Notice/holiday pay if terminating contract after long term sick

aroominyork

My wife has been on sick leave for just over a year so has exhausted her sick pay (although her employer was incredibly generous in how they interpreted their policies). She is discussing redeployment with them but it's unlikely to work out so we expect they will terminate her contract. In a recent meeting with HR and her boss, HR they mentioned her notice period (she is on three months) and accrued leave in the context of termination. My question is whether these would be paid or unpaid? Would she receive a parting payment equivalent to three months pay plus accrued holiday, or is it just going through the formality of putting her on notice but without pay?

General_Grant

If they give her notice then it should be at full pay for the full notice period.

If she would be able to do any work (not necessarily the work she used to do for them but something within her capabilities/reasonable for the company to request she undertakes), then I think they could say she should take the accrued holiday during that notice period and so this would not be paid in addition.

springboot

In the event of termination, your wife would typically receive payment for her notice period and any accrued holiday leave. Therefore, she should expect a parting payment equivalent to three months' pay plus any accrued holiday leave.

aroominyork

Another question, please. My first post meant to say she has exhausted her company's sick pay - she is now on SSP. If she retires due to ill health before using the full 28 weeks of SSP, does she forego the unused SSP or is it paid as a lump sum when she leaves the job?

LinLui

It isn't correct that she will definitely get 3 months full pay for the notice, plus holiday pay. It depends on (a) the contract, and (b) how long she has worked there; or (c) if the employer is being generous or not. 

[I would have posted you a link to the law here, but apparently I am not allowed to because I am new - go look at ACAS under the section Pay& Wages/ Final Pay when someone leaves a job / Pay during the notice period.]

It's possible that she has worked there long enough to be entitled to full pay by law, but you haven't said that, and I wouldn't assume to guess. If she hasn't, nothing stops the employer from being generous, but they aren't required to be.

I am a bit confused by your saying that she is now on SSP. Normally the first 6 months of occupational sick pay includes the SSP element. It is highly unusual that someone is off sick for 12 months and then gets SSP. Can you clarify that this is what the employer has done?

Also, is she being dismissed (potentially) because of her long term sickness; or is she taking ill health retirement? Because you suggest both, and they are very different things. 

aroominyork

She has worked there more than two years (which I think is the cut-off). Her contract is for three months' notice. Her employer gave her, since last Feb, a combination of their company policy of 12 weeks full pay, 12 weeks half pay, plus some compassionate leave on full pay. So she only went onto SSP last month.

We are waiting to hear next steps and the mechanism by which she leaves; while her boss is very generous as you can see, he is not the most efficient at processing paperwork (and he needs to take advice from HR). I would appreciate guidance on the best way for her to leave from a financial perspective.

LinLui

It isn't two years. I have copied this summary from another site -

If you have a contractual notice period, whether or not you are entitled to actual notice pay over and above your Statutory Sick Pay or contractual sick pay will depend on whether the amount of notice your employer has to give under your contract of employment is more or less than your statutory minimum notice period.

If your contract of employment obliges your employer to give notice which is at least a week more than the statutory minimum notice period of 1 week for every complete year worked, your employer does not then need to make any additional payments during the notice period over and above either contractual sick pay or Statutory Sick Pay (SSP)  In the event that your entitlement to sick pay has already been exhausted, no pay at all may be due during your contractual notice period.

For example, if you had exhausted your sick pay entitlement and been working for 5 years (entitling you to 5 weeks’ statutory minimum notice) and your contractual notice period was 12 weeks, you would not be entitled to any pay during your notice period if you were on sick leave. This is because notice to be given by the employer is at least one week more than statutory notice.

By contrast If, however, your contractual entitlement to notice is at least a week shorter than your statutory entitlement to notice then you would be entitled to full pay for your statutory minimum notice period even if your sick pay has been exhausted. As above, if you are still receiving sick pay, this can be offset against the amount of notice pay due.

Hopefully that explains it - that's the legal position, buit obviously they can be more generous than that if they want. 

It would appear that the last six months on full pay was not counted as sickness, because that would be the only reason she could claim SSP at this point. SSP is only paid for the first 28 weeks of sickness (assuming someone qualifies for it which she obviously does). After SSP, if someone has not returned to work they may qualify for other benefits which are means tested.

In terms of what is best from a financial perspective IF the employer has an ill health retirement policy then that would always be best, but it is often very hard to qualify for and she may struggle because it sounds like she hasn't technically been off sick for 12 months. Policies vary too, but broadly speaking you ususally have to be able to show that you would not be capable of performing ANY work in the future (so not just your normal job); there are other types that are less restriuctive but they are very expensive for employers so they aren't that common now. 

aroominyork

Very helpful, thanks. Are you saying that SSP cannot be claimed more than 28 weeks after sickness started, whether or not any SSP was paid during those 28 weeks? If so, and since she is current receiving SSP, perhaps the compassionate leave did not count as sickness; if that's the case, is the SSP clock reset to zero each time she came off compassionate leave (which she did twice)?

LinLui

SSP is only paid for the first 28 weeks of sickness, yes. So no, the compassionate leave did not count as sickness. But it was still absence as far as the employer is concerned. But I can't answer when or how it was "reset" - that is down to the rules around claims and her pattern of absences. You can check the rules online. However I wouldn't focus on that - where you are now is where you are. She has been absent for over a year and even the best employers are likely to not be willing to sustain that situation for much longer. So the question will very quickly become whether she returns to work or whether they begin whatever processes exist to terminate her employment. Ocasionally an employer might simply do nothing, let SSP run out, and leave the employee to either leave or stay on the books unpaid. That latter situation entitles an employee to holiday pay annually. But it isn't common that an employer would do that - at some point it is reasonable to want to (a) not pay for someone not in work and (b) replace them if that is required. 

aroominyork

Thanks. And that is where we are heading. She cannot return to her job, we have looked at alternative roles and they do not work either, so we are - correctly - now looking at her leaving the organisation and it is the mechanism for that which we are thinking about.