A tribunal decision that forced a trust to stop withholding pay from staff who take too much sick leave has failed to deter other organisations from pursuing similar policies, HSJ has learned.

Central Manchester University Hospitals Foundation Trust was told last month by an employment tribunal its actions were unlawful.

The trust had imposed rules under which employees who were off sick four or more times a year, or for 18 or more days in total, would lose that year’s increment - equal to a 2.5 per cent pay rise on average.

Unions, including Unison, Unite and the Royal College of nursing, challenged the policy on behalf of 83 staff and hailed the tribunal decision as a victory. The trust has now withdrawn its pay policy.

RCN chief executive and general secretary Peter Carter said the tribunal had shown increments could only be withheld in “certain, strictly defined circumstances” that “do not include sickness absence”.

Increments cost the NHS around £1bn a year. In 2010, then Department of Health director of finance, performance and operations David Flory told HSJ: “The pay drift around increments is a significant cost pressure.”

But HSJ has confirmed that at least three trusts are still pursuing policies under which staff members taking a certain amount of sick leave risk having increments withheld.

They are Salford Royal, University Hospitals of Morecambe Bay and County Durham and Darlington foundation trusts.

Salford Royal executive director of organisational development and corporate affairs David Wood said the trust had “definitely not” frozen its policy in light of the tribunal decision.

He said he had invited local union representatives to discuss the trust’s pay policy, but there was “nothing specific in the tribunal’s judgement which suggests we cannot link mandatory training/performance/conduct to pay progression”.

The trust has spent £1.1m less on pay this year than it budgeted for at the start of the financial year, according to most recent board papers - a 1 per cent underspend.

County Durham and Darlington, predicting a pay underspend of £3.2m, or 1.1 per cent, has also declined to immediately halt its scheme. A spokeswoman said it was “aware” of the Central Manchester ruling but would “discuss it in detail” before taking any steps.

Morecambe Bay, which declined to provide recent paybill figures by HSJ’s deadline, confirmed its scheme was still in place. A spokesman said it was “not exactly the same” as Central Manchester’s scheme and the trust would “consider whether any changes need to be made”, based on legal advice.

A Unison spokeswoman insisted the tribunal had sent a “signal” to other trusts that national terms and conditions should be upheld. Union representatives were negotiating with employers in the first instance but could resort to further legal action if necessary.

It is not known definitively how many other trusts are linking sickness absence to pay, but Capsticks partner Andrew Rowland said it was “the kind of thing trusts are looking at” and identifying savings through the Agenda for Change framework was “very high on trusts’ agendas”.

He said there was nothing to prevent trusts from implementing a policy such as Central Manchester’s for new employees.

Alternatively they could vary contracts for existing staff by agreeing this with unions or, potentially, take the “nuclear option” of dismissing and re-employing staff on new contracts.