When an employee is on sick leave during their notice period, working out what they are owed in notice pay isn’t always straightforward. Surprisingly, it can turn on something as quirky as who gave notice and whether the contractual notice is longer than the statutory minimum.

The amount of pay due during sickness absence depends largely on the employee’s length of absence and what it says in their contract:

  • Enhanced sick pay: Some employers offer enhanced sick pay, for example, full pay or a percentage of pay for a fixed period (such as three months in any twelve). These schemes are rarely open-ended.
  • Statutory Sick Pay (SSP): Where no enhanced scheme applies, eligible employees can claim SSP (currently £118.75 per week) for up to 28 weeks.

This can all be turned on its head where the employee is given or receives notice to terminate their employment during a period of sickness. In these circumstances, the quirky provisions of sections 87-89 Employment Rights Act 1996 dictate what pay the employee is entitled to. There is no point trying to apply any logic to these provisions. There isn’t any. But employers need to be aware of them in order that the correct payments are made to a departing employee.

Step-by-step guide

  1. The statutory minimum notice requirements are important background information. Section 89 ERA provides that employees are entitled to receive a minimum of one week’s notice from their employer after one month of employment, rising by one week for each year of continuous from two years, up to a maximum of 12 weeks’ notice after 12 years.
  2. If an employer gives notice of termination of employment to an employee on sick leave and the notice period applicable is the statutory minimum detailed in 1. (or not more than a week more than this), then the employee is entitled to receive full pay during their notice period.
  3. If the employer gives notice of termination of employment and the notice period is at least one week more than the statutory minimum then the employee is only entitled to receive their sick pay entitlement during their notice period (either SSP, no pay if SSP is already exhausted or employer sick pay if this is applicable).
  4. These same rules apply where it is the employee who has given notice. The actual notice period here might be different – the statutory minimum is just one week. However, to work out how much you need to pay for this period you have to check what the employer notice period would have been – if it would have been statutory minimum or less than one week more then full pay is payable, if it would have been more then payment should be at the applicable sick pay rate.

Key takeaway

The rules on notice pay during sickness are not intuitive. In fact, they often feel unfair in practice – an employee may miss out on paid notice simply because their contract gives them a week more than the statutory minimum. But the statutory provisions are clear, and tribunals have consistently applied them.

If you’re interested in reading more, the EAT case of Scotts Company (UK) Ltd v Budd [2003] IRLR 145 affirms the position.

For a succinct summary of the topic, members can access our handy flowchart in the Vault.