Medical incapacity

Medical incapacity

These situations include ongoing absence or incapacity due to accident or injury (whether covered by ACC or not) or through ongoing illness including both where it is clear the employee will not be able to return to work for a prolonged period or where there is ongoing uncertainty abNew Flowchart Buttonout if and when they might return to full normal duties. Whatever the source of their medical incapacity might beas manager you have to deal with the consequent issue of their inability or unavailability to perform full normal duties. In these situations you need to balance our care for the employee with our need to operate effectively and provide service to clients. Set out below is guidance on how to handle these situations. See also our  Flowchart – Medical Incapacity . These are often complicated situations with fine judgements to be made. Involve your manager and HR professional in your process.

Factors influencing your decision to potentially terminate employment

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From a legal perspective the employment relationship is based on the employee providing their labour for the benefit ofBigApple, with consideration for the employee being the wages payable.  If the work cannot be performed due to the absence of the employee, then the whole purpose of the relationship is lost despite any moral issues regarding preservation of income for the employee. Ultimately, in cases of protracted absence an employer is legally entitled to terminate the relationship on the grounds that the ongoing medical incapacity has essentially “frustrated” the employment contract.

The law requires that you take all reasonable steps to ascertain the basis of the incapacity and its likely duration and impact on the person’s ability to work before making any decision to terminate and that the employee has a reasonable time in which to return to work. Each case will be judged on its merits taking into account the factors listed below.

Factors to consider

Consider these factors before determining that a contract of employment has been “frustrated” by the employee’s absence.

Should the absence continue to a point where the employee has used all their sick leave entitlement and the prognosis is that the employee is unlikely to be able to return to normal work in the foreseeable future, you should assess the situation to determine whether or not the job is to be kept open.

  • The nature of the employment. Employees who occupy a key post may need to be replaced earlier than other employees. Where the employee holds a key role that cannot reasonably be covered during their absence by way of reallocation of duties or filled on a temporary basis, you are likely to be justified in taking action earlier than may otherwise be the case.
  • The nature of the illness or injury, how long it has been ongoing, and the prospects of recovery. If the prognosis is that the employee is unlikely to be able to resume full duties it may well be appropriate to start the process of terminating employment on notice.
  • The period of employment. A long-standing relationship is less easily destroyed than one of short duration. Where the employment relationship has been of a lengthy duration it is reasonable to expect that you would hold the employee’s position open for a longer period of time than for a recent hire.
  • Were you aware of the particular health problem when the employee was hired?
    If you were aware of the illness or injury at the time the employee was engaged then it could well be argued that the employee is being discriminated against as a direct result of their particular illness or disability. Advice should be sought in such cases before proceeding with a termination.
  • In the case of medical incapacity, should you, in fairness, simply absorb the loss?
    In other similar cases have you retained employees with protracted absence due to illness or injury? If so you may have created a precedent that the employee could reasonably expect to be applied in their circumstance.
  • Should you absorb the loss in a case where the sickness resulted from the work itself, or from a work-related accident, for which Council may be liable? Seek advice as to what conditions may be applicable prior to considering termination an employee’s employment.
  • Is there alternative work available which the employee concerned could do? Consider whether there are suitable alternative positions available which the employee could reasonably undertake as part of the employee’s rehabilitation where that is supported by medical advice.

Principles of our approach

Intermittent absences
Where a minor illness or series of minor illnesses causes intermittent absence, any requirement for a formal medical examination byBigApple may become unrealistic, especially if the transient nature of the symptoms and complaints renders such an investigation not worthwhile.

In these situations there is a need for open and honest communication between both parties.

Employees must keep you updated
For the employee, this means regularly communicating their general state of incapacity and their medical prognosis for a return to work. This may mean a return to their previous duties or to alternative duties to suit the circumstances.
Medical privacy versus disclosure
For reasons of personal and medical privacy, it may not be appropriate for an employee to make complete disclosure of all information relating to an injury, illness or other disability. However, experience in a number of cases has shown that issues of privacy can be accommodated whilst still disclosing toBigApple all necessary information to enableBigApple to assess what action may be necessary.
Balancing business and personal considerations
Once you have accessed all the relevant information, consider whether you are prepared to keep open the employee’s job for the indicated period of time. Make a decision balancing fairness to the employee and your reasonable business requirements.
Full enquiries and open discussion
Clearly show that inquiries have been made as to likelihood of the employee returning to work. Disclose to the employee your honest assessment of the consequences of the employee’s absence. Where appropriate, include a reasonable time scale for the employee to return to work. Advise what the consequences will be, in the event that such a return is not made in that period. Where it is obvious that the employee will be away from work for a greater period, address the situation promptly.

