Where an Employee is absent on long-term sick and resigns with notice or the Employer terminates on notice, does the Employer pay full notice pay?
With long-term sickness absence, employers have a duty of care to support the employee, which extends to making reasonable adjustments to the employee’s role. This is to assist the employee’s return back to work in circumstances where the medical prognosis suggests adjustments are desirable. However where the employee, whilst off sick, freely and willingly decides to resign then the payment for the notice period is a tricky matter which this article addresses. It will also deal with the situation where the employer decides to dismiss an employee absent on long term sick.
Other than for summary dismissal on gross misconduct, for an employment contract to end the Employment Rights Act 1996 (ERA) requires statutory notice to be given. The statutory notice to be given by the employer being one week for each year of service after 2 years’ service (under 2 years’ service it is 1 week notice ) up to a maximum of 12 weeks, and for an employee to resign, the statutory notice is a minimum of one week.
Statutory Notice
The contract of employment can increase the required notice, but any lesser provision will be overridden by the statutory notice.
During the statutory notice period, notice pay is protected under Section 88 ERA thus the employee is paid his/her full normal salary over this period and this applies even if the employee is unavailable for work for reasons like sickness ie statutory sick pay (SSP) is not paid over this statutory notice period.
However, under Section 87 (4) ERA the above pay protection does not apply when the notice to terminate within the employment contract is greater than the statutory notice period and this also applies where the employee resigns.
Where the above provision applies to the employment contract and the employee resigns whilst off sick or is dismissed whilst off sick, the employee is not entitled to full pay during the statutory notice period. However they will be entitled to any statutory payments that are due to the employee like SSP that lasts for 28 weeks of continued absence. Thus where the 28 weeks SSP has been exhausted and the employee then resigns or is dismissed the employee will get no pay during the contractual notice period.
Employment Tribunal Case
An example of a case where the above rule applied was in Scotts Company (UK) Ltd v Budd [2003] IRLR 145 where Mr Budd had 12 years’ service thus entitled to 12 weeks’ statutory notice and was dismissed after he had been off work due to ill-health for over two years and thus was on unpaid sick absence at time of his dismissal. Amongst other issues considered, the Employment Appeal Tribunal concluded that Mr Budd was not entitled to any remuneration during his notice period as his contract provided for a 13 week notice period, one week more than his statutory entitlement of 12 weeks. Had Mr Budd’s contractual notice period been 12 weeks only, then he would have been entitled to receive full contractual salary for that period.
If this article raises any issues for you or your organisation or you would like more information, please speak to our Quest HR Advisors on 0333 240 7208 or contact us.
