Managing long term sickness absence and capability

Having to terminate employment due to capability in respect of ill health is a potentially fair reason for dismissal under s.98 of the Employment Rights Act 1996. But the employer must show that it acted reasonably both in treating the long-term ill health as a sufficient reason for dismissing the employee and in the procedure adopted to effect the dismissal. When an employer is considering dismissing an employee on the grounds of long-term ill health a fair procedure should include:

  • consultation with the employee
  • a medical investigation
  • consideration of alternative employment
  • possible ill-health early retirement if there is provision in the pension scheme for this.

The decision to dismiss is not a medical question but one for the employer to take in the light of the medical evidence available. However, the fact that an employer has obtained medical evidence does not absolve it of the requirement to consult personally with the employee.

An employer that dismisses an employee on the ground of ill health without considering any reasonable steps that it could take to enable the employee to return to work may be liable for disability discrimination as well as unfair dismissal, if the employee is disabled within the meaning of the Equality Act 2010.

Something else to consider in a situation of long term absence is that an employee on long-term absence also continues to accrue their annual leave and may wish to book a period of annual leave in order to receive full pay for that period, for example if they have exhausted all entitlement to sick pay, or is receiving only statutory sick pay.

The law does not prevent employees from taking annual leave while on sickness absence. If it refuses the request, the employer would have to allow the employee to take the accrued annual leave on their return to work (even if this means carrying it over to the next leave year), or pay the employee the accrued holiday pay on termination of employment.

Should you wish to discuss any long term absence issues and how to managed, please call our CIPD qualified consultants on 0800 9995 121.

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