What can an employer do when an employee is too sick or injured to work?

Employment | Print Article

June 2016

Legal position

It is well established that an employer is not bound to hold a job open indefinitely for an employee who is unable, due to illness or injury, to attend work. However, if an employer does decide to dismiss for incapacity, that can be challenged through the personal grievance process as set out in the Employment Relations Act 2000 (‘the Act’) in the same way as any other dismissal.

An employer must be able to justify a dismissal both substantively and procedurally, that is, whether the decision to dismiss was one that a fair and reasonable employer could come to. The employer is required to carry out a fair inquiry and balance fairness to the employee against the practical requirements of the business when making a decision whether to dismiss. It is important to note that an investigation into an employee’s medical prognosis is not a disciplinary investigation.

McKean v the Board of Trustees of Wakaaranga School ([2007] ERNZ 1) sets out a number of factors that should be considered when deciding whether or not to terminate an employee’s employment on medical grounds:

  • the terms of the employment agreement;
  • the nature of the illness or injury, its duration and prognosis;
  • probability of long-term employment but for the medical incapacity;
  • the nature of the employment;
  • nature of the incapacity and the prospects of recovery; and
  • length of employment to date.

Recent case

The importance of employers failing to follow appropriate processes in circumstances where an employee is sick or injured has recently been highlighted in the decision of Waititi v Pedersen Industries Limited ([2016] NZERA Auckland 82).

In this case, a long-standing employee, Mr Waititi, was dismissed because he could not produce a medical certificate to satisfy his employer that he was fit to work.

In 2001, Mr Waititi had suffered what was suspected to be an epileptic seizure outside of work time and in 2013 he was on medication for suspected epilepsy.

In October 2013, the employer’s line manager followed up a rumour he had heard about an incident the week before, allegedly involving the high stacker vehicle being driven in an erratic manner by Mr Waititi. He also followed up another allegation that Mr Waititi had some kind of turn in the lunch room a few days before. When Mr Waititi was questioned about the incidents, he denied they had happened. Nevertheless, he was stood down until a meeting later that day. The manager of the employer eventually suspended Mr Waititi because he felt that he was not in full control of himself, and the incidents, if they had occurred, were serious health and safety risks to staff safety, given the machinery Mr Waititi operated. Mr Waititi was told that he would have to get a full medical clearance before he could return to work.

Mr Waititi’s doctor conferred with a specialist and issued a medical certificate saying Mr Waititi was fit for work but that before he could confirm the decision he needed more information and suggested that the eye witnesses to the alleged incidents come to see him to describe the events. The employer failed to obtain signed statements from witnesses and refused to allow Mr Waititi or his doctor to speak to witnesses. Instead, the HR manager of the company stated that Mr Waititi had been given all of the relevant documentation.

Eventually, the employer dismissed Mr Waititi because no medical clearance was provided to say he was able to return to his original driving duties and no alternative work was available.

The Employment Relations Authority held that a fair and reasonable employer would have fully consulted with Mr Waititi’s doctor and facilitated the process to enable the doctor to come to a decision on valid medical grounds on whether Mr Waititi was fit to return to work. It would not have prevented the doctor from interviewing witnesses who had the most relevant information on which to base his diagnosis. Lack of access to witnesses also prevented the specialist from coming to a diagnosis for the same reason. The Authority found that the employer failed to provide Mr Waititi with access to information as it was required to under the Act.

The Authority found that Mr Waititi had been unjustifiably dismissed from his employment and that the employer had breached its duty of good faith to Mr Waititi. It ordered the employer to pay lost wages for four months, holiday pay owing for that period, a compensatory payment of $18,000 and a $5,000 penalty.


In summary it is important that as an employer you:

  • ensure that your employment agreement contains an effective medical incapacity clause;
  • are communicative – this is key!
  • are proactive in ascertaining information about an employee’s medical situation. You cannot justify a decision unless you understand, or at least attempt to understand, the employee’s condition;
  • work together with ACC to assist an employee in returning to work (if applicable);
  • do not allow a sick or injured employee to return to work until they are medically cleared to do so.