Where an employee has exhausted their sick pay, whether they are entitled to payment during their notice period is a complicated question. It depends on the amount of contractual notice compared to statutory minimum notice. An employee who is going to be dismissed on the grounds of ill health is always entitled to receive notice, and the notice you have to give, will be the greater figure of the contractual notice period and the statutory minimum notice period.
Section 88(1)(b) of the Employment Rights Act 1996 provides that the employee should be paid full pay for the statutory minimum notice period in cases where they are incapable of work because of being absent on ill health grounds. However, under s.87(4) this right does not apply where the contractual period of notice exceeds the statutory minimum notice period by at least one week. This principle is perhaps best illustrated by way of two examples.
Employee A has been employed for five and a half years when they are dismissed on long-term incapacity grounds. Under their contract of employment, they are entitled to receive one month’s notice. In this case, the statutory minimum notice period of five weeks exceeds the contractual notice period of one month, so Employee A must be given five weeks’ notice of the termination of their employment and, in accordance with s.88(1)(b), they must receive this at the full rate of pay.
Meanwhile, Employee B has been employed for two years when they are dismissed due to long-term ill health. Under their contract of employment, they are entitled to receive four weeks’ notice. In this case, the contractual notice period of four weeks exceeds the statutory minimum notice period of two weeks, so four weeks’ notice of termination of employment must be given. However, as the contractual notice period exceeds the statutory notice period by at least one week, this means that s.87(4) is triggered and there will be no obligation for it to be paid at full pay. If the employee’s entitlement to sick pay has already been exhausted, no pay at all will be due during the four-week notice period.
