This issue arose in the High Court of Declan Hynes and Kilkenny County Council 2022 IHC 227 being a judgment of Mr. Justice Simons delivered on the 27th April 2022.

The issue which the judgment addressed is that of how Sick Pay, paid by an employer, should be treated.

At paragraph 3, of the judgement it states:

“the extent of the loss of earnings, will of course, depend on whether the injured party is entitled to Sick Pay under the terms and conditions of employment.  The actual loss suffered will be the difference, if any, between (i) the amount of earnings the injured party would have received if they had been able to work and;

(ii) the amount of Sick Pay received.

Where as in the present case, generous provision is made for Sick Pay, in the relevant Contract of Employment, this has the potential to reduce, by a significant sum, the amount of damages which the respondent to the Personal Injury action is required to pay”.

At paragraph 7, after reviewing the law on this matter the judgement states:

“it follows therefore that in calculating a claim for Loss of Earnings, it would be appropriate to deduct any sum paid to the injured party pursuant to a contractual right to Sick Pay.  The actual loss suffered by the injured party is the shortfall, if any, between the amount received by way of Sick Pay and the amount to which the injured party would be expected to earn but for his inability to work”.

This is a significant judgment particularly as regards those involved in drafting Contracts of Employment. 

The judgment clearly sets out that the loss of earnings where there is a provision for Sick Pay, will be discounted as part of a Loss of Earnings claim.  It would therefore appear to us that when drafting Contracts of Employment, it is useful to include a provision that in the event that an individual employee suffers an injury due to the fault of a third party that in those circumstances any payment, paid to the employee, will be treated as a loan which is recoverable.  It does mean that where there is a generous Sick Pay policy that it would be advisable to amend such contracts to specify that in those circumstances, where an injury is caused by a third party, that any payment shall be treated as a loan which the employer will be obliged to seek to recover as part of any proceedings.

Of course, this will in reality not be applicable to employers who are paying a limited amount of Sick Pay.  It would be more relevant to employers who may be paying a substantial amount of Sick Pay. 

In the case which we have referred to over €40,000 was paid by way of Sick Pay.  For those involved in Personal Injury litigation this is equally an important judgment and it is of particular relevance to Employment Law Solicitors who are involved in drafting Contracts of Employment where there would be substantial sick leave benefits payable to employees.

*Before acting or refraining from acting on anything in this guide, legal advice should be sought from a solicitor.

*In contentious cases a solicitor may not charge fees or expenses as a proportion or percentage of any award or settlement.

Richard Grogan

Author Richard Grogan

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