Long term sick redundancy entitlement is where two of the hardest parts of employment law collide. An employee has been off sick for months. Meanwhile the business is restructuring, or the role has quietly stopped being needed. Now you have to work out what that employee is owed, and which legal route you are actually on. 

Get it right and the process is lawful, even if it is uncomfortable. Get it wrong and the claim is unfair dismissal, disability discrimination, or both. The awkward truth is that most employers who get it wrong were not careless. They just assumed sickness and redundancy could be handled as one problem. They are two problems, with two different rulebooks. 

This guide covers what an employee on long-term sick is owed in a redundancy, how ill health redundancy pay is calculated, what medical redundancy really means, and what to do when the employee asks for redundancy themselves. It is written for UK SME owners and managers who carry this without an in-house HR expert. It is education, not legal advice on any individual case. The statutes and figures cited apply in England, Scotland and Wales. Northern Ireland runs separate employment legislation with its own redundancy pay caps. 

Long term sick redundancy entitlement: what the law says 

Start with the principle that decides almost everything else. Redundancy is about the role, not the person. The legal definition sits in section 139 of the Employment Rights Act 1996: the business closes, the workplace closes, or the need for employees to do work of a particular kind reduces or ends. 

Sickness absence changes none of that. An employee on long-term sick keeps their continuous service. They keep their right to be consulted. They keep their statutory redundancy pay if they have the qualifying service. Absence pauses their attendance, not their employment rights. 

So the entitlement position is simple to state: 

1. If the role genuinely disappears, an employee on long-term sick is treated like any other employee in the pool. Same consultation, same selection scoring, same pay. 
2. If they have two or more years of continuous service, they qualify for statutory redundancy pay in full. 
3. If the sickness influenced the selection, it is not a safe redundancy at all. It is a dismissal looking for a defence. 

That third point is where employers get hurt. A tribunal does not stop at the label on the letter. It asks why this person, why now. If the honest answer is "because they have been off for eight months", the redundancy reason collapses. What is left is a health-related dismissal that never went through a capability process, plus a likely discrimination claim on top. 

For the full framework on redundancy rights, pools and consultation periods, use our UK redundancy rights and consultation guide. This article stays focused on the ill-health overlap. 

Ill-health capability or redundancy? Two routes, two rulebooks 

UK law gives employers separate potentially fair reasons for dismissal under section 98 of the Employment Rights Act 1996. Capability is one. Redundancy is another. They are different routes with different tests, and you must pick the one that matches reality. 

Here is the question that separates them. Would this role still exist if the employee were fully fit tomorrow? 

If the role would still exist, you are not in redundancy territory. The issue is whether the employee can do the job, and that is a capability question. It needs medical evidence, occupational health input, genuine consideration of adjustments, and a staged, documented process. We have set out that route in full in our guide to the capability procedure and what UK employers get wrong. 

If the role would not exist, you are in redundancy territory. The sickness is background noise. You run a fair redundancy process, adjusted so the absent employee can take part. 

The dangerous middle ground is the "kind" redundancy. An employer decides the employment has to end because of health, but calls it redundancy because it sounds gentler and avoids difficult conversations about illness. This is a sham redundancy. Tribunals find the real reason, and the real reason was never tested through a fair capability process. The employer has then dismissed for a reason it cannot evidence, using a procedure designed for a different reason. That case is close to indefensible. 

There is a second layer of risk. An employee off sick long term will often meet the definition of disability in section 6 of the Equality Act 2010: a physical or mental impairment with a substantial, long-term adverse effect on normal day-to-day activities. Once that threshold is crossed, you carry a duty to make reasonable adjustments, and any unfavourable treatment arising from the disability needs objective justification. Discrimination awards are uncapped. This is why route selection is not paperwork pedantry. It is the whole ballgame. 

Medical redundancy: why the phrase misleads 

Search data lets us know that many employers and employees look for "medical redundancy". It is worth being direct: medical redundancy is not a legal category in mainstream UK employment law. People use the phrase to mean three different things: 

1. A genuine redundancy that happens while the employee is off sick. Legally, this is just redundancy. 
2. A dismissal because ill health stops the employee doing the job. Legally, this is a capability dismissal, not redundancy. 
3. Ill-health retirement under an occupational pension scheme, common in the NHS, the armed forces and parts of the public sector. This is a pension scheme mechanism, not a statutory redundancy route. 

Why does the wording matter? Because documents outlive conversations. If your letters, minutes or settlement discussions describe the exit as "medical redundancy", you have written down that health was the reason. That single phrase can undo a redundancy defence and hand a tribunal its finding on the real reason for dismissal. Use the correct name for the route you are on, in every document, from the first letter onwards. 

If you operate in a sector with an ill-health retirement scheme, treat that as a third route with its own rules, and take advice from the scheme administrator before anything is promised. 

Ill health redundancy pay: what an employee on long-term sick receives 

Now the money. Ill health redundancy pay is not a separate scheme, and there is no uplift or deduction for sickness. An employee made genuinely redundant while on long-term sick receives statutory redundancy pay on exactly the same basis as a colleague at their desk. 

