What is Ill Health Severance Pay and How to Claim It

UK Immigration Blog

Severance pay to the employees is compensation employers in the UK provide them under the UK government’s laws. Ill health severance pay is offered by employers to employees who are laid off because of health problems after working for some time with the company.

So, how much is ill health severance pay? The severance pay depends on your service time and your type of job. You can calculate it by following this rule. 

  • If your age is 21 years or less: you’ll get 0.5 weeks’ pay for each full year of service. 
  • If you age 22 to 40, you’ll be compensated with one week’s pay for each full year of service. 
  • If you are 41 years and above: you’ll get 1.5 weeks’ pay for each full year of service

Terms and conditions will apply for the outcome. Furthermore, the type of job may also affect the total severance pay you’ll get. 

Let’s learn more about ill severance pay in this blog post. Plus I’ll also share some important things related to severance pay. So, read till the end, and you may get many answers to your common queries. 

What Is Ill Health?

Ill health is any physical or mental condition affecting your ability to work

Ill health is any physical or mental condition affecting your ability to work. You will face difficulties while performing your job at your workplace if you have any sort of injury generally under medical conditions.

Under UK law, employers must make reasonable adjustments for any employee with a disability so that they can continue working in their current role. However, if this isn’t possible, ill health severance pay may be an alternative solution.

What is Ill Health Severance Pay?

Ill health severance pay is a type of compensation employers may offer employees forced out of their job due to ill health. It’s meant to provide financial assistance in case of an illness or injury that prevents the employee from working. Typically, this payment type is offered to affected workers when there are no other options for employing them.

Employers are legally obligated to provide some level of protection for employees who become ill or injured while on the job. Still, the law does not require them to offer ill health severance pay as part of this protection package. 

When Does Ill Health Severance Pay Apply?

The primary reason why ill health severance packages are offered is that employers may be unable to provide suitable alternative employment opportunities for those medically declared unfit for work. 

Sometimes, companies encourage their employees with a “golden handshake”. In short, severance pay is a perk for those who have been with the company for many years and are experiencing deteriorating health standards to retire early rather than remain employed in a hazardous environment.

It is important to note that employers need to follow certain legal requirements before they offer ill health severance pay.

Additionally, it’s worth noting that not all illnesses or disabilities qualify for an ill health severance package; only those deemed serious enough by doctors can qualify.

How To Calculate Ill Health Severance Pay?

Ill health severance pay is typically calculated based on the time the employee has worked with the company. Other factors such as age and job performance during their tenure also affect the pay. 

Typically, longer-serving employees will receive higher amounts than those the company has employed for shorter periods. 

Also, ill health severance packages may include additional payments based on factors such as seniority or length of service bonuses if these were part of the original employment contract.

How to Dismiss an Employee Due to Ill Health: A Guide for Employers

You can dismiss an employee due to ill health as an employer.

You may need to dismiss an employee due to ill health as an employer. To handle the process legally and fairly, you need need to take specific steps.

Here are the steps you need to take to dismiss an employee due to ill health.

Step 1: Assess the Situation

The first step is assessing the situation and determining if dismissal is the best action. There are several factors you will need to consider, such as:

  • The severity of the employee’s illness.
  • The length of time the employee has been ill.
  • The impact of the illness on the employee’s job performance.
  • The prognosis for the employee’s recovery.
  • Whether or not any other options are available to accommodate the employee’s illness or transfer them to a different position within the company.
  • If, after careful consideration, you decide that dismissal is the best option, then you can proceed to step 2.

Step 2: Follow Your Company’s Procedures

The next step is to follow your company’s procedures for dismissing an employee. These procedures include giving the employee directive and pay instead of notice and documenting the reasons for dismissal. 

You must follow these procedures carefully to avoid any legal challenges from the employee later.

Step 3: Communicate With The Employee’s Doctor

Once you have decided to dismiss an employee due to ill health, you must communicate with the employee’s doctor. This communication should include a discussion of the following topics:

  • The nature and severity of the employee’s illness.
  • The expected duration of the illness.
  • The impact of the illness on the employee’s job performance.
  • The prognosis for recovery.

This information will help you determine whether or not there is a chance that the employee might be able to return to work at some point in the future. It will also help you determine what kind of accommodations, if any, might be necessary for the employee to return to work.

Step 4: Make a Final Decision

Once you have gathered all the relevant information, it is time to decide whether to dismiss the employee due to ill health. 

Once you have decided, you must communicate it clearly and concisely to the employee. It is always best to deliver this news in person so that you can answer any questions they may have. However, sending a written notice via email or regular mail is also acceptable.

