Where an employee who has exhausted all entitlement to sick pay is to be dismissed on grounds of ill health will he or she be entitled to any payment throughout his or her notice period?
The answer to this question is complicated and depends on the amount of contractual notice when compared to statutory minimum notice. An employee who is to be dismissed on the grounds of ill health is always entitled to receive notice. This will be the greater 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. Where the period of employment is less than two years, the statutory minimum notice period is not less than one week. Where the period of employment is two years or more, the statutory minimum notice period is not less than one week's notice for each year of continuous employment, up to a maximum of 12 weeks.
Section 88(1)(b) then provides that the employee should be paid full pay for the statutory minimum notice period in cases where he or she is 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 he is dismissed on long-term incapacity grounds. Under his contract of employment he is 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 A must be given five weeks' notice of termination of employment and, in accordance with s.88(1)(b), he must receive this at the full pay rate.
Meanwhile, employee B has been employed for two years when she is dismissed due to long-term ill health. Under her contract of employment she is 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.