ProtectionJun 21 2017

Statutory sick pay and notice pay issues

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Statutory sick pay and notice pay issues

Q: One of my employees has resigned while on sick leave. What do I do in regards to their notice pay?  

A: Employers seek every opportunity to support employees to help them return to work when they are sick. In some cases, they will be unsuccessful and an employee can go on to resign for many reasons. The correct payment of notice pay is a tricky area for most employers – not only will notice periods differ depending on whether the employer or employee is ending the contract of employment, but the statutory notice period will also affect any agreed contractual notice. 

The statutory notice period is the amount of notice legally required to be given by either party to end the contract. For employers to dismiss, the statutory notice is one week for each year of service up to a maximum of 12 weeks. For employees to resign, the statutory notice is always one week. The contract of employment can increase the required notice, but any lesser provision will be overridden by the statutory notice laid out. 

Notice pay is protected during the statutory notice period. This means an employee who works during their notice period should receive their normal pay during this time. If the employee is not available for work for specific reasons, including sickness, then they are still entitled to full pay for their statutory notice period as this is protected. 

However, pay protection is overturned when the employer’s notice to terminate the contract is a week or more greater than the statutory notice period. This applies even when the employee resigns and means that the employee is not entitled to pay during the statutory notice except for any statutory payments that are due, such as statutory sick pay (SSP). 

An example of this is where the employer is required to give four weeks’ notice to terminate a contract of employment. If the employee has three years’ service and they resign, their employer’s notice period is a week greater than the statutory notice period of three years. They will not receive any pay for their statutory notice period to resign unless their entitlement to SSP is ongoing. 

Any entitlement to pay for additional contractual notice due on resignation should be outlined in the contract of employment. This will generally be statutory sick pay; however, each individual contract of employment will need to be examined to determine if the employee is entitled to a greater rate of pay. 

Peter Done is managing director of law firm Peninsula