How Much Does it Cost?

The amount employers pay for ill health severance will vary from case to case and company to company. The most common range for these payments falls between two weeks and 12 months’ salary. This can be negotiated with the employee on a case-by-case basis, depending on the specifics of each situation. 

In addition, employers should also consider other costs associated with ill health, such as medical bills or rehabilitation services, which could add additional costs to the employer’s end.

Can I Get Redundancy on Medical Grounds?

Yes, redundancy on medical grounds is possible if your employer believes there is no suitable alternative role for you within the company. 

If this happens, then you should be offered redundancy pay which will be calculated based on your length of service and age at the time of leaving the company. You may also qualify for additional payments, such as ill-health severance pay, depending on the circumstances.

Can You Make Someone Redundant on Sick Leave?

No, an employer can’t make someone redundant while on sick leave unless the employee has been absent for at least four or six weeks over 13 weeks. If all other alternative options are explored and deemed unsuitable then redundancy can be considered.

What Are the Rules for Leaving Work Due to Ill Health in the UK?

According to recent statistics, nearly one in six people in the UK will experience some form of mental health problem in their lifetime. This means that, at some point, you or someone you know will likely need time off work due to ill health. 

But what are the UK’s rules for taking time off work due to ill health? Let’s learn. 

1.  You Must Have a Doctor’s Note

If you plan on taking time off work due to ill health, you first need to get a doctor’s note. This note should state that you are too sick to work and list the dates you will be away. Once you have this note, you should give it to your employer immediately.

2. You May Be Entitled to Statutory Sick Pay

Statutory Sick Pay (SSP) is an option for you if you are too ill to work in the UK. SSP is a government-funded scheme that provides financial support to employees who cannot work due to ill health. 

You must have been ill for at least four consecutive days to qualify for SSP. You must also earn an average of £123 per week for your company. If you meet these criteria, you may get up to £99.35 per week in SSP.

3. You May Be Entitled to Additional Benefits

In addition to SSP, if you cannot work due to ill health, you may also be entitled to other benefits such as Employment and Support Allowance (ESA) or Universal Credit. 

ESA is a benefit paid to people who cannot work because of an illness or disability. To qualify for ESA, you must have paid National Insurance contributions for at least 26 weeks out of the last 52 weeks. 

Universal Credit is a benefit that can help with your living costs if you are on a low income or unemployed. To qualify for Universal Credit, you must meet certain criteria, such as age 18 or over and having less than £16,000 in savings.

4. Your Employer May Request a Fit Note

If your sick leave lasts longer than seven days, your employer may request a ‘fit note’ from your doctor. A fit note is a document that states whether or not you are well enough to return to work and lists any recommended changes that could help you stay in employment. 

For example, a fit note may recommend that you be allowed to take more frequent breaks or start working reduced hours.

5. Your Employer May Request a Return-to-Work Interview

Once you have returned to work after a sick leave, your employer may request that you attend a return-to-work interview. This interview allows your employer to determine how much support you need upon returning to work. 

With this interview, the employer will identify any changes needed for your stay in employment. For example, if your doctor has recommended that you start working reduced hours, your employer may use this interview to discuss this with you and make arrangements accordingly.

Does Tesco Pay Sick Pay? 

The answer depends on what type of employee you are. If you are an hourly-paid or salaried employee, then Tesco will pay Statutory Sick Pay (SSP) for up to 28 weeks per year. 

If you are off work for four consecutive days or more due to illness or injury, then Tesco will start paying SSP from day one. 

However, it’s important to note that SSP is only available if you earn above a certain amount each week, £123.

If you don’t meet this threshold, then Tesco may offer other types of assistance, such as contractual sick pay or contractual payments instead of SSP. 

Can My Employer Force Me To Retire On Medical Grounds? 

It is possible for an employer to force an employee into retirement on medical grounds, but only under very specific circumstances. An employer must demonstrate that no reasonable accommodation enables the employee to continue in their role. 

They must also provide evidence of an occupational health assessment supporting their decision. If these criteria are met, an employer can legally retire an employee on medical grounds without repercussions.


Ill health severance pay can be a great way for employers to protect employees if they become too sick or injured to work. It provides them with financial support while ensuring all legal requirements are met. 

However, employers must understand how much this program could cost them before committing themselves financially. By doing so, employers can ensure adequate worker protection without breaking their budgets.

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Teresa Aldridge
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VisaHelpUK - UK Immigration and Visa Application Advice Service
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