Continued wage payment obligation liable for reduction

Employers are under the obligation to continue paying the wages of their employees when these fall ill, in principle for the duration of the first and second years of sick leave unless UWV, the Employee Insurance Agency in the Netherlands, grants extension by imposing a statutory sick pay order upon the employer.

The scope of the continued wage payment obligation during the third year of sick leave was the bone of contention in an argument which ended up being taken to the Subdistrict Court. The dispute focused inter alia on the question as to whether it was permissible for the employer to dock the wages to be paid out to the sick employee by the latter’s income from work other than that in the employer’s service. Employers are under a statutory obligation to continue paying 70% of wages to employees who are off sick unless a greater percentage has been agreed in the context of an employment contract or collective labour agreement. The statutory continued wage payment obligation in the amount of 70% will (continue to) apply throughout the third year of sick leave where no alternative arrangements have been agreed upon.

The Subdistrict Court ruled that the employer had rightly suspended the continued wage payment during the employee’s third year of sick leave. The permissibility of an employer’s suspension of an employee’s wage payment is strictly conditional upon the employer having forthwith notified the employee of the underlying reason, as a condition which the employer from the employee’s third year of sick leave onwards had satisfied. The statutory sick pay order having been imposed upon the employer in conjunction with the employee’s lack of disclosure of information concerning his earnings were deemed to have been enough of a reason for the employee to suspend wage payments.

It is statutorily permissible for employers to dock the wages of employees who are off sick by the earnings from work performed by the latter while they were on sick leave. There is debate in the professional literature concerning the question as to whether as much as 100% or only 70% of an employee’s income may be docked where that employee is on the receiving end of a continued wage payment obligation. An alternative argument which has been presented is that it should be permissible for the employee to generate additional earnings up to the level of 100% of his or her wage while only the excess earnings should be dockable. According to the Subdistrict Court, the phrasing of the law – in which no proviso of any sort is made where it concerns the level of the reduction – points to the full complement of earnings being taken into consideration where the reduction is concerned.

The employer was excused from making any further wage payments to its employee as the latter’s income from miscellaneous activities had been significantly greater than the amount involved in the continued wage payment obligation during the third year of sick leave.