PWD2613

PARTIES:

DIVISION:

SUBJECT:

Appeal of Adjudication Officer Decision No's: ADJ-00055757 (CA-00067965-001).

BACKGROUND:

This is an appeal of an Adjudication Officer’s Decision made pursuant to the Payment of Wages Act, 1991. The appeal was heard by the Labour Court in accordance with Section 44 of the Workplace Relations Act, 2015 on 22 May 2026.

The following is the Court's Decision:

DECISION:

Ms Beata Kowalska (“the Complainant”) has appealed a decision of an Adjudication Officer made under the Payment of Wages Act 1991 (“the Act”).  The Adjudication Officer held that Ms Kowalska’s claim againstSecurispeed Logistics Limited (“the Respondent”) was not well founded. 

1. Background

The Complainant commenced employment with the Respondent on 18 April 2022. The Complainant was absent from work on sick leave from 4 October 2024 to 11 October 2024. The Complainant submits that the Respondent’s failure to award her paid sick leave during that period amounts to an unlawful deduction of wages properly payable to her at that time. The Responded refutes that assertion. Its position is that it utilised its right to not pay the Complainant sick pay as she had been placed on a Performance Improvement Plan.

Summary of the Complainant’s position

The Respondent failed to pay wages properly due to the Complainant in respect of certified sick leave in October 2024, amounting to €673 gross. The Respondent relied on alleged managerial discretion and performance-related considerations. The Complainant was routinely paid certified sick leave over the course of her employment. Sick leave pay was treated in practice as payable upon certification and no claim for sick pay was previously refused.

The Complainant’s contract of employment provides for a sick pay scheme in the following terms: -

“A total of ten (10) paid sick days will be permitted per year at the discretion of the Company. Payment for any additional sick leave will be at the discretion of your manager.”

The clause, properly construed, provides a contractual entitlement to paid sick leave up to ten days per annum. The wording “will be permitted” is mandatory and reference to “discretion of the company” is contradictory. Properly construed, the clause operates as follows: (a) the first ten days constitute a contractual sick pay scheme embedded in the employment contract, and (b) any discretion arises only in respect of sick leave beyond that threshold. The Complainant relies on the established principle of contractual interpretation that where ambiguity arises, it must be construed against the drafter under the doctrine of contra proferentem. Accordingly, the refusal to pay for certified sick leave constitutes an unlawful deduction from wages within the meaning of the Act.

If (which is denied) the Respondent retains discretion, such discretion is subject to well established legal principles as set out by the UK Supreme Court in Braganza v BP Shipping Ltd [2015] UKSC 17 and applied in Irish law by the Supreme Court in O’Sullivan v HSE [2023] IESC At paragraph 87 of the O’Sullivan Judgment, the Court confirmed that: discretionary decision-making in employment contracts must be exercised in good faith; must not be arbitrary, capricious or irrational; and may be impugned where the decision-maker takes into account irrelevant considerations; or fails to consider relevant ones. There is no policy in place governing the use of discretion by the Respondent. No process was followed as no policy existed regarding such a matter.

The Complainant asserted a civil claim arising from her personal injuries, and the action of pursuing legitimate legal rights and remedies soured the employment relationship and effectively resulted in discretion being improperly exercised to withdraw paid leave provided for. The Respondent’s actions demonstrate a predisposition to avoid contractual liability, a reliance on considerations extraneous to the purpose of sick pay and a decision-making process lacking in good faith and rationality. The Respondent’s reliance on “discretion” was not genuine, but rather a post hoc justification for withholding a pre-existing contractual entitlement. The Respondent relied on alleged performance issues.

Alternatively, the Complainant relies on a consistent and established practice of payment of certified sick leave. The Respondent’s conduct over the course of employment demonstrates routine payment upon certification, an absence of discretionary refusal and an absence of any communicated limitations. As recognised in Patrick J. O’Reilly v The Irish Press Ltd [1937] 71 I.L.T.R. 194, consistent workplace practice informs contractual expectations even where strict custom is not fully established. The Respondent’s departure from that practice was unilateral and unexplained.

The Complainant further relies on the fact that contemporaneously with placing her on a Performance Improvement Plan, the Respondent presented her with a revised version of her Terms of Employment. That revised document purported to remove the existing contractual provision relating to paid sick leave and to replace it with a more limited or statutory-based entitlement.

Summary of the Respondent’s position

The Respondent fully complied with their obligations under the Act and refutes the allegations that there was any breach of the Complainant’s rights.

