How do bank holidays affect statutory sick pay?

I have to make an employee redundant. She has been on long-term sick leave, has three years of service, and our annual leave policy is 22 days plus all English bank holidays. Must I pay her for bank holidays while she has been off?

Redundancy is a delicate topic, and should be treated with the utmost care and respect. Employers have a legal responsibility to guide those facing redundancy through the process respectfully. Knowing what’s required of you as a business, and helping employees understand their rights, will clear the way to fair negotiations. Clarity and consultation are therefore key to empowering employees with the information they need. 

>See also: Holiday pay for laid-off workers

Firstly, for a redundancy to be fair, a consultation process has to take place with documented evidence of a fair selection process. There are three phases to the selection process for redundancy:

  • The pool for redundancies
  • The selection criteria which will be applied
  • How to apply the selection criteria in a fair and objective manner

For the holiday aspect, during sickness absence, employees are entitled to accrue holidays. The statutory minimum is 28 days per year for a full time worker (working five days a week), which includes eight days of bank holidays. You allow 22 days plus bank holidays, giving your staff 30 days in total which is in excess of the statutory requirement.

Don’t forget – next year (2022) will have nine bank holidays, increasing the total number of days off to 31.

>See also: Calculating holiday allowances for part-time staff

However, you should always refer to the employee’s contract of employment or your internal policies to determine whether the number of holiday days accrue at the statutory or contractual rate during sick leave.

Whilst the law doesn’t allow you to pay people in lieu for their statutory holiday entitlement during employment, you are able to pay for any accrued holidays which remain untaken on termination of employment, whether that be as a result of redundancy or any other type of termination. Holiday pay will normally equal contractual pay.

She is entitled to SSP (Statutory Sick Pay) for up to 28 weeks. Six weeks before it runs out you should issue an SSP1 so she can claim for social security benefits. Statutory sick pay has increased from £95.85 to £96.35, an increase of 0.5 per cent, following the UK’s exit from the EU.

Jonathan Richards is CEO of Breathe

Further reading

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1 Comment

  1. I am sorry but this is not clear. Lets say the contract says to pay only statutory while on sick leave. So that this means you pay 20 days or 28 days, as it needs to include bank holidays, even if off sick?

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