Which allowances must an employer continue to pay during sick leave?

An employee who regularly works on Sundays usually receives a Sunday allowance for this if a collective agreement applies. But what happens to that allowance if the employee falls ill? The District Court of The Hague recently considered precisely this question.

In this case, the collective agreement for staff of large retail chains and the food industry (VGL-CAO) applied to the employment contract. That collective agreement stipulates that, during illness, an employee receives 100 per cent of the wages to which they would have been entitled whilst performing their normal duties for the first 26 weeks, 90 per cent thereafter, and 80 per cent in the second year of illness. At the same time, the collective agreement stipulates that allowances for special working hours, such as the Sunday allowance, do not fall within the definition of ‘wages’.

Prior to reporting sick, the employee regularly worked on Sundays and therefore regularly received a Sunday allowance. In his view, this allowance should therefore have continued to be paid during his sick leave. His reasoning was that he would also have received the allowance had he been performing his duties as normal. Sounds logical, doesn’t it?

The subdistrict court did not agree. As the VGL collective agreement explicitly stipulates that allowances for special working hours do not fall within the definition of ‘wages’, the Sunday allowance did not have to be continued during sick leave under the terms of the collective agreement. 

The fact that, in practice, the employee worked on Sundays on a regular basis and therefore always received the Sunday allowance in the normal course of his duties did not, in the court’s view, alter this. The phrase ‘to which he would have been entitled in the normal course of his duties’ does not imply that the ‘fixed’ allowances should be paid in contravention of the concept of wages, the court held.

However, this did not bring the discussion to a close. The statutory provision for continued payment of wages during sickness sets a minimum threshold. Under Article 7:629 of the Dutch Civil Code, an employee is, in principle, entitled to 70 per cent of the (maximum daily) wage. When determining that statutory wage, structural allowances may well play a role. No deviation from this statutory protection may be made to the detriment of the employee.

In this case, however, that proved not to be a problem. Under the collective agreement, the employer paid 100 per cent of the wage specified in the collective agreement during the period of sickness, followed by 90 per cent and then 80 per cent. The employer was able to demonstrate that the employee thus consistently received more than the statutory minimum of 70 per cent, even when the Sunday allowance was included in that statutory calculation. The subdistrict court therefore concluded that the collective agreement provision did not work to the employee’s disadvantage. The employee was therefore not entitled to additional payment of the Sunday allowance.

This ruling demonstrates that it is not only the wage components actually received that are relevant, but also how the wage is defined in the applicable collective agreement. Under the law, the employee was therefore entitled to the Sunday allowance whilst on sick leave, but a collective agreement may exclude certain allowances, provided that the employee receives at least what they are entitled to by law whilst on sick leave.

Do you have any questions about continued payment of wages whilst your employees are on sick leave? Please contact Dennis Oud, Tessa Sipkema, Elke Hofman-Bijvank or Noa Bilogrevic.

You can read the ruling here.