Can an Employee Be Made Redundant While on Sick Leave?

Redundancy is difficult in any circumstance, but it can feel especially unsettling if you are already dealing with ill health. A common question from employees is whether being signed off sick protects them from losing their job. The short answer is no, an employer can still make redundancies while someone is on sick leave. 

However, the law is clear that redundancies must be genuine, fair, and not linked to the employee’s illness. If the process is mishandled, it can expose the employer to claims of unfair dismissal or discrimination.

Key Takeaways

• Employees can be made redundant while on sick leave if the decision is based on genuine business needs.
• Redundancy must not be used as a substitute for dismissal due to illness.
• Employers must consult with sick employees and apply objective, non-discriminatory selection criteria.
• Long-term sickness linked to disability requires reasonable adjustments before redundancy.
• Employees on sick leave are still entitled to statutory redundancy pay, notice pay, and holiday pay.
• Mishandling the process risks unfair dismissal or discrimination claims.

What the Law Says About Redundancy and Sick Leave

UK employment law recognises redundancy as a fair reason for dismissal, provided it is genuine and handled correctly. Redundancy arises where:

• An employer needs fewer staff to do certain work.
• The business or workplace closes.
• A role is no longer required because of restructuring.

Being on sick leave does not exempt an employee from being included in a redundancy process. What the law does require is that sickness absence is not used as the reason for redundancy. For example, dismissing someone simply because they have been off work for a period of time would not be lawful unless handled under capability procedures.

Employer Duties During Redundancy on Sick Leave

When handling redundancy involving staff on sick leave, employers have several key responsibilities to ensure the process is lawful and fair.

Consultation Requirements

Employers must consult with all staff at risk of redundancy, including those absent due to illness. Being signed off sick is not a reason to exclude someone from the process. 

In practice, this means employers should make reasonable efforts to involve sick employees, for example, through phone calls, written updates, video meetings, or even home visits if appropriate. Failure to consult properly can make a redundancy dismissal automatically unfair.

Fair and Objective Selection Criteria

When deciding who is at risk, employers must use fair and objective criteria such as skills, qualifications, or performance. Using sickness absence as the main selection factor can be discriminatory, especially where the absence is connected to a disability or pregnancy. 

Employers who rely on absence records risk breaching the Equality Act 2010 and facing tribunal claims.

Reasonable Adjustments

Where an employee’s ill health amounts to a disability, the employer has a legal duty to consider reasonable adjustments before reaching a redundancy decision. Adjustments might include redeploying the employee into another role, adapting duties, or agreeing to a phased return to work. 

Ignoring these obligations could turn an otherwise fair redundancy into a discriminatory dismissal.

Get to know about: How to Challenge an Unfair Redundancy

Capability Dismissal vs Redundancy

It is important to distinguish between redundancy and dismissal on capability grounds. Redundancy occurs when a job is no longer required. Capability dismissal, on the other hand, is where an employee cannot perform their role due to long-term ill health or reduced capacity. 

Employers sometimes confuse the two, but the processes are separate and must be handled differently. 

If an employer genuinely needs fewer staff, redundancy is the correct route. If the issue is that the employee cannot perform their role because of health reasons, then capability procedures should be followed, including medical assessments and adjustments.

Redundancy Pay and Employee Rights During Sick Leave

Employees on sick leave are still entitled to the same statutory rights as colleagues who are at work. This includes:

• Statutory redundancy pay: available to employees with at least two years of continuous service. The amount is calculated based on age, length of service, and weekly pay (capped by law).
• Notice pay: employees must receive their contractual or statutory notice period, whichever is longer. If someone is signed off sick during this time, the employer still has to honour their notice entitlement.
• Holiday pay: accrued but untaken annual leave must be paid on termination.

Importantly, redundancy pay must be calculated on the employee’s normal pay rate, not on reduced sick pay or statutory sick pay. This ensures that employees on sick leave are not financially disadvantaged compared to their colleagues.

Risks for Employers

Making redundancies while an employee is on sick leave carries legal risks if the process is not managed carefully. The main pitfalls include:

• Unfair dismissal: if the employer fails to consult properly or cannot show a genuine redundancy situation, the dismissal may be challenged.
• Discrimination: where absence relates to a disability, pregnancy, or another protected characteristic, dismissing an employee without proper consideration of adjustments may amount to unlawful discrimination under the Equality Act 2010.
• Procedural errors: overlooking sick employees during consultations, failing to offer suitable alternative roles, or miscalculating redundancy pay are all common mistakes that lead to tribunal claims.

Employers need clear documentation showing that the redundancy was based on business needs rather than the employee’s health.

What to Do if You Believe Your Redundancy Was Unfair

If you suspect that your redundancy during sick leave was not handled properly, you have the right to challenge the decision. The first step is to request a written explanation from your employer outlining the reasons for your dismissal and the selection process used. If you are not satisfied, you can raise a formal grievance within your organisation.

If this does not resolve the issue, you should contact Acas to begin early conciliation, which is required before making an employment tribunal claim. Legal advice from a solicitor can also help you assess whether the redundancy was genuinely business-driven or whether it was influenced by your sickness absence, which may amount to unfair dismissal or discrimination under the Equality Act 2010.

You should read: How Employers Should Handle Redundancy Procedures

Need Advice on Redundancy While on Sick Leave?

Facing redundancy while on sick leave can feel overwhelming, especially when you are unsure if the decision is fair. At Gulbenkian Andonian Solicitors, our employment law team can review your situation, explain your rights, and help you challenge an unfair process. Whether through negotiation, conciliation, or tribunal representation, we will make sure your case is handled with care and expertise. If you have concerns about how your redundancy was managed, contact our redundancy solicitors today for clear, practical legal support.