Key points
§  Add a note hereLack of capability occasioned by illness or injury (physical or mental) is one of several so-called legitimate (or permitted) reasons for dismissal listed in section 98 of the Employment Rights Act 1996. When responding to a complaint of unfair dismissal, an employer must not only explain why he dismissed the complainant but must also satisfy the employment tribunal hearing the complaint that his reason (or, if more than one, the principal reason) for doing so was legitimate – and that he had not been influenced by some ulterior motive.
§  Add a note hereHaving been satisfied that an employee was dismissed for a reason related to his health (or any other physical or mental quality), a tribunal must then decide whether the dismissal was fair. That, says section 98(4), will depend on whether, in the circumstances (including the size and administrative resources of his undertaking, the employer had acted reasonably in treating illness or injury (and its associated effects) as a sufficient reason for dismissing the employee; and that question 'shall be determined in accordance with equity and the substantial merits of the case'.
Note 
Add a note hereIn this context, the word undertaking means any organisation (firm, company, partnership or business) in which people are employed.
Add a note hereQualifying period and upper age limit
§  Add a note hereTo qualify to pursue a complaint of unfair dismissal, an employee dismissed on grounds of illness or injury must have been continuously employed for at least one year at the effective date of termination of his (or her) contract of employment, and must have been under normal retiring age at that time. Those qualifying conditions apply in all cases of alleged unfair dismissal unless an employee is convinced that the real reason for his dismissal was an inadmissible or unlawful reason (eg, on grounds of sex, race, disability or pregnancy, or because of his trade union membership and activities, and so on).
§  Add a note hereFurthermore, a complaint of unfair dismissal must be presented to the nearest regional office of the employment tribunals within the period of three months beginning with the effective date of termination of the employee's contract of employment. If an employee presents his (or her) complaint 'out of time', it will not be accepted, unless the tribunal is satisfied that it was not reasonably practicable for the employee to have done so within the prescribed three-month period (ibid. sections 108, 109 and 111).
Note 
Add a note hereAn employee in an excluded class of employment at the time of his dismissal is not protected by the 'unfair dismissal' provisions of the 1996 Act.
Add a note hereProcedural guidelines and the issue of 'reasonableness'
§  Add a note hereWhen asked to state his reasons for dismissing a particular employee, an employer would receive a somewhat peremptory response if he were to inform an employment tribunal that he did so because the employee had bronchitis, asthma, or a heart condition (or whatever), or had caught his or her foot in the power press. What he should say is that (with the best will in the world) he could no longer tolerate a situation in which one of his employees was continually absent from work; that he had a business to run; that work was piling up; that the employee's state of health (or the nature of his or her injuries) prevented him carrying out the work he was paid to do; that the employee posed a risk both to himself and to others within the organisation; and so on. If asked to elaborate, he would point out that the employee was a key worker, or that he had an abysmal attendance record; that he was unlikely to recover (or return to work within the foreseeable future; and that, having discussed the situation with him and investigated all the circumstances (including opportunities for suitable alternative work), he had been left with no alternative but to dismiss.
§  Add a note hereA competent employee may be invaluable and irreplaceable while at work, but will be of little benefit to his employer when he is not. And, if he is not at work very often, his employer must, sooner or later, consider the possibility of dismissal. As was indicated earlier, an employee is unlikely to be dismissed simply because of his poor health record but because of the effect his state of health is having on his capabilities as an employee. A poor health record is, more often than not, associated with a poor attendance record. Some illnesses raise issues of safety or hygiene, and fears (many of them groundless) concerning the spread of disease. Furthermore, a disfiguring disease could lead to unseemly and unjustified rejection by fellow employees or resistance from unsympathetic or ill-informed clients and members of the general public. The deciding factor is not only the effect that an employee's state of health has (or may have) on his ability to function in his job, but also the impact on the employer's business. If he is a small employer, his tolerance level will be low. If he is a large employer, his threshold of tolerance will undoubtedly be higher.
