Benefit ‘unheard of’ in private sector, becoming an exception in public sector
The issue of banking sick days was at the centre of a contentious, nearly six-week-long strike by City of Toronto workers in the summer of 2009.
Under their collective agreements, members of Canadian Union of Public Employees Locals 79 and 416, which represent about 24,000 inside and outside workers such as daycare workers and garbage collectors, are entitled to 18 sick days per year and are able to bank any days they don’t use.
At retirement, workers are able to cash out their unused days to a maximum of six months’ salary, setting up a potential cost to the city of $450 million, according to an audit.
“It’s a huge burden on Toronto taxpayers,” said Plamen Petkov, senior policy analyst for the Canadian Federation of Independent Business (CFIB) in Toronto.
The city wanted to eliminate the sick bank and offered a one-time buyout for workers with accumulated sick days, which would have resulted in an average of $8,500 for senior full-time employees.
But the union refused and in the end the new collective agreement allowed current employees to continue to accumulate sick days, while eliminating the sick bank for future employees and including an optional buyout for current employees who choose to switch to a short-term disability (STD) plan.
Sick banks are most often seen among unionized public sector employees, such as government, health-care, education and transportation workers, said Rochelle Morandini, national lead for Hewitt’s organization health consulting practice in Vancouver.
Sick banks started several decades ago as a way to compete with higher private sector salaries, said Petkov. But times have changed.
“Wages in the public sector are actually quite competitive,” he said.
Looking at data from Statistics Canada, CFIB found City of Toronto workers earn about 12 per cent more than their private sector counterparts. When benefits are factored in, the differential increases to 36 per cent, said Petkov.
“You would never see benefits like this in the private sector,” said Petkov. “It’s not fair for a small business owner in the city to subsidize benefits that he or she cannot even dream of.”
While sick banks are traditionally seen as being better for workers than employers, they do have a benefit for organizations, said Morandini. Since workers have to put in the time to accumulate sick leave, new hires can’t go off on paid sick leave after only a couple of months on the job, she said.
“Because it was an earned benefit, someone would have to put in some time before they could access the full benefit versus a sick-leave benefit they could access basically from day one,” said Morandini.
From a union perspective, sick banks give senior employees a lot of financial protection. However, because they’re an earned benefit, workers may start to see sick banks as an entitlement, said Morandini.
This can lead to workers using them as vacation or personal days, which can cause problems, said Morley Gunderson, a professor at the University of Toronto’s Centre for Industrial Relations and Human Resources.
“Employers are concerned, in part, because if workers don’t use their sick days they take them as holiday time; the problem is people may be showing up at work sick a lot,” said Gunderson.
This could result in other workers getting sick, especially during a pandemic or bad flu season, he said.
Then there’s the uncertainty around cost. There’s no way to plan for how or when workers will use the days, or which workers will choose to take the full payout before retirement, said Gunderson.
Also, with a sick bank, there’s often no formal structure or disability management, which means sick employees don’t receive the same support they would under a STD program, said Morandini.
“It doesn’t give the individual any recovery help,” she said. The missing support includes recovery coaches who help employees navigate the health system or support employees in a return-to-work program.
There’s also concern about the gap between accumulated sick days and long-term disability (LTD) coverage, said Morandini. Newer workers who become very ill can be on the hook financially until LTD kicks in, she said.
For that reason, one health-care union in British Columbia is advocating for a formal sick leave program to replace the current sick bank provision, she said.
“There’s a recognition that (sick banks are) probably not really in everyone’s best interest and how can we go forward in something that gives the person help, that’s financially responsible,” said Morandini.
As such, sick banks are becoming increasingly rare in the public sector but it takes a long time to get rid of them, she said.
“These are old collective agreements that are very embedded,” said Morandini. Even if an employer eliminates sick banks, the accumulated days don’t just disappear, she said.
Halton Region in Ontario eliminated its sick bank in the 1970s but allowed existing employees to keep banked days. It took 30 years until the last employee with the benefit retired and cashed out.
Ontario’s York Region didn’t want to be on the hook that long and eliminated its sick bank in 1999 for all current and future employees, buying out employees’ accumulated sick days.
Other employers find a compromise and allow workers to blend sick banks and short-term disability, said Morandini.
