In a recent decision, the Employment Court provides clear guidance on the steps an employer must take when terminating employment of a long term sick or injured employee. SBM Legal acted for the employer in the case, The Warehouse Limited, and was successful in showing that the company's process and decision to dismiss the employee were justified.
It has long been that an employer can “fairly cry halt” to a person’s employment where they can’t attend work due to sickness or injury. But the questions are often when? And how? The Court has confirmed that an employer is not obliged to keep a job open indefinitely, no matter how long an employee has been employed or how large the employer’s business is.
The Court has said that the following matters will need to be taken into account and considered as part of the obligation to act as a fair and reasonable employer:
- An employer must give the employee a reasonable opportunity to recover.
- An employer can’t, at the first suggestion that an employee might be absent for a while, seek to terminate employment. But an employer is entitled to have regard to its business needs in deciding an appropriate response to the situation and any applicable timeframes.
- There isn’t a fixed amount of time that has to be allowed and what is a “reasonable” amount of time will depend on a number of factors. This will include the terms of the employment agreement, any relevant policy, the nature of the position held by the employee and the length of time they have been employed. Paid sick leave entitlements under the Holidays Act, and whether those have been exhausted, will also be relevant.
- An employer must undertake a fair and reasonable inquiry into the “prognosis” for a return to work. This means trying to find out when an employee might return to work and in what capacity, and what sort of adjustments might need to be made.
- The Court says that this will likely involve seeking and considering relevant medical information. Having a provision in employment agreements requiring employees to be examined by a medical practitioner nominated by the company and allowing that information to be viewed by the employer will make this obligation easier to comply with.
- An employer will be expected to explain why it wants that information, and what might happen once it gets the information (i.e. the possibility of termination of employment). The employer will be expected to provide the employee with an opportunity for input and comment about this request for medical information and the process.
- As well as considering the medical information, the employer must fairly consider what the employee has to say before terminating their employment.
- Throughout such a process, an employee is required to be responsive and communicative. This means providing information when requested, attending meetings and engaging with attempts to return to work. This is part of the employee’s duty of good faith.
- Ultimately, any contractual requirement (for example, notice requirements) will need to be complied with in terminating the employment as well.
As always we recommend seeking advice on the particular factual situation your organisation is dealing with. But in the meantime, an employer following this guidance is going to be well placed to make good decisions about whether a person’s employment should or should not be terminated, and also well placed to defend personal grievance claims by employees following termination on the basis of medical incapacity or frequent or long term absence.