Termination on grounds of medical incapacity

Employees who are medically incapacitated cannot hold their employers to ransom by remaining absent from work indefinitely or by dictating the terms on which they will return to work.

While employers are not bound to hold a position open indefinitely for an employee who is medically unfit to work, employers must have regard to their good faith obligations and their obligation to act as a fair and reasonable employer when terminating an employee’s employment on medical grounds.

The starting point for any justified dismissal is whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred. In applying this starting point to medical termination cases the

Employment Court has provided a number of principles that employers should take note of:

  1. Employees must be given a reasonable time to recover from injury or sickness;
  2. If the employer caused the employee’s injury or sickness, the employer may have an ongoing responsibility to take reasonable steps in the employee’s rehabilitation;
  3. Employers should carry out a reasonable enquiry into the circumstances of the illness. What is ‘reasonable’ will be influenced by the terms of the employment agreement, relevant policies, the nature of the position, the duration of the employment relationship, and so on.
  4. Employment is a ‘two way street’ – employees should be positively engaged with their employer regarding their condition and recovery.

In a case before the Employment Court an employee suffering from PTSD and a serious injury to his right shoulder and elbow was away from the workplace from 2 December 2014 until his employment was terminated on 8 December 2015. Throughout that period the employee’s doctor provided a series of non-specific medical certificates. The employer began its enquiry into the employee’s absence in late July 2015. A specialist occupational physician’s report, arranged by the employer in November 2015, concluded that it would be several more months before the employee could resume his duties. By 8 December 2015 the employer had reached the decision to terminate the employee’s employment on the grounds of medical incapacity.

The Employment Court held it was open for the employer to commence its enquiries in July 2015 as the employee had already been absent for 7 months and had provided very limited information to the employer. It was not unreasonable for the employer to not consider the employee for light or alternative duties such as administration work given that the employer had limited administration roles available and those roles bore no relation to the employee’s usual duties. It was reasonable for the employer to have relied on the physician’s report and to discount the final medical certificate that said he would be fit to resume work in early February 2016. Ultimately the Employment Court held that the Employer had waited for reasonable amounts of time throughout the process, conducted a full and fair enquiry which allowed for feedback, and the dismissal was justified.

Take away points

Times of sickness and injury will always be challenging for employers that are balancing having to manage the business efficiently with treating the employee with dignity and fairness. Employers should seek as much information as possible to place themselves in an informed position before making any decisions. Employers would be wise to seek legal advice to ensure they follow a fair investigation and termination procedure.


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