An employer’s right to call halt? Employee illness or injury affecting performance

Employment | Print Article

March 2020

It can be a difficult situation when an employee is affected by a new illness or injury and this is having an impact on that employee’s ability to be at work or perform their job.

There are not only immediate obligations on employers where an employee is affected (such as site safety), but also wider implications on a business if such illness or injury were to extend beyond a few weeks or months. Employer obligations in these circumstances can seem somewhat of a minefield. So what happens when an employee’s work is adversely impacted by a new illness or injury?

Fundamental obligations: Act in Good Faith – be fair and reasonable

The starting point must always be the fundamental obligations of an employer to act in good faith in their dealings with their employees. Practically this means being responsive, communicative and open with your employee.

An employer must act in a way that is entirely fair and reasonable in the circumstances. In a practical sense, this means:

  • making a genuine effort to understand the issue, how long it is anticipated to last, and to obtain appropriate medical advice about it;
  • allowing the employee reasonable time to recover (what is reasonable will be largely situation specific);
  • allowing the employee an opportunity to be heard (as part of their return to work, their recovery, any impact on their employment or their role);
  • taking any feedback from the employee into account before determining how to work with such a situation; and
  • treating the employee with respect and dignity throughout the process.

Immediate or interim solutions

Depending on the severity of the illness or injury, most situations can be approached from a rehabilitative perspective – i.e. what can we do to help this employee get back to work as per normal? This will ordinarily be in the form of a return to work plan, developed with the assistance of a medical professional – either that paid for by the company, the employee’s own GP or specialist, ACC, or some combination of them.

The employee should be consulted regularly about their progress, have reasonable support from the employer to work around their illness or injury, and fair and reasonable time frames for making it back to their normal duties.

What this will look like will depend entirely on what the illness or injury is and the type of work that is being performed. This will also factor in the nature of the recovery and the nature of the work – when it is safe for the employee to return and in what capacity. Employers should be prepared to be flexible and to meet an affected employee halfway in getting them back to work.

Medical incapacity

Medical incapacity is a situation where an employee is no longer able to perform the key duties of their role due to a new illness or injury. This is a no-fault employment process used by an employer to understand the full circumstances of an illness or injury on an individual employee and look at ways of working around it or, if no alternatives or work arounds are available, bringing the employment relationship to an end.

Ordinarily, to start a process such as this, an employer must have fair and valid reason to do so. There must also be a demonstrable impact on the business as a result of the employee’s inability to perform the key duties of the role. Medical incapacity might be considered where:

  • an employee has been off work for an extended period of time and is still unable to come back to work (depending on the illness or injury, the time off must be unreasonable);
  • an employee has taken a significant amount of time off of work due to the illness or injury that it is affecting their ability to do their role productively; or
  • where an employee has returned to work but is on different or light duties because of the illness or injury and it is unlikely they will recover in a reasonable time to pick up the original key duties of their role.

In the leading case Lyttelton Port Company v Arthurs, the Employment Court in 2018confirmed that for a dismissal for medical incapacity to be justified, there must be:

  • a timely, robust, and fair investigative process to look at the facts and viable alternatives to dismissal that follows their own policies and that set out in the employee’s Individual Employment Agreement (some examples could be redeployment or a permanent altered role) prior to making a decision to dismiss;
  • little or no prospect of recovery within a reasonable time frame and a strong medical opinion (or more than one) that supports that view (what is reasonable will be largely fact specific);
  • the employee being provided with all of the relevant information and sufficient time to adequately respond to the proposal to dismiss;
  • the employee being appraised of the reasons for obtaining information and provided with the opportunity to give informed consent to medical assessment for the purposes of determining whether or not incapacity is substantiated;
  • the employer accepting the employee’s feedback with an open mind, and engaging in meaningful consultation with the affected employee before a decision is made to dismiss or pursue some other option available.

Other considerations

Employers considering this route must be mindful of their obligations under other legislation that might not immediately seem of relevance such as the Privacy Act 1993 and the Human Rights Act 1993.

Every employee is entitled to be free from unlawful discrimination on the basis of disability under the Human Rights Act. A new illness or injury that impacts on one’s ability to do their job will likely be deemed a disability for the purposes of the Human Rights Act and impose obligations on the employer to act in a timely and non-discriminatory way.

Employers should also understand that when requesting information from or about an employee (including medical information) there are requirements under the Privacy Act 1993 (and in some instances, the Health Information Privacy Code) that must be adhered to. If you are obtaining a medical report about an employee, you must be very clear with your employee, prior to obtaining their consent, as to what the contents of that report will be used for. For instance, ascertaining ability to continue to work or whether a further specialist opinion may be required, or at the far end, using this in the context of a medical incapacity process where dismissal may be a possible outcome.

Because of the nature of such processes and the attention to detail required, those employers seeking to go down this path ordinarily should seek independent advice before acting. Every employee is entitled to a clear, straightforward and fair process when an employer is looking at the future of their role. In practice, this can mean a somewhat lengthy process, several consultations with the affected employee, multiple visits to a medical practitioner, working with union or legal representatives and many steps.

For information or advice about illness or injury affecting performance, please contact our employment law team.