An Employee resigns whilst off sick – what happens next?

Let’s start at the beginning; The Employment Rights Act 1996 (ERA 1996) places a statutory obligation on both employers and employees to provide minimum periods of notice to terminate an employment contract.

The statutory minimum periods of notice start at one week for employees with more than one month of continuous service with the employer and increase over time to a maximum of twelve weeks where an employee has been continuously employed for over twelve years by the employer.

Now, if the notice requirements set out in the contract of employment between two parties exceed those set out by the ERA 1996, the contract will take precedent.

Therefore, the starting point for an employer who receives a resignation from any employee, should be the contract of employment and the notice requirement set out within. If this refers to the statutory minimum periods of notice, these are easily calculated based on length of service as mentioned above.

This is where things get more complicated when considering an employee who gives notice whilst absent from work due to sickness…

If the contractual notice required to be given by the employer is the statutory minimum, the employer will be required to pay the employee’s full pay* for the entirety of their statutory notice period.

(*calculating this amount can be tricky if the employee has variable hours but that’s another matter!)

If the contract requires that the employer provides more than one weeks’ notice in excess of the statutory minimum for that employee, they need make no notice payment during the notice period (section 87(4) ERA 1996).

The reason why the legislation appears to penalise employees who have longer contractual notice periods is not clear. It has been suggested that this was designed as a mechanism to encourage employers to contract longer notice periods with their staff, but this is merely one view of many.

Where a period of paid notice is required, payments of Statutory Sick Pay (SSP) and/or Contractual Sick Pay can be counted toward the notice pay but must be “topped up” if they do not equate to the “full pay” required.

If no notice payment is required, employers must continue to pay SSP and/or Contractual Sick Pay in line with their obligations but will not be required to “top up” these payments. If an employee has exhausted their entitlement(s) to Sick Pay, this could result in them receiving no payment for their notice period.

It is also worth remembering that employees continue to accrue Annual Leave during periods of sickness absence and that accrued but untaken Annual Leave should be paid upon termination of the contract of employment – this again applies regardless of whether the employee works during their notice period or is absent.

As always, if you would like to discuss any of the issues raised in this blog, have questions about managing absence more generally, or would like expert advice on any other HR issues, please do not hesitate to get in touch with me or any of the friendly team at Tamar HR.