Can an employee's car allowance be withdrawn while he or she is on long-term sick leave?
Whether or not an employee's car allowance can be withdrawn will depend on the terms of the employee's contract of employment and any policies or rules regarding the car allowance that are incorporated into the contract. When an employee is absent from work due to sickness, there is no statutory duty on the employer to continue paying the employee's wages or salary, although statutory sick pay must be paid. However, unless there is a clear statement in the contract that a car allowance normally payable to the employee will be discontinued after a defined period of sickness absence, it is likely that the employee would impliedly have the right to expect the allowance to continue. There may also be an implied duty to continue a car allowance as a result of custom and practice in the organisation, for example if in the past it has been the usual practice to allow it to continue.