§  Add a note hereThe Department of Trade & Industry (DTI) has produced three guides for employers titled:
Add a note hereAIDS and the Workplace (ref PL 893)
Add a note hereAIDS/Work leaflet (ref PL917)
Add a note hereDrug Misuse in the Workplace (ref PL 880)
Add a note hereEach provides practical guidance for employers uncertain about how to deal with HIV or AIDS-related sickness absence, and problems associated with drug misuse. Booklet PL 893 also gives advice on developing and implementing an AIDS policy to allay any fears and prejudices employees may have about any colleagues who have developed AIDS or who are infected with the HIV virus. Copies of these booklets are available free of charge from:
Add a note hereDTI Publications Orderline
Admail 528
London
SW1W 8YT
Telephone: 0870 1502 500
E-mail orders: publications@dti.gsi.gov.uk
§  Add a note hereNo fair-minded employer relishes the prospect of dismissing a sick, injured or mentally-incapacitated employee – the more so if the employee has a long and unblemished service record and has never been other than a competent, enthusiastic and loyal member of the workforce. The natural inclination of any reasonable employer faced with the prospect of dealing with an employee who is incapacitated for work, would be to talk to him (or her), to discuss his situation, to explain the problems associated with his continued or repeated absences, to ask his permission to approach his doctor for a prognosis, to obtain a second medical opinion, to explore the possibility of a transfer to less-demanding (including part-time or sedentary) work, to suggest early retirement on health grounds; and so on – anything to avoid the conclusion that dismissal is the only sensible option.
§  Add a note hereA decision to dismiss becomes all the more difficult if the employee is chronically ill or disabled within the meaning of the Disability Discrimination Act 1995, or if his state of health is directly attributable either to the type of work on which he (or she) has been engaged or to an injury sustained in the course of his employment. Contemplating an employee's domestic and financial circumstances, and the likelihood of his finding work elsewhere, once his recovery is complete, merely compounds the difficulty.
§  Add a note hereFortunately, the health problems experienced by the vast majority of employees are of a temporary nature. A common cold soon passes, broken limbs are healed, illnesses are cured, permanent disabilities can often be accommodated. Some health problems will take longer to resolve than others. Some lead to sustained absences from work; while others result in intermittent absenteeism (a day or two here, a week or more there). In the meantime, of course, the employer has a business to run.
§  Add a note hereOver the past 25 years, case law has demonstrated time and again that the tribunals and courts will rarely condone as reasonable an employer's decision to dismiss a sick or injured employee out of hand. In East Lindsey District Council v Daubney [1977] IRLR 181, the EAT remarked that there can be no detailed principles to be laid down when an employer is forced to make a decision about the continued employment of a sick or injured employee. 'What will be necessary in one case,' said the EAT, 'may not be appropriate in another. But if, in every case, employers take such steps as are sensible according to the circumstances to consult the employee and to discuss the matter with him, and to inform themselves upon the true medical position, it will be found in practice that all that is necessary has been done.'
§  Add a note hereAlthough every case will turn on its particular circumstances, some of the guidelines put forward by the tribunals and courts are nonetheless worthy of consideration. Thus:
1.     Add a note hereAn employer has to know the medical facts, in order to reach a proper decision. With permission, he should either consult with the employee's own doctor or ask for an independent medical opinion (East Lindsey District Council v Daubney [1977] IRLR 181).
2.     Add a note hereIf a sick or injured employee refuses to cooperate with his (or her) employer in his efforts to establish the medical facts, the employer may be left with no alternative but to dismiss (Post Office v Jones [1977] IRLR 422).
3.     Add a note hereWhere circumstances permit (given the employee's age, length of service, etc), the employer should consider the possibility of locating the employee in suitable alternative employment (eg, sedentary work or part-time employment). However, he is under no obligation to create another job simply to accommodate the sick employee (Merseyside & North Wales Electricity Board v Taylor [1975] IRLR 80, QBD).
4.     Add a note hereAn employer has a duty to exercise reasonable care for the safety of his employees. If one employee's state of health is a source of danger to other employees, that can reflect on his capability for doing the job he is employed to do and present some other substantial reason for his dismissal (Harper v National Coal Board [1980] IRLR 260).
