Ill Health Dismissal Payment Calculator UK
Calculate your entitlements when facing dismissal due to illness
Quick Facts
- No automatic right to ill health severance pay
- Statutory Sick Pay: £118.75 per week (2025)
- Notice pay may be required
- Settlement agreements may provide additional compensation
Your Rights
- Right to reasonable adjustments if disabled
- Fair dismissal process required
- Accrued holiday pay entitlement
- Potential tribunal claims if unfairly dismissed
Calculate Your Ill Health Dismissal Payments
What Is Ill Health Dismissal Payment?
Ill health dismissal payment refers to the financial compensation an employee may receive when their employment ends due to long-term illness or medical incapacity. Unlike redundancy, there is no automatic statutory entitlement to specific ill health severance payments, though employees retain rights to notice pay and other contractual entitlements.
Key Components of Ill Health Dismissal Payments
- Notice Pay: Statutory or contractual notice period payment
- Accrued Holiday Pay: Payment for unused annual leave
- Statutory Sick Pay: Any outstanding SSP entitlements
- Settlement Payments: Discretionary payments agreed between parties
- Contractual Benefits: Any payments specified in employment contracts
How Ill Health Dismissal Works
Dismissal due to ill health is a capability dismissal, meaning the employee cannot perform their job due to health reasons. Employers must follow a fair process, including medical assessments and considering reasonable adjustments where applicable.
Before Dismissal
- Medical reports from GP
- Occupational health assessments
- Consider reasonable adjustments
- Explore alternative roles
- Fair consultation process
At Dismissal
- Written notice of dismissal
- Clear reasons provided
- Right to appeal decision
- Calculate statutory entitlements
- Consider settlement agreements
Statutory Entitlements
Even without contractual ill health benefits, dismissed employees retain certain statutory rights to payment.
Settlement Agreements
Many ill health dismissals involve settlement agreements, where employers offer additional compensation in exchange for waiving tribunal claims. These payments can be tax-free up to £30,000.
Benefits of Settlement Agreements
- Provides financial cushion during recovery
- Avoids lengthy legal proceedings
- Maintains positive employment reference
- Offers certainty for both parties
- May include enhanced benefits
Settlement Agreement Requirements
- Must be in writing and signed
- Employee must receive independent legal advice
- Adviser must have professional indemnity insurance
- Specific claims must be identified and waived
- Usually includes confidentiality provisions
Disability Discrimination Claims
If dismissal relates to a disability without proper consideration of reasonable adjustments, employees may have discrimination claims with potentially unlimited compensation.
Compensation Types
- Financial losses (salary, benefits)
- Future loss of earnings
- Injury to feelings: £1,200-£60,700
- Personal injury damages
- Aggravated damages in serious cases
Reasonable Adjustments
- Phased return to work
- Altered working hours
- Modified duties or equipment
- Workplace adaptations
- Redeployment opportunities
Frequently Asked Questions
Can I be dismissed while off sick?
Yes, but only after a fair process including medical assessments, considering reasonable adjustments, and following proper consultation procedures. The dismissal must be based on capability, not the illness itself.
Am I entitled to ill health severance pay?
There is no automatic entitlement to ill health severance pay. However, you remain entitled to statutory notice pay, accrued holiday pay, and any contractual benefits. Employers may offer settlement agreements with additional compensation.
What if I’m disabled under the Equality Act?
If you have a disability, your employer must consider reasonable adjustments before dismissal. Failure to do so may constitute discrimination, leading to unlimited compensation awards and potential tribunal claims.
How is notice pay calculated during sickness?
Notice pay depends on the relationship between statutory and contractual notice. If contractual notice exceeds statutory by more than one week, you may only receive sick pay. Otherwise, you are entitled to full pay during notice.
Can I claim tribunal compensation?
You may claim unfair dismissal (after 2 years’ service) or disability discrimination (no service requirement). Compensation can include financial losses, injury to feelings, and potential future losses.
Should I accept a settlement agreement?
Settlement agreements can provide financial security and avoid tribunal proceedings. You must receive independent legal advice before signing. Consider the offer against potential tribunal awards and your specific circumstances.
Next Steps
Immediate Actions
- Review your employment contract
- Gather medical evidence
- Keep records of all communications
- Calculate your statutory entitlements
Seek Professional Help
- Contact employment law solicitors
- Consult trade union representatives
- Use free legal advice services
- Consider ACAS early conciliation
Know Your Rights
- Right to reasonable adjustments
- Fair dismissal procedures
- Notice and holiday pay entitlements
- Time limits for tribunal claims
References
HM Government. (2015). Dismissing staff: Dismissals due to illness. GOV.UK. Available at: https://www.gov.uk/dismiss-staff/dismissals-due-to-illness
DavidsonMorris. (2025). Ill Health Severance Pay: Employer Guide & Rules. Available at: https://www.davidsonmorris.com/ill-health-severance-pay/
HM Government. (2025). Rates and thresholds for employers 2024 to 2025. GOV.UK. Available at: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2024-to-2025
Equality Act 2010. Chapter 15. London: The Stationery Office.
Employment Rights Act 1996. Chapter 18. London: The Stationery Office.
ACAS. (2025). Sickness and ending employment – Sick leave. Available at: https://www.acas.org.uk/sick-leave/sickness-and-ending-employment
Citizens Advice. (2023). If your employer wants to dismiss you because of long term sickness. Available at: https://www.citizensadvice.org.uk/work/dismissal/check-your-rights-if-youre-dismissed/