Employers terminating an employee’s contract of employment who is on long-term sick leave, have exhausted all statutory and employer sick pay and have no prospect of returning to work based on medical evidence can be perfectly within their rights to do so provided that they follow a fair process.
When terminating any employment contract, whether for reasons of long-term incapability or not, employers should always check the employee’s contract of employment as a first port of call. Within that, entitlement of notice period is one of the key things employers should look out for.
Statutory minimum notice is the right of every employee. Employers may offer notice periods that are longer than the statutory minimum (1 week for every completed year of service up to a maximum of 12 weeks). If employers offer such enhanced notice periods, this would be detailed in the employee’s contract of employment. In terms of terminating employment on the grounds of long-term ill health, it is important to establish if the employee has an enhanced notice period under their contract of employment.
This is important as according to the Employment Rights Act 1996 section 88(1)b employees are entitled to full notice pay if their contract of employment is terminated whilst on sick leave even if they have exhausted all statutory and employer sick pay.
However, as per section 87(4) of the Act, this is not applicable if the employee in question has a contractual notice period that is at least 1 week more than the statutory notice requirement.
What does this mean in practice?
For example, if an employee has been employed by a company for 3 years, their statutory notice would be three weeks. If according to their contract of employment they receive 1 month notice if the company decides to terminate their employment this would be more than 1 week longer than the statutory requirement.
If this employee was on long-term sick leave, have exhausted all statutory and employer sick pay and have no prospect of being able to return to work as supported by medical evidence, this employee would be entitled to no pay during their notice period.