Termination for Medical Incapacity. Is it discrimination?

Unfortunately, there may be a time when an employee is unable to work for long periods due to a severe injury or illness. In this situation, under the Employment Relations Act 2000, there is protection from dismissal of employees who are absent from work because of their illness or injury.

What is termination for medical incapacity?

When an employee is unable to perform their role due to illness or injury it can be challenging, as a business owner and employer, to balance the needs and support of your employee, with managing the operational needs of your business.

Termination for medical incapacity can also be referred to as termination on medical grounds. It is when, after considering all reasonable options and adjustments, and finding no suitable alternative, you decide to end the employment relationship. The decision must be based on available medical evidence that indicates that an employee can no longer perform the fundamental duties of their role.

While termination on medical grounds may be justified in some circumstances, getting the process wrong could expose your business to an unjustified dismissal or discrimination claim.

Informal Welfare meeting

Where an employee has been absent due to long-term illness or injury, the first step should be to invite them to an informal welfare meeting / consultation meeting. You should notify your employee about the meeting in advance and outline its purpose and provide them with the opportunity to have a support person present at the meeting.

Clearly communicate your concerns about how long the employee has been away from work and the impact it has on colleagues and the business generally. Give then the time they need to fully respond and ask questions.

Use the meeting to review the employee’s current situation and enquire informally about their diagnosis and prognosis in relation to their long-term ability to perform their role. You can also ask about the probability or potential time frame of their return.

Steps to take before acting on a decision

When an employee is unable to work due to illness or injury, you need to balance compassion and understanding against operational business needs and the risk of an unjustified dismissal claim. Employees should be given a reasonable opportunity to recover from injury or illness.

Before making a decision, you need to know if your employee does return, whether they can perform the inherent requirements of their role safely. This means obtaining medical evidence, consulting with the employee and genuinely considering the employee’s feedback, any reasonable adjustments or other alternatives.

• Engage in an open conversation with your employee.
  
• Outline your concerns, ask about their condition as much as they feel comfortable sharing, offer support and potential return-to-work options.
• Where reasonable, request additional information or with consent an independent medical assessment.
  
• Identify the essential tasks and capabilities of the role. Assess if modified duties, hours, equipment, or a hybrid work arrangement is feasible.
• Record all the adjustments considered and why any were not suitable.
• Thoroughly document all communications.
  

Mitigating personal grievances during long-term sick leave

When an employee is unable to work because of illness or injury, you are often left to answer some difficult questions:

• How long can the role remain unfilled?
• What medical information can reasonably be requested and relied on?
• Are modified duties, reduced hours or other adjustments options to consider?
• At what point is termination of employment the last and only resort?

As a business owner, extended sick leave or injury recovery can leave you in a challenging position. There’s a difficult balancing act between a desire to continue to support your employee with, the operational needs and legal obligations.

What if an employee can’t return to work?

You should meet with your employee to discuss the outcome of the review process.

When an employee is not able to perform the inherent requirements of the role, even with all reasonable adjustments considered, there can be a valid reason for termination.

After following a welfare process and the proposed outcome is dismissal of employment, this should be communicated to your employee and their feedback should be sought before a final decision is made. The final decision should be confirmed in writing to your employee.

If you have an employee who is unwell due to a long-term illness or sustained injury and you’re unsure how to manage the situation, speak with Peninsula for free initial expert advice.

This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.