Employer not entitled to reimbursement of sick pay in damages claim

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Employer Not Entitled To Reimbursement Of Sick Pay In Damages Claim Employer Not Entitled To Reimbursement Of Sick Pay In Damages Claim
Generous sick pay provision in an employment contract might significantly reduce the level of damages a liable party would be required to pay, the court found. Photo: File image
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High court reporters

An injured party who enjoys an unconditional contractual right to sick pay is not entitled to claim reimbursement for their employer as damages in a civil action, the High Court has ruled.

In a judgment, Mr Justice Garrett Simons said a sum incurred by an employer in sick payments will only be recoverable against a third-party wrongdoer where the injured party is legally obliged to reimburse it.

An injured party who has been unable to work for a period due to injuries is generally entitled to recover loss of earnings as part of a successful personal injuries legal action. However, generous sick pay provision in an employment contract might significantly reduce the level of damages a liable party would be required to pay.

The judge said employers could protect themselves by wording contracts to the effect that the employee is legally obliged to reimburse the amount paid from any compensation received in a personal injuries claim.

VHI Healthcare case

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Mr Justice Simons made the findings in a successful personal injuries case brought by an employee of VHI Healthcare, which had paid him €40,800 for absences due to injuries he sustained in a road traffic accident.

Declan Hynes, of Pococke Valley, Johnswell Road, Kilkenny, sued Kilkenny County Council and its employee, Leo Hogan, of Ballyfoyle, Co Kilkenny, over the incident on December 5th, 2011.

Mr Hogan had been driving the council road sweeping truck that was alleged to have entered the path of Mr Hynes’s car, colliding with it.

Liability had been admitted by the defendants and the High Court was tasked with assessing damages, including whether Mr Hynes was entitled to recover sick pay to reimburse his employer.

Mr Hynes had a contractual entitlement to 100 per cent of his basic salary for up to six months in any 12-month period, the judge noted.

Damages claim

However, VHI as his employer had written to Mr Hynes following his accident saying he should include the €40,800 it had incurred due to his absence if he decided to bring a claim for damages against a third party. “On successful settlement of your claim you would be expected to reimburse the board,” it wrote.

Mr Hynes’s solicitors responded to the letter by confirming the costs would be refunded to VHI if the claim was successful.

However, this chain of correspondence does not give rise to a legal obligation on Mr Hynes’s part, said Mr Justice Simons.

A contractual right to sick pay, which is not conditional on an obligation to reimburse the monies paid, cannot be waived post-accident, so the voluntarily assumed loss would be visited on the wrongdoer, he said.

The parties involved in the legal action agreed Mr Hynes had suffered neck and back injuries, but the level of psychological injury suffered was disputed.

The judge said the psychological impact affected “all aspects” of Mr Hynes’s life, including him having prolonged absences from work.

Mr Justice Simons awarded €173,000 in damages, including €70,000 for physical injuries and €45,000 for psychological injury as against the defendants.

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