The GOV.UK statutory redundancy pay rules work like this: 

1. Two or more years of continuous service to qualify. 
2. Half a week's pay for each full year of service under age 22. 
3. One week's pay for each full year aged 22 to 40. 
4. One and a half weeks' pay for each full year aged 41 or older. 
5. Service capped at 20 years. 

For redundancies taking effect on or after 6 April 2026, weekly pay is capped at £751 and the maximum statutory payment is £22,530. Both figures move most Aprils, so check the current rate on GOV.UK before you run any numbers. The employee also has six months from the date the job ends to claim a payment they did not receive. 

Here is the practitioner point that catches employers out. The week's pay in this calculation comes from the contract, not from what the employee has actually been receiving while off sick, and an employee on variable pay uses an average of their normal pre-absence earnings. An employee who exhausted company sick pay months ago, and dropped to Statutory Sick Pay at up to £123.25 per week or to nil pay, still has redundancy pay calculated on their normal contractual pay. Calculating redundancy pay on SSP is one of the most common and most expensive errors in ill-health redundancies. It understates the payment, it surfaces quickly once the employee takes advice, and it starts the tribunal conversation with your credibility already damaged. 

A worked example makes the point. An employee is 50 years old, with 12 complete years of service and contractual gross pay of £600 a week. Nine of those years were worked at age 41 or over, so each counts as one and a half weeks. The other three years, worked between 22 and 40, count as one week each. That gives 16.5 weeks multiplied by £600, a statutory payment of £9,900. The employee has been on SSP for the last five months. That fact never enters the calculation. 

Notice pay during sickness absence has its own separate rules, and they are counterintuitive. Treat notice pay as a second calculation, not a copy of the first, and check the position before the dismissal letter goes out. 

Run your figures through our free redundancy calculator, and for the detailed mechanics, mistakes and worked examples, see our guide to statutory redundancy pay. 

Can I ask for redundancy due to ill health? Handling the request 

Employees type this question into Google in large numbers, which means employers hear it in meetings. Someone worn down by illness asks whether they can "just take redundancy". You need a clear answer, because a well-meant yes can create real problems. 

The legal position: an employee can ask, but asking does not create a redundancy. Redundancy only exists where the statutory definition is met, meaning the role itself is disappearing. An employer cannot conjure a redundancy for one person whose job remains needed, however sympathetic the circumstances. 

So the answer depends on your situation: 

1. A genuine redundancy exercise is already running. The employee can volunteer for redundancy within it. This is usually low risk, provided the redundancy itself is real and the pay is calculated properly. 
2. No redundancy exists, and the employee simply wants an exit on ill-health grounds. The honest routes are a properly run capability process, ill-health retirement where a pension scheme provides it, or a negotiated exit under a settlement agreement with independent legal advice on their side. 
3. You are tempted to label a health exit as redundancy to be kind. Do not. You would be recording a false reason for dismissal, misleading the employee about their rights, and creating tax and tribunal exposure that outlasts the goodwill. 

Handled openly, the request is often the start of a constructive conversation about what the employee actually wants: certainty, dignity and a fair figure. You can deliver all three without borrowing a legal label that does not fit. 

Running a fair redundancy process when someone is off sick 

Where the redundancy is genuine, the absent employee must be inside the process, not around it. The two failure patterns tribunals see are the employer who quietly excludes the sick employee to avoid awkwardness, and the employer who scores absence against them. Both are avoidable. 

Practical rules that keep the process fair: 

1. Consult the absent employee properly. Use letters, calls, video meetings, a home visit if welcomed, or a neutral venue. Offer extra time to respond and the right to be accompanied. 
2. Never treat absence as a reason to skip consultation. An uncomfortable conversation is still owed, and ACAS guidance on managing redundancies expects genuine and meaningful consultation with every affected employee, and absence is not an exception. 
3. Score selection criteria with care. If attendance is a criterion, disability-related absence must be discounted, or the scoring itself becomes discriminatory. 
4. Consider alternative roles for the absent employee on the same basis as everyone else, and share the vacancy list with them directly. 
5. Keep the tone human. Someone on long-term sick usually fears the worst from every brown envelope. Clear, prompt, personal communication reduces both distress and legal risk. 
6. Document the business reason for the redundancy in terms that never mention the employee's health. If you cannot write that document convincingly, revisit whether you are on the right route. 

Consultation length, collective consultation triggers and the wider process rules are covered in the UK redundancy rights and consultation guide, which is the place to go next if a live process is starting. 

Find out where you stand before the process starts 

Ill-health redundancy punishes improvisation. The employers who defend these decisions successfully picked the right route early, calculated pay on the right figures, and kept the absent employee inside the process throughout. 

If you are not certain your absence records, contracts and redundancy paperwork would stand up to that standard, find out now rather than mid-process. The free HR Health Check takes under a minute and lets you know where your HR risks sit, scored across the areas a redundancy will test first. It is the fastest way to see the gaps while there is still time to close them. 

Richard, Director, OES HR