The Complainant commenced employment with the Respondent on 18 April 2022 as a Site Supervisor. Her contract of employment outlines that ‘A total of ten paid sick days will be permitted per year at the discretion of the company’. The Complainant received 5 paid days of sick leave in March 2024.

In October 2024, the Complainant was informed that she would be placed on a Performance Improvement Plan to support her to improve her performance to the standard required.

The Complainant was absent from work from 4 October 2024 to 11 October 2024. The contract of employment outlines that sick pay will be paid at the discretion of the company. The Complainant was aware of this at all times. The Respondent utilised its right to not pay the Complainant sick pay in this instance as the Complainant had been placed on a Performance Improvement Plan.

The Respondent operates a sick pay scheme which is a benefit to employees and entitles eligible employees to a maximum of 10 days paid sick leave. However, this entitlement is discretionary as confirmed in the Complainant’s contract of employment where it states, ‘A total of ten paid sick days will be permitted per year at the discretion of the company’. It is clear from the clause that the payment for up to ten days of sick leave is at the discretion of the Respondent and the Complainant does not have automatic entitlement to it.

The wages “properly payable” to the employee were the wages as advised to the employee in the contract of employment. The Complainant received wages properly payable to her in line with her contract of employment. The Respondent applied discretion and did not pay her sick pay. No deduction as defined in Section 5 of the Act has been made.

3. Testimony of the Complainant - Ms Beata Kowalska

The Complainant was assisted with a Polish language interpreter.

The Complainant said that she availed of five days paid sick leave in 2021, a further ten days paid sick leave in 2022, and five days paid sick leave in 2023. The company never refused her paid sick leave prior to 2024. She was not aware of any policy that sick pay was paid to employee on a case-by-case basis.

Under cross-examination, the Complainant accepted that the relevant clause in her contract of employment stated that payment of sick pay was at the discretion of the company. She stated that on signing the contract she was informed by a previous company director that sick leave was paid if confirmed by a doctor’s certificate.

When asked to clarify what sick leave payments she received in the past, the Complainant said that she could not be sure and did not wish to mislead the Court. When asked what evidence she could provide to support her assertion that she availed of ten days sick leave in 2022, the Complainant said that she could not recall. When invited to comment on a letter dated 4 October 2024 which confirmed that she was subject to a Performance Improvement Plan (PIP), the Complainant said that everyone in the company was placed on a PIP.

5. Testimony of Gareth Dunne for the Respondent

Mr Dunne is the Head of Solutions with Masterlink. That entity took over the respondent company, Securispeed Logistics Limited, by way of a transfer of undertakings in 2024. All employees were issued with a new standard contract of employment.

Mr Dunne said that there is no custom or practice in the company to pay sick leave for ten days. Discretionary payments specified in older contracts of employment predate the introduction of statutory sick pay provisions. Since the introduction of statutory sick pay, sick leave payments in the company have aligned with the statutory provisions and no discretionary payments made.

Mr Dunne conducted a review of the Complainant’s payroll records. The records show that no sick leave payments were made to the Complainant in 2021 or 2022.  The Complainant was paid for three days sick leave in 2023.  She was paid for an absence that arose from an accident in the workplace, which was not recorded as a sick leave payment for payroll purposes. In 2024, the Complainant was placed on a Performance Improvement Plan (PIP), which impacts decisions about discretionary payments. At the time, the Complainant was the only employee in the company on a PIP. 

Under cross examination, Mr Dunne said that there was no written policy on how discretionary sick pay is applied.  When asked to explain the difference between the two sentences in the contract - “A total of ten (10) paid sick days will be permitted per year at the discretion of the Company. Payment for any additional sick leave will be at the discretion of your manager.” Mr Dunne said that both are applied on a discretionary basis.  He said that the general manager has discretion to apply ten days paid sick leave and, thereafter, if the general manager wishes to apply further discretionary sick pay he can escalate that matter to Mr Dunne for review on a case-by-case basis.  Mr Dunne said that no request to apply discretionary sick pay to the complainant was escalated to him.

6. The Applicable Law

Section 1 of the Payment of Wages Act 1991 (“Act”) provides in part as follows:

“wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

(a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, or

Section 5 of the Payment of Wages Act 1991 provides in part as follows:

(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless–

(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

(b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

(c) in the case of a deduction, the employee has given his prior consent in writing to it.

(6) Where—

(a) the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

(b) none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,

then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.

