parties, including any claim in relation to Statutory Sick Pay. He argued that the agreement was not a general attempt to exclude, limit or otherwise modify any provision of Statutory Sick Pay scheme.
11. In my view the employee either meets the conditions for entitlement to payments of Statutory Sick Pay from his employer or he does not. The purpose of Section 147(2) makes it relatively clear to me that any purported agreement between an employer and an employee to exclude or modify an employee's rights to Statutory Sick Pay is void. I find myself unable to accept Mr Coll's proposition that in some way this particular agreement is not affected by Section 147(2). Accordingly I conclude that the agreement is not a relevant defence to the employee's claim for Statutory Sick Pay. In addition Mr Coll has not established any legal principle whereby the employee could be said to have been estopped from pursuing his claim for Statutory Sick Pay by virtue of the agreement.
12. In the circumstances I find that the Tribunal has not erred in law in the respects set out in the employer's first two grounds of appeal.
13. Mr Coll also submitted that the Tribunal ought to have taken into account the fact that the employee was dismissed throughout the period 18 August 1994 until 28 December 1994 and therefore was not employed under a contract of service during that period. In the circumstances it was immaterial that he was incapable of work due to sickness. The reason for this is that the employee was not entitled to work under his contract of employment at that stage, nor was his employer under any obligation to pay him wages. In addition Mr Coll submitted that the agreement of 2 May 1995 provides only that the employee's continuity of employment is not interfered with following his "re-engagement" on 29 December 1994. The legal reality, in Mr Coll's submission, remains that during the relevant period the employee was not employed under a contract of service. He also submitted that, even though the employee was eventually re-employed by the employer, it was by way of re-engagement, rather than reinstatement, and this was emphasised by the fact that the employment was to be at a lower grade and without any entitlement to back pay.
14. Mr Breslin submitted that the employee in this case was reinstated, rather than re-engaged, and that the letter from the Department of the Environment dated 22 December 1994, referred to in the reasons for the Tribunal's decision, specifically states that the claimant was reinstated, although without any pay for the period of suspension. Accordingly Mr Breslin argued that there was continuity of employment.
15. Mr McAvoy submitted, in light of the Department's letter of 22 December 1994, that it was now clear that the employee was in fact reinstated, rather than re-engaged.
16. The Tribunal has dealt with this issue in its reasons and, in my view, has properly analysed the factual situation and come to the conclusion that, whilst the word "reinstatement" was used in the letter of 22 December 1994, the reality of the situation, taking into account all the relevant facts, is that a re-engagement has occurred in this case. I am persuaded by the Tribunal's reasons that, as the employee was downgraded, he was not reinstated in his old job.
17. However, I come to a different conclusion to that of the Tribunal arising out of that finding. If the employee was re-engaged after the dismissal, it is consistent with the employee having been dismissed on 17 August 1994. If he was dismissed, as I conclude he was, his contract of employment has come to an end. Retrospectively the relevant parties might have come to an accommodation, through the 2 May 1995 agreement, to treat the employee to some extent as if he had always been in employment. However this does not change the position that at the time there was no contract of service in existence. Therefore at the relevant time it is not possible to consider the employee as a person eligible for Statutory Sick Pay as the incapacity for work does not relate to a contract of service as required by Section 147(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
18. Accordingly I conclude that the Tribunal erred in law in finding that the employee was entitled to Statutory Sick pay for the period after his dismissal.
19. In light of my conclusion that the employee's contract of service had come to an end on 17 August 1994, the submissions made on behalf of the parties in relation to the effect of suspension followed by reinstatement are no longer relevant. However if the submissions had been relevant it is perhaps important to appreciate that the definition of "employee" set out in Section 159(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (namely "a person who is ...... gainfully employed in Northern Ireland ...") could well be a bar to a successful claim as a person who is not entitled to work and pay is unlikely to be categorised as "gainfully employed". The reason for this is that during the relevant period from 18 August 1994 to 28 December 1994 he was effectively on disciplinary suspension without entitlement to pay and with no right to be provided with work by his employer.
20. In the circumstances I hold that the Tribunal's decision was erroneous in point of law. Accordingly I set the Tribunal's decision aside. I consider that it is appropriate for me to give the decision that the Tribunal should have given, as I can do so without making fresh or further findings of fact. Therefore I allow the appeal and hold that for the period from 18 August 1994 to 1 March 1995 (both dates included) the employee concerned is not entitled to Statutory Sick Pay from his employer.

(Signed): J A H Martin


CHIEF COMMISSIONER

5 January 1999