5.     Add a note hereThe risk of an employee falling ill (eg, having a second or third heart attack) at some future date cannot amount to a ground for dismissing him unless the nature of his job makes it patently unwise to allow him to continue working because of that risk. 'The case of a sole wireless operator on a sea-going ship, who had the risk of a heart condition, is quite different from the case of a works manager on land in a factory with a heart condition' (per the EAT in Coverfoam (Darwen) Ltd v Bell [1981] IRLR 195).
§  Add a note hereClearly, it would be insensitive of an employer to issue a strongly- worded warning to a sick or injured employee that he (or she) will be dismissed if his health does not improve or if he is not back at work within a stated number of days or weeks. As was indicated above, an employer must take steps to discuss the situation with the employee or, at the very least, write to him and explain that dismissal may be inevitable if there is no significant improvement in his health within a specified period. Discussions with a sick or injured employee concerning his state of health, the frequency of sick visits, consultations with the employee's doctor (with the employee's written permission) concerning his prospects for recovery, the size of the employer's business, the need for the work to be done – all are factors likely to be taken into account by an employment tribunal when determining the reasonableness or otherwise of the employer 's decision to dismiss (vide Spencer v Paragon Wallpapers Ltd [1976] IRLR 373).
§  Add a note hereMalingerers, who abuse their employers' sick pay schemes, or who routinely use sickness as an excuse to take time off work when it suits them, are guilty of misconduct and should be dismissed for that reason. Fortunately, practised malingerers are usually found out and uprooted long before they earn the right to pursue a complaint of unfair dismissal. But, whatever the apparent circumstances, an employer should never presume to dismiss an employee without first talking to him (or her) (and any available witnesses) and offering him an opportunity to explain his conduct. If an employer has a procedure for dealing with issues affecting the employee's conduct or capabilities (including his state of health), he should follow that procedure to the letter (as was pointed out by the House of Lords in Polkey v Dayton Services Ltd [1987] IRLR 503).
Add a note hereOccupational sick pay schemes
§  Add a note hereIf an employee has a contractual entitlement to a number of weeks or months' paid sick leave under the terms of his (or her) employer's occupational sick pay scheme, he should not normally be dismissed on grounds of ill-health until he has exhausted that entitlement. Indeed, not only would his dismissal be held to have been unfair in those circumstances, but it would also afford the employee an opportunity to present a claim to an employment tribunal for damages arising out of that breach of his contractual rights. In Smiths Industries Aerospace & Defence Systems Limited v Brookes [1986] IRLR 434, an employee was dismissed before he had exhausted what he believed to be his entitlement to 225 days' paid sick leave in any period of 12 calendar months. An employment tribunal held that the employer had acted in breach of contract and that the dismissal was therefore unfair. Although the decision was reversed by the EAT on a question of interpretation, the tribunal had nonetheless made its point. As a rule of thumb, an employer should think long and hard before dismissing an employee who is still on paid sick leave in accordance with the terms of his contract of employment.
Note 
Add a note hereThere is a distinction to be drawn between an employee's contractual entitlement to paid sick leave under the terms of an occupational sick pay scheme and his (or her) legal right to payment under the Employer's Statutory Sick Pay Scheme. To dismiss an employee before he has exhausted his contractual entitlement may be a breach of contract as well as unfair. But for an employer to dismiss a sick or incapacitated employee simply to avoid his liability to pay statutory sick pay (and for no other reason) would not only be prima facie unfair but pointless. Regulation 4 of the Statutory Sick Pay (General) Regulations 1982 (as amended) cautions that, in such circumstances, the employer must continue to pay the dismissed employee his entitlement to statutory sick pay for so long as his illness and incapacity for work persists.
Add a note herePermanent health insurance schemes
§  Add a note hereA similar dilemma arises when an employee is covered by permanent health insurance (PHI). The generosity of some such schemes can pose a real problem for employers faced with the need to replace a key worker who is still technically employed during an extended (perhaps indeterminate) absence from work. The wording of such schemes should be scrutinised to ensure that the employer is permitted a degree of latitude at such times. Furthermore, if there is an express term in the insurance policy underwriting a PHI scheme that benefits under the scheme would cease once an employee's employment had come to an end, that restriction will have no effect unless replicated by an express term to the same effect in the employee's contract of employment (Villella v MFI Furniture Centres Limited [1999] IRLR 468).