7. Deliberations

The Act provides that where the total amount of wages properly payable to an employee is not paid, any deficiency is regarded as a deduction. Consequently, to ground a claim under the Payment of Wages Act 1991 the Court needs in the first instance to ascertain what wages are properly payable.

In Balans v Tesco Ireland Limited [2020] 31 E.L.R. 125 MacGrath J. held that the first matter to determine in assessing if a contravention of the Act occurred is to establish what wages are properly payable under the contract. Accordingly, the starting point for assessing what is properly payable is the Complainant’s contract of employment.

While the Complainant contends that the Respondent purported to remove her contractual entitlement to paid sick leave when it issued her with a revised contract of employment in 2024, the Respondent fully accepts that the contract of employment applicable during the relevant period for consideration by the Court in the within complaint was the contract of employment signed by her on the commencement of her employment in April 2022.

That contract of employment provides for a sick pay scheme in the following terms:

“A total of ten (10) paid sick days will be permitted per year at the discretion of the Company. Payment for any additional sick leave will be at the discretion of your manager.”

Counsel for the Complainant submits that the contract clause, properly construed, provides an enforceable entitlement to ten days paid sick leave per annum which should operate as follows: (a) the first ten days constitute a contractual sick pay scheme embedded in the employment contract, and (b) any discretion arises only in respect of sick leave beyond that threshold.

The Court cannot agree with that submission. The full stop inserted at the end of the first sentence in the contract clause indicates that the Complainant does not have an unfettered contractual entitlement to ten days paid sick leave per year, as the sentence clearly and unambiguously states that the entitlement is subject to the discretion of the employer. The fact that the Respondent has the authority to exercise discretion does not mean that the Respondent was compelled to exercise discretion to award paid sick leave in every case.

Counsel further submits that the Respondent failed to exercise its discretion lawfully as the exercise of any discretion is constrained by the principles affirmed in Braganza and in O’Sullivan. In that regard, it is submitted that the Respondent’s actions and decision-making process when exercising its discretion demonstrated a lack of good faith and rationality.

The Court heard evidence from Mr Gareth Dunne that where an employee is placed on a Performance Improvement Plan, this can impact decisions about discretionary sick payments. It is accepted that the Complainant was subject to a Performance Improvement Plan (PIP) at the relevant time in October 2024. The Court preferred Mr Dunne’s evidence that the Complainant was the only employee on a PIP at that time and that, as a result, the Respondent decided not to exercise its discretion to pay the Complainant in October 2024 during her certified sick leave. In light of the above, the Court cannot support the contention that the decision not to award the Complainant sick pay was irrational or lacking in good faith. 

In the alternative, Counsel submits that the Complainant’s entitlement to paid sick leave arises through custom and practice in the company, which is an implied term of her contract.

In O'Reilly v Irish Press [1937] 71 I.L.T.R 194 Maguire P considered how a term can be implied into a contract of employment by custom and practice. In that case, the plaintiff argued that he had an entitlement to a 6-month notice period by virtue of custom and practice in the industry. In assessing if such an entitlement was implied into the plaintiff’s contract of employment through custom and practice, Maguire P said for this to happen it must be proved: -

“by persons whose position in the world of journalism entitles them to speak with certainty and knowledge of its existence. I have to be satisfied that it is so notorious, well known and acquiesced in that in the absence of agreement in writing it is to be taken as one of the terms of the contract between the parties.”

No evidence was presented to the Court by the Complainant in the within appeal to support the assertion that there was an established custom or practice in the employment of paying employees full pay when absent on sick leave. Her own evidence on that matter was contradictory. Under cross examination, she could not recall if and when she was paid for sick leave absences. As a result, the Court cannot find that there was established custom or practice of paying employees full pay when absent on sick leave.

Having regard to the submissions and evidence tendered, the Complainant has not established that that she had an unfettered contractual entitlement to ten days paid sick leave during her absence from work on certified sick leave in October 2024. Accordingly, the Court finds that refusal by the Respondent to pay the Complainant for that certified sick leave does not constitute an unlawful deduction from her wages within the meaning of the Payment of Wages Act. As no unlawful deduction in the Complainant’s wages occurred, the Court finds the within complaint is not well founded.

8. Decision

The Court finds that the complaint is not well founded.

The decision of the Adjudication Officer is upheld.

The Court so decides.

	Signed on behalf of the Labour Court
	Katie Connolly
TH	______________________
02/06/2026	Deputy Chairman

NOTE

Enquiries concerning this Decision should be addressed to Ms Therese Hickey, Court Secretary.