The High Court has ruled that €40,833.02 paid to Declan Hynes as sick pay cannot be recovered from Kilkenny County Council and Leo Hogan in his personal-injuries proceedings. It also found that Mr Hynes is not personally obliged to reimburse his employer, VHI Healthcare.
In a supplemental judgment delivered on 27 April 2022, Mr Justice Garrett Simons considered a narrow issue about special damages: whether the defendants should pay an amount equivalent to sick pay received during Mr Hynes’s absence from work after a road traffic accident in December 2011.
The parties agreed that sick pay must be deducted from a loss-of-earnings claim unless the injured person has a legally enforceable obligation to repay it to the employer. The dispute was whether such an obligation arose in this case.
Mr Hynes’s employment contract entitled him to 100% of his basic salary for up to six months in any 12-month period. VHI Healthcare paid €40,833.02 gross, equivalent to €35,887.22 after payroll deductions. The contract did not make the sick-pay entitlement conditional on repayment if he pursued a claim against a third party.
VHI Healthcare wrote to Mr Hynes in January 2012 saying that, if he pursued a third-party damages claim, salary-related costs should be included and would be expected to be reimbursed after a successful settlement. In September 2013, his solicitor wrote that the costs would be refunded from the claim if it succeeded.
The judge held that this correspondence did not create an enforceable repayment obligation. He said the solicitor’s letter was conditional on the claim for the employer’s costs being allowed by the court. The court found that claim inadmissible because Mr Hynes had an unconditional contractual right to the sick pay. The judge also said that any supposed undertaking would not be enforceable if it arose from a shared mistake about the law.
The court distinguished cases involving payments made as a loan or advance, where an employee is legally required to repay the employer. It concluded that a person with an unconditional contractual right to sick pay cannot make the cost recoverable by waiving that right after an accident.
The ruling concerns only the sick-pay item addressed in this supplemental judgment. The principal judgment in the proceedings dealt with general damages; this judgment did not revisit that issue.