For example, if you are considering dismissing the employee as a consequence of their prolonged absence, you should make it patently clear to the employee. If the employee is unable to continue to perform their normal duties within a reasonable time frame and there is no likelihood of alternative duties being available, you must communicate this clearly to the employee.

Potential for discrimination
In some cases dismissal for sickness or other incapacity might amount to unlawful discrimination on the grounds of disability under anti-discrimination legislation. Seek advice so as to ensure that the termination is not challenged by the employee as being unlawful. This can usually be avoided by communicating your concerns to the employee and taking sound medical advice from a specialist medical adviser.

Obtaining medical evidence

You are not bound to hold a job open for an employee who is sick or prevented from carrying out his duties for an indefinite period, unless the employment arrangements between the parties provide otherwise.

However, despite the employee’s illness or other incapacity, the termination process must be conducted in a fair manner.

Requiring a medical opinion
Where there is doubt as to the employee’s medical condition, you are obliged to ascertain the facts before dismissing the employee. In some cases, a specialist opinion may be required. Terminating the employee before obtaining medical advice or allowing the employee to present medical evidence is likely to be held to be premature and unjustifiable. Before terminating the employee you need to be “reasonably informed” regarding the employee’s condition in relation to the performance of their duties. If you have not carried out a proper inquiry, then the dismissal may not be justified.

It will usually be necessary to require the employee to submit to a medical examination. Conduct this in a fair and reasonable manner, and enable the employee to bring forward additional medical evidence or opinion.

Refusal to get an independent assessment
If the employee refuses to see your medical practitioner or an independent specialist, you can seek the employee’s consent to write to the employee’s doctor seeking answers to general questions in relation to the medical prognosis and the likelihood of the employee to return to work within a reasonable period of time. In most cases, employees consent to this request as overall it is in the employee’s best interest to get you the relevant facts prior to making any decision on their ongoing employment.

If the employee declines to submit to examination, the employee cannot subsequently complain of unfairness should you ultimately take action based on an assessment of the information already to hand.

When you receive medical information confirming an employee’s absence is likely to continue, it may be reasonable for you to terminate the employee.

Guidelines for the process for termination

Meet with the employee

Arrange to meet with the employee to discuss the situation. Ask the employee when he/she believes they will be able to return to work, and whether that would be on normal or restricted duties.

If a return to work on restricted duties is not a viable option, deal with this at once. Explain that keeping the position open indefinitely is not a viable option due to the business requirements and that a decision needs to be made as to whether the employee will be able to return to work on normal duties within a reasonable period of time.

If the prognosis is that the absence is likely to be ongoing, terminating the employee’s employment will be justified. Explain that prior to making that decision, an up-to-date medical assessment will be required including professional medical opinion on when the employee may be able to return to normal duties. You should pay for the cost of the medical examination.

Indicate that if the employee fails to make timely arrangements to have the medical examination and to provide an up-to-date prognosis within a clearly defined period, it is likely the decision will be made on information currently to hand.

Confirm the issues & outcomes

Subsequent to the meeting, confirm the issues and outcomes in writing should employee fail to comply with your directions. Use the requirement for medical assessment – letter to advise the employee of your requirements. The request to medical practitioner-letter to ask a medical practitioner for their opinion and the authority to provide medical opinion to employer-letter  to request the employee allow the medical opinion received to be sent to you.

Consider feasibility of keeping job open

If the medical advice provided indicates that the employee is unlikely to resume normal duties in a reasonable period of time, you should consider again whether it is feasible to keep the position open for the employee. If it is not practicable to do so, arrange to meet the employee again to explain. In giving the employee notice of termination, you will need to comply with the normal procedures specified in the employee’s employment agreement in relation to notice.

Confirm the notice of termination

Confirm the notice of termination to the employee in writing. Set out the reason for the termination indicating that the position has been kept open for a considerable period of time and that it is no longer practicable to do so, based on the medical advice regarding the employee’s likely date of return to normal duties.


It is unreasonable and inappropriate to treat cases of genuine ill health the same as if it were another form of misconduct.  An employee is not at fault for being genuinely ill.  However you still need to manage your business efficiently and therefore allowing an open-ended absence is unlikely to be satisfactory.

There will come a time when you determine that you have provided enough leeway to the employee. At this time, provided you have managed the absence in a sensible manner and have appropriate procedures in place, you should safely be able to bring the matter to an end. Ensure that the employee fully understands that you are unable to keep open the position indefinitely. Advise that in the event that they are unable to return to normal duties in a reasonable timeframe, the employment relationship will be terminated.

Follow the flowchart – medical incapacity for a guide to handling these issues.