Different shapes and sizes
Employers do not have complete freedom to decide on pay rises within their organisations. Besides the statutory minimum wage, such decisions can also be shaped by collective labour agreements (CLAs). CLAs frequently include arrangements for one-off or structural pay rises. Employers covered by a CLA with pay-rise provisions are obliged to grant their employees those increases.
Pay-rise arrangements can depend on factors such as performance reviews or years of experience. Some employers automatically grant an annual pay rise, for example based on an inflation adjustment.
What are the rules if an employee is, or has been, long-term sick?
If an employee is, or has been, long-term sick, the question can arise whether they are still entitled to a pay rise.
In some cases, an employee can still claim a scheduled pay rise while sick, while in others the increase may be postponed or cancelled, depending on the employer’s policy.
Generally speaking, the answer depends on what can be regarded as reasonable, which means looking at the criteria applied for pay rises in previous years. If the pay rise was historically tied to performance, a long-term sick employee may have a weaker claim to it, given the lack of performance during periods of illness. An employee who previously received increases based on years of experience may not receive an increase after a year of sick leave, since no additional work experience was gained during that period. In the case of a periodic, structural pay rise, however, a (long-term) sick employee may not be excluded, and remains entitled to the increase just like anyone else.
Know your own policy
It is important for employers to be aware of the consequences of their own policy on annual salary indexation. Although CLAs generally provide guidelines, employers should carefully consider what is reasonable when granting pay rises, and what obligations follow from this (for example, in the case of a sick employee).
Do you have questions about pay rises and/or sick employees? Please feel free to contact one of our employment lawyers, without obligation.
