Right to Notice Pay After Long-Term Sickness Absence


Employers should be aware that they may be liable to pay full salary to an employee being dismissed after long term sickness absence, even if that employee has exhausted all rights to sick pay, including Statutory Sick Pay.

Under the Employment Rights Act 1996, employees with statutory minimum notice periods acquire certain rights during their notice period. Among these rights is the right to receive normal pay for any period of notice during which the employee is incapable of work because of sickness or injury.

This provision applies even if the employee has been on long term sickness absence, has exhausted the sick pay provisions and would not have been entitled to receive any pay had their contract not been terminated. However, any payment made during the notice period in accordance with sick pay schemes or statutory sick pay go towards meeting the employer’s liability for notice pay.

As illustrated in the case of Scotts Co (UK) Ltd v Budd (2003) this right does not exist where the notice period required to be given by the employer exceeds the statutory minimum by at least one week, and if sick pay provisions have been exhausted the employee cannot expect to receive any pay for the entirety of their notice period.

Therefore, although the statutory minimum notice period often suits employers in terms of being able to effect dismissals with the shortest notice period possible, the liability to pay full salary after an employee has been on long term sick leave is something to bear in mind when drafting contracts of employment. Employers may therefore consider it worthwhile extending the statutory notice period by a week when drafting employment contracts to mitigate their losses should a long term sick leave situation arises and the absence of the employee from the work place will already have caused the Employer financial loss.

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