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Q&A – Notice pay and long term ill health

Q) We have an employee who has unfortunately been off sick for a long time. He has exhausted their entitlement to sick pay, and we have received a medical report which confirms he will not be fit to return to work for the foreseeable future. We have no suitable redeployment options available. We are currently discussing the situation with him, and he has asked us to confirm what he would be entitled to if he is dismissed due to ill-health, particularly bearing in mind that he has exhausted his sick pay entitlement. Would he be entitled to notice pay in this situation?

A) The employee will be entitled to notice in accordance with his contract, or the statutory minimum notice if that is greater. The statutory minimum notice required by an employer is 1 week for each year of service, up to a maximum of 12 weeks. So, for example, if a contract of employment says that someone is entitled to 4 weeks’ notice, but they have been employed by the employer for 6 years, they will be entitled to 6 weeks’ notice.

However, the position regarding notice pay when someone is dismissed due to ill-health in these kinds of circumstances can be complicated, because it isn’t necessarily straightforward whether they should receive pay for their notice period or not.

Logic suggests that if the employee has used up their entitlement to sick pay, then they should not be paid for the period of notice – after all, if the employer did not dismiss and simply left them as an employee, then they would not get paid. However, the law is not that logical or simple! Under the legislation, an employee in this situation is entitled to be paid for notice of dismissal given by their employer if their notice period is either the statutory minimum, or up to 6 days more than the statutory minimum. However, if their notice period is 1 week or more greater than the statutory minimum, they are not entitled to be paid during their notice period.

Here are some examples help to illustrate the workings of this strange statutory provision:

  • An employee has a contract of employment which provides for 1 month’s notice. The employee is dismissed after 30 months due to ill health and his entitlement to all sick pay has been used up. He is therefore entitled to statutory minimum notice of 2 weeks (2 full years’ service). His contractual notice at 1 month is more than 1 week greater than this, so the employee is not entitled to be paid.

  • The same employee has 4 years’ service when he is dismissed. His statutory notice is now 4 weeks, so he is entitled to be paid as his contractual notice of 1 month is less than 1 week more than his statutory notice.

  • An employee with 20 years’ service has a contract of employment which provides for 3 months’ notice. She is dismissed for ill health and her entitlement to all sick pay has been used up. Jer statutory notice is 12 weeks (the maximum), so her contractual notice at 3 months is 1 week more than this. She is therefore not entitled to be paid.

  • The same employee has a contract which provides for 1 month’s notice, or one week for each year of service up to a maximum of 12 weeks, whichever is the greater. Her notice entitlement is therefore 12 weeks, which is the same as her statutory notice. She is therefore entitled to be paid.

It is worth noting that the position may be different if the employer makes a payment in lieu of notice, so if you are considering doing that then it is best to take advice (we can help!).

So why was the legislation drafted in this way? We have no idea! The rules have been like this for many years, and we have never understood the logic behind them, nor have we read anything which shines any light on the thought process (if there was one!) which went into the drafting.

Please do contact our Employment Team if you need assistance with any aspect of employment law.

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.