It is a situation which an employer often has to face. An employee has been away from work for a long time and there is really no alternative but to end the employment and give him notice.
Section 86 of the Employment Rights Act 1996 sets out statutory minimum periods of notice, according to how long the employee has been employed. By definition, a sick employee cannot actually work out his notice period, but he is still entitled to be given notice. As he is incapable of working during his notice period then (unless his contract of employment expressly provides for it) he is not entitled to any payment from his employer in respect of his notice period. That is the position under the common law. However, legislation has stepped in and in certain circumstances the Employment Rights Act 1996 gives the employee the right to be paid his normal pay during his statutory notice period. A combination of sections 87 and 88 of the 1996 Act provides that if an employee who has normal working hours is off sick for all or part of his notice period, he will be entitled to be paid at his average hourly rate of remuneration during his minimum notice period. However, by section 87 (4) of the Act, this right to receive normal pay during the notice period does not apply to employees whose employment contract provides for a notice period longer by at least one week than the minimum period stipulated for in Section 86.
The legislation was considered in 2002 in the case of The Scotts Company (UK) Limited v Budd. Mr Budd was dismissed after he had been off work through ill health for over 2 years. His contractual rights to sick pay were exhausted. He was given 13 weeks’ notice, pursuant to an express provision in his employment contract. Under Section 86 his statutory minimum notice period was 12 weeks. Section 87(4) therefore applied and he was not entitled to pay in respect of his notice period under the legislation; and he was not entitled to any pay in respect of that notice period at common law because he was unable to work as a result of sickness and his right to sick pay had been exhausted. Thus his claim for notice pay failed.
In the later case of Burlo v Langley and Carter, Ms Burlo worked as a nanny for Mr Langley and Ms Carter. Her employment contract provide for 8 weeks notice on either side. The contract also provided that during periods of sickness she would be paid “sickness benefit in accordance with the government statutory sick pay legislation”. Ms Burlo had a car accident and soon afterwards her GP provided a sick note to say that she would be off work. Mr Langley and Ms Carter promptly engaged another nanny and paid Ms Burlo for her 8 weeks notice period at the statutory sick pay rate as provided for in her employment contract. Ms Burlo brought a claim in the Employment Tribunal which included a claim for wrongful dismissal. The Employment Tribunal awarded her 8 weeks net pay. Mr Langley and Ms Carter appealed, saying that the award should have been calculated at the statutory sick pay rate because Ms Burlo had been unable to work throughout the whole of her notice period. The case reached the Court of Appeal in 2006. The Court of Appeal overturned the Employment Tribunal award. In Ms Burlo’s case the minimum period of notice under Section 86 was 4 weeks and the period of notice under her employment contract was 8 weeks. Because her contractual notice period exceeded the statutory minimum period by 1 week or more, the legislation saying that she should be paid at her normal pay rate did not apply. As her statutory sick pay had not been exhausted, statutory sick pay was what she was entitled to.
The case of Milson v Hope in 2013 involved an oral employment contract where no notice was provided for. The employee’s statutory notice period was 2 weeks. She was in fact given 4 weeks’ notice by her employer. Like Ms Burlo, the employee brought a claim in the Employment Tribunal which included a claim for wrongful dismissal. The Employment Tribunal awarded the employee her full net salary for the 4 weeks’ notice period which she had been given. On appeal the Employment Appeal Tribunal pointed out that the legislation allowing for normal salary applied “as regards the liability of the employer for the period of notice required by Section 86(1)”. Thus the employer was only required to pay the employee her full net salary (subject to deduction for statutory sick pay as provided for in Section 88(2) of the 1996 Act) during the statutory minimum period of 2 weeks, even though the employee was incapable of working during that period because of sickness and had in fact been given 4 weeks’ notice.
In Milson v. Hope, the Employment Tribunal had not made any finding as to what was the employee’s contractual notice period. This meant that Section 87(4) did not apply so as to remove the employee’s right to be paid her normal salary during her 2 weeks statutory notice period. The significance of the case is that the Employment Appeal Tribunal accepted that if there had been a finding that the contractual notice period exceeded the statutory minimum period by one week or more, the employee would not have been entitled to be paid her normal salary for that minimum notice period.
It is not known why the legislation should have the effect that where the notice period in an employment contract is stated to be the same as or shorter than the statutory minimum (calculated as at the date of termination) an employee is entitled to be paid his normal pay during that notice period, notwithstanding that because of illness he is unable to work; whereas if his employment contract provides for a notice period which happens to be one week or more longer than the statutory minimum period he is not entitled to receive his normal pay. It seems odd that if Mr Budd’s employment contract had stated his notice period to be, say 1 week for each year of service up to a maximum of 12 weeks, he would have been entitled to be paid his normal pay for his notice period even though when he was given notice of termination he had been off work without pay for over 2 years because of illness. Nevertheless this is the curious effect of the legislation.