Sick leave, notice periods, notice pay… what does it all mean for employers?

Employee dismissals can be difficult at the best of times, but it is even harder to understand the right course of action when the staff member involved has exhausted their entitlement to sick pay. Thanks to the numerous clauses included in the Employment Rights Act 1996 regarding the topic, it can raise a lot of confusing questions…

• Can you dismiss them on grounds of ill health?

• What does this mean in terms of payment during their notice period?

• What sort of notice period do you have to provide?

Unfortunately, there’s no easy answer, but hopefully by the end of this blog you will be a lot clearer on what you, as the employer, need to be doing.

Are employees entitled to payment during their notice period?

There are two types of notice – statutory and contractual. Employees are entitled to whichever is longer.

The law states that employees are entitled to at least one week's notice if they have worked for anywhere between one month and two years. After that they are entitled to a further one week's notice for every year of service, up to twelve years' service.

These statutory notice periods are minimum notice periods, but a contract of employment can include a longer notice. This is up to the employer to decide and should be included in every employee contract.

In terms of employees who have been on sick leave and are being dismissed on the basis of ill health, the process isn’t much different.

Notice period and payment for sick leave

In most gross misconduct cases, employees are usually summarily dismissed without notice. However an employee who is being dismissed on the grounds of ill health is always entitled to receive notice. This will be the greater length of time out of the contractual notice period and the statutory minimum notice period.

Section 86 of the Employment Rights Act 1996 provides for statutory minimum notice periods of one week for employees up to two years or up to twelve weeks dependent on their length of employment.

Section 88(1.b) then 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 Section 87(4) this right does not apply where the contractual period of notice exceeds the statutory minimum notice period by at least one week.

What does this mean for employers?

With so many contradicting clauses, it can be hard to figure out the right course of action.

But this basically means that if an employee of five years is being dismissed on the grounds of their extended ill health, and their contract states they are entitled to one month’s notice, the statutory minimum notice period of five weeks (due to their five years’ service) should be given.

In terms of payment, employers must adhere with Section 88(1.b) which states employees 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, if the employee dismissed due to ill health has worked for the company for two years and their contract states they are entitled to one month’s notice, it would be the other way round.

As the contractual notice period of four weeks exceeds the statutory minimum notice period of two weeks the four weeks' notice of termination of employment must be given.

However, in this case, as the contractual notice period exceeds the statutory notice period by at least one week, this means that Section 87(4) is triggered and there will be no obligation for the notice period 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.

Getting it right

It may be a confusing subject, but it highlights the importance of accurate and appropriate contracts for your employees.

Every business is different, and your need for employee notice period may differ. For some, the statutory notice period is perfect for their structure but for other employers it essential you include the relevant clauses in your employment contracts dictating how much notice you would prefer.

Still confused?

If you aren’t sure your current employment contracts are up to scratch, I’m here to help. Just drop me an email (andrew@ajbhrcs.co.uk) or pick up the phone (01788 228608), I'll be happy to do this for you. I can even arrange to send contracts directly to your employees and have them returned to me and stored electronically. Complete legal compliance and protection for you, and you don’t even need to hold the paperwork.