Add a note hereFrustration of contract
§  Add a note hereIt is unwise for an employer to rely on the common law doctrine of frustration of contract as an excuse to terminate the employment of a sick or injured employee who has been absent from work for a prolonged period. In Harman v. Flexible Lamps Limited [1980] IRLR 418, the Employment Appeal Tribunal held that:
Add a note here'where a contract of employment is terminable by notice, there is really no need to consider the question of frustration, and, if it were the law that… an employer was in a position to say "this contract has been frustrated", then that would be a very convenient way in which to avoid the (unfair dismissal) provisions of the [now] Employment Rights Act 1996.'
§  Add a note hereAlthough an employer should consider the opportunities for transferring a sick employee (or one with a poor health and attendance record) to other work within his organisation, involving lighter duties or sedentary work, he is under no obligation to create a new job to accommodate that employee (Garricks (Caterers) Limited v Nolan [1980] IRLR 259).
§  Add a note hereIt is not unreasonable for an employer to ask a sick employee to agree to submit to an independent medical examination by a doctor nominated by the employer; although it would be unreasonable to expect him (or her) to pay for that examination. Indeed, this is a common provision in many occupational sick pay schemes. The refusal of a sick employee (or one with an unsatisfactory health and attendance record) to permit such an examination, or to allow the employer to approach his own doctor to discuss his condition, will be an important factor to be taken into account by an employment tribunal when determining the fairness or otherwise of a dismissal in such circumstances. However, an employer wishing to obtain a medical report from an employee's doctor should be aware of the employee's statutory rights under the Access to Medical Reports Act 1988.
Add a note herePregnancy and ill-health
§  Add a note hereIt is important to remember that health problems that attend pregnancy (however disruptive those problems may be) do not of themselves provide grounds for dismissal. Indeed, section 99 of the 1996 Act cautions that an employee will be treated as having been unfairly dismissed if the reason (or, if more than one, the principal reason) for her dismissal was that she was pregnant or any other reason connected with her being pregnant or having given birth to a child or for being absent on (or for having availed herself of the benefits of) maternity leave.
Note 
Add a note hereAn employee who is dismissed (for whatever reason) during her pregnancy or after childbirth (before the end of her maternity leave period) is entitled, as of right, to a written statement explaining the reasons for her dismissal. In other words, her employer is duty-bound to provide her with the statement (within 14 days of her dismissal) whether or not she has asked for it (ibid. section 92(4)).
Add a note hereRights during period of notice
§  Add a note hereWhen dismissing an employee on grounds associated with illness or injury, an employer should bear in mind the employee's statutory rights during the notice period. Section 88 of the 1996 Act allows that, if during the period of his notice an employee is incapable of work because of sickness or injury, his employer must nonetheless pay him his normal wage or salary throughout that period. However, this right arises only if the period of notice required to be given by the employer under the terms of the employee's contract of employment is the same as that prescribed by section 86 of that Act (or not more than one week more than that statutory minimum period). This requirement is particularly important in the case of an employee who, at the time notice of dismissal was served on him (or her), had exhausted his entitlement to be paid under his employer's sick pay rules (if any). But payments by way of sick pay, statutory sick pay, holiday pay or otherwise (during or in relation to the notice period) will go towards meeting the employer's liability in this regard.
Note 
Add a note hereIf an employee who has been employed for one month or more resigns, the same rule applies – unless the notice he is required to give under his contract of employment is more than one week more than the period of notice prescribed by section 86(2) of the 1996 Act.
Add a note hereReinstatement after dismissal
§  Add a note hereIf an employee is dismissed (or resigns) on grounds of illness or injury and is subsequently reinstated or re-engaged by the same or an associated employer within 26 weeks of the effective date of termination of his employment, the intervening period will count as part of his total period of continuous employment with his employer (ibid. section 212(3) and (4)).

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