Continue salary payment during illness,yes or no?

An employee calls in sick, meaning they cannot fulfill ‘the agreement to perform work.’ Do you continue paying their salary during illness or not? The main rule in general contract law is: ‘Suspend salary payment, as the employee is not fulfilling the agreement.’ However, practice—and our law—teaches us that this is not the case. In principle, you must continue paying the salary even during illness.

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Continue salary payment during illness, yes or no?

April 9, 2024

Arbeidsrecht Verzuim Personeel

It's important to understand what is meant by illness. The law does not provide a definition. However, it can be inferred from the law that pregnancy and childbirth do not fall under illness.

In practice, the answer to the question of what illness is largely depends on the work for which the employee was hired. If your employee cannot fulfill the arrangements from the employment contract (the agreed work) due to 'medically objectifiable limitations,' they are considered incapacitated for work.

Is there any doubt?

Are you unsure whether an employee is incapacitated for work? Then call them in as soon as possible after the sick report to a company doctor. If it turns out that the employee is (partially) fit for the agreed work but is not working, you do not have to pay a salary.

Joanne Wesselo Senior Specialist Employment Law

Continue salary payment during a conflict

There is also 'situational incapacity for work.' This occurs when an employee, due to workplace tensions, such as a work conflict, is unable to work at your organization. They might still be able to work in the same role for another employer. Is this situationally incapacitated employee considered incapacitated by law? And do they then have the right to salary continuation? In principle, no, because medically there is no inability to work, just a conflict.

Corporate physicians often recommend intervention periods in these situations, which are used to arrange a solution to the conflict. Can't come to a resolution? Then whether or not you have to pay salary depends on whose 'risk sphere' the situational sickness falls under.

Duration of salary continuation period

The period over which you must continue paying salary in the event of sickness absence is 104 weeks from the first day of the absence. The law stipulates that this period can be adjusted on several grounds.

Short period of salary continuation: Does an employee perform (almost) exclusively domestic tasks fewer than four days a week? Then as an employer, you only need to continue paying salary for six weeks. For employees entitled to AOW, there is also no obligation to continue salary for 104 weeks. These employees are entitled to salary for only six weeks.
Long period of salary continuation: The UWV checks after the 104 weeks whether you have done enough for reintegration and have complied with the Gatekeeper Improvement Act. If the UWV judges that this is not the case, the institution can impose a salary sanction for a maximum of one year. This means you cannot part ways with the employee, and you must continue to pay the salary for up to one year.

Two periods of illness

Another special situation occurs if two periods of illness follow each other closely. If the interruption between the two periods is less than four weeks, then you must add those periods together for calculating the 104 weeks. The reason why the employee is sick again is not relevant for this.

However, if the periods of illness follow each other with longer intervals, then a new period of 104 weeks applies. In practice, this may mean that you have to continue paying the salary for much longer than 104 weeks.

Deviating from CAO

Your CAO may require you to pay more salary during illness than the legal minimum (70%). With a minimum CAO, you may also choose to pay more salary during illness than agreed. So, deviating from the law is allowed, but the employee always retains the right to what the law prescribes as a minimum.

More about CAOs

Distinction in salary continuation

Sometimes an employer handles salary during illness differently in practice than agreed. For example, by paying 100% salary during the first year of illness while 70% was agreed upon. Many employers believe that in this way they can distinguish between employees or apply different salary continuation percentages for different sickness notifications.

If you pay your employees differently during sickness absence, you are unjustly distinguishing between employees. An employee who discovers this can claim that he or she is also entitled to the higher amount.

The situation where you apply one percentage one time and another percentage the next can also lead to problems. The question then is whether the employee has 'acquired the right' to the higher percentage by virtue of this practice.

You can also accidentally overpay, for example, at the beginning of the second year of illness (often the point where salary decreases). If you continue to pay the employee 100% for an extended period, you may no longer be able to deviate from this, because the employee may now expect to receive 100% salary. Whether this expectation is justified depends on the situation.

Relatively simple?

Although the rules regarding salary during illness seem relatively simple, practice is often different. You must consider the law and apply it consistently. Judges may sometimes rule differently on this subject.

Case 1 Employer's mistake nearly proves costly

An employer and employee had agreed on an employment contract for an indefinite period. It was specified that the employee would have the right to 100% salary continuation for the first 52 weeks of sickness absence and 70% for the second 52 weeks.

In April 2017, the employee reported sick. During the first year of illness, he received 100% of the salary as agreed. After this period expired, the employer continued to pay 100% of the salary for several more months by mistake. This should have been 70% based on the applicable employment conditions regulations.

The employer corrected his mistake, resulting in the employee being downgraded in salary. The employee then claimed that his employer should continue to pay 100% salary for the entire second year of illness.

By mistake

The court saw no reason for 100% salary continuation in the second year of illness. The judges found that the accidental full salary continuation at the beginning of the second year of illness was insufficient reason to grant the employee's claim (continuation of 100% throughout the second year of illness).

The court explained that extraordinary circumstances are needed for granting such a claim, which was not the case here.

Court of Appeal 's Hertogenbosch, February 19, 2019, ECLI (abbreviated): 591

Case 2 Employee may expect full salary

On May 16, 2015, an employee reported sick to their employer. According to the collective labor agreement, the employer had to continue paying 100% of the salary for the first six months and then 90% for the following 18 months. The employer adhered to this rule by paying 100% of the salary from the date of incapacity for work.

On April 1, 2016, the organization decided to cease its business activities. From this date, the employee no longer received a salary. To terminate the employment contract, the employer sought permission from UWV due to the complete business closure.

The dismissal permit was granted as of July 1, 2016. The employee then claimed the unpaid salary (including allowances) for the months of April, May, and June at the full gross monthly salary (100% thus).

Trust

The sub-district court judge was of the opinion that the employee could indeed trust that he would continue to receive his full salary even after the first half-year of incapacity for work.

This trust was instilled because he continued to receive 100% salary for another 4.5 months after the first half-year had expired, whereas the collective labor agreement only obligated 90%. The unpaid salary—considering the longer duration of payment at 100%—was deemed payable by the judge.

District Court Limburg, July 14, 2016, ECLI (shortened): 6130

Any questions?

Would you like to know more about continued salary payment during illness, or do you have questions? Please feel free to contact me.

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