The answer below assumes that a genuine “redundancy” situation has arisen (note the legal definition under the Redundancy Payments Act 1990[1]) and that a fair redundancy process has been followed including, if necessary, reasonable adjustments made for the purposes of redundancy scoring.
We then turn to consider the relevant payments to be made to the affected employee. As a starting point, of course, an employee with two or more years’ service will be entitled to statutory redundancy pay. But what about notice pay in circumstances where the employee has been off work on long-term sick and exhausted any entitlement to contractual sick pay?
The answer depends on the length of notice the employer is required to give relative to the statutory minimum period of notice the employee is entitled to receive. The starting point is that, if an employee with regular hours who has been employed for a month or longer is dismissed, they are due all their contractual pay and benefits during the statutory notice period even if they are incapable of working due to sickness or injury.
There is an exception to the above position (the “Exception”) which is that, where the employee’s contractual notice period (specifically, the notice to be given by the employer) exceeds statutory minimum notice by two weeks or longer[2], whether or not they are entitled to have their notice paid depends entirely on the terms of the employment contract.
This generally means that those with longer contractual notice periods eg 6 months or 12 months etc[3] have no right to be paid during any part of their notice period when they are off sick (assuming they have already exhausted their right to company sick pay). However, you should always read the contract to check the finer details and seek advice if in doubt.
The provisions relating to rights during the notice period can throw up some anomalous situations such as where employees have the same contractual notice period but different lengths of service. This can lead to inconsistent rights in the sense of one with a shorter length of service not being entitled to be paid their notice[4] whereas a longer serving employee with contractual notice of the same length as their statutory entitlement (or statutory notice plus up to an additional two weeks) having the right to be paid.
To be clear, it is not only employees with a contractual notice period in excess of the overall statutory maximum (ie 12 weeks) to whom the Exception may apply but any employee who, at the relevant time, is entitled to contractual notice at least two weeks longer than minimum statutory notice for their length of service.
Note that holiday pay on termination for an employee who has been on long-term sick is a separate matter and, again, requires more than a cursory reckoning. Bear in mind, firstly, that a period of annual leave is incompatible with a period of sickness absence for the purposes of accrual during the holiday year and, secondly, any right of carry over that the employee has.
See also our note on the interaction of different types of leave with annual leave (the first question deals with sickness absence) here.
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References:-
[1] Section 1(2)
[2] (cf the UK: at least a week)
[3] (quite typical for executives and senior level employees)
[4] i.e. because contractual notice exceeds statutory notice by at least two weeks