Navigating Medical Incapacity

13 June 2024

Managing an employee’s long-term illness and/or injury can be challenging, especially where their ongoing absence is impacting the operation of the business.

From a health and safety perspective, you want to ensure your employees’ well-being is prioritised, but there comes a point where you can’t indefinitely hold open the job.

In some circumstances, it may be appropriate to dismiss an employee for reasons of medical incapacity, but the correct process must be applied.

The key point here is not how long the employee has been off work, but rather how long it may be before the employee may be able to return to full duties.

However, you should seek expert advice before carrying out such a process, as it must be approached with caution.

How long must the employee’s job be held open?

There is no set amount of time which is considered reasonable.  Ultimately each situation is fact specific. You should first gather any relevant information to understand the nature and extent of the incapacity, including:

• How long the employee has been unable to work.
• The prognosis for recovery and how long that may take.
• The extent to which the employee’s absence has impacted business operations.
• The employer’s ability to appoint a temporary replacement, and the cost of doing so.
• Whether reasonable accommodations could be made to the employee’s role, including consideration of a different role.

The Process

Like any other dismissal, you must have justifiable reasons for dismissing the employee; and follow a fair and reasonable process.

• When considering dismissal for medical incapacity, the employee should be notified in writing, setting out such matters as the period of absence, the impact on the business if the role can’t be covered temporarily, and the need for medical information about the prognosis for a return to normal duties, and the potential for termination of employment if the employee is not able to resume duties by a specified date.

• To further ascertain the nature and extent of the employee’s incapacity and the prognosis, send a similar letter to an appropriate medical practitioner which, depending on the nature of the incapacity, could be a specialist you nominate, or the employee’s usual GP.  Make sure you ask for an opinion about when the employee may be fit to return, or the minimum period the employee is likely to need for recovery. To ensure the medical practitioner is fully informed of the situation and the potential consequences of the medical advice, provide a job description and/or describe the nature of the work; and also make clear that if the medical advice is that it is unlikely the employee will be able to return to work on a nominated date, it is likely the employee’s employment will terminated.

• If the employee refuses to undertake a medical examination, the decision can be made on the information already available.

• After assessing all relevant information, you should propose a preliminary decision and seek the employee’s feedback.

• Before considering dismissal, consider whether there are any alternative roles the employee could carry out.

• Once a final decision has been made, give the employee notice of termination in accordance with their employment agreement.

Key Considerations

• Both parties must act in good faith throughout the process. This includes providing clear communication, considering the perspectives of both parties, and documenting all steps taken.

• Ensure the employee is made aware of their right to be represented or have a support person throughout the entire process.

• You should consider whether the incapacity was caused by workplace conditions. If so, additional steps may be required to address these underlying issues and support the employee's recovery.

By following these guidelines, you can strike a balance between supporting the affected employee and meeting the operational needs of the business.

For further support on managing medical incapacity, contact us: Tony Teesdale 021 920 323, Justine O’Connell 021 920 410, Michelle Battersby 021 993 735, or Esther Cohen-Goh 021 178 4111