Medical incapacity – When to ‘cry halt’

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A dismissal is, for most employees, always going to be a traumatic event. However, when the dismissal is for medical incapacity it can be traumatic for both the employee and the employer.

Dismissing someone because they are no longer medically fit to work is akin, for most good employers, to kicking someone when they are down, particularly given that medical issues are usually outside the employee’s control and, like redundancy, amounts to a “no fault” dismissal. For this reason, many employers go to considerable lengths to try and keep someone’s position open for as long as they possibly can, before making the decision that the business can no longer withstand the disruption and difficulties associated with temporarily accommodating a long-term absence.

Unhelpfully, the previous test from the 1985 case of Hoskin v Coastal Fish Supplies Limited, as to when employment could be terminated for medical incapacity, was vaguely worded as at “…the point an employer could fairly cry halt.” That point depends on a range of factors such as how key the employee is to the organisation, the size of the business and to what extent the employer can continue to provide temporary cover and for how long. Subjectively deciding that the point to cry halt had been reached, could very well be found by the Court, retrospectively, to have been “wrong.”

Unfortunately, there are also employees who will exploit the largesse of their employer, particularly where an employer has tried their utmost to accommodate their employee’s increasingly dictatorial demands as to when, where and how the employee will return to work. Such was the case of Lal v The Warehouse Limited.

The judgment in this case was issued by Judge Christina Inglis in June 2017, shortly before she assumed her appointment as Chief Judge of the Employment Court on 10 July 2017, following former Chief Judge Colgan’s retirement. It now sets out more concrete criteria for an employer to decide when the “point to fairly cry halt” has been reached.

In a nutshell, Ms Lal injured her foot at work on 31 August 2012, and this progressively led to other related medical issues, which saw her sometimes fit for work on restricted duties, and other times not fit for work at all. By January 2014, The Warehouse asked for a meeting to discuss this ongoing incapacity issue and try to get her back to work. At the meeting which resulted, it transpired that Ms Lal would return to work, but she no longer wanted to return to the Newmarket store during her rehabilitation as she had “issues” with the manager.

Before her return to work the manager at the Newmarket store changed but she still did not wish to work at this store, despite the change in management. In July 2014, Ms Lal’s doctor issued her with a medical certificate, which also contained comments about the need for The Warehouse to allow her to change stores based on non-medical issues, of which his only knowledge came from Ms Lal’s self-reported desire to change stores. The practise of doctors including personal issues and recommendations in relation to the workplace in support of their patient, is far from uncommon, despite the fact it breaches the Medical Council of New Zealand recommendations for issuing medical certificates.

Despite confirming that she would return to work in a meeting that occurred on 21 July 2014, this did not happen, and on 3 September 2014, she produced a medical certificate from her doctor stating she was medically unfit to work for a further 42 days. At that point, The Warehouse sent her a letter informing her to that if she did not return to work by 30 September 2014, her employment would be terminated. Ms Lal did not return to work by 30 September and her employment was terminated, leading her to raise a personal grievance for unjustified dismissal. Her claim was dismissed by the Employment Relations Authority, so she challenged the decision in the Employment Court.

This judgment (which, like all Employment Court judgments, can be accessed at www.employmentcourt.govt.nz.), dismissing Ms Lal’s claims, stated a number of very sensible principles when dealing with medical incapacity terminations. In particular, at paragraph 48 it stated that “…An employer cannot be held to ransom by an incapacitated employee, dictating the terms on which they will return to work and where. An employee can however expect that their concerns will be genuinely considered and appropriately responded to. The employer’s actions must be within the range of what a fair and reasonable employer could do in the circumstances…”

In conclusion, any employer struggling with an ongoing medically-incapacitated employee, would be well advised to locate and read this judgment. Many employers do try to be as fair and reasonable as possible when dealing with medical incapacity. Unfortunately, there are employees who will see this consideration as a weakness and exploit every last drop of empathy and goodwill an employer has to offer.

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About Author

Erin Burke

Employment Lawyer and Director at Practica Legal
Email: erin@practicalegal.co.nz phone: 027 459 3375

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