5. Sickness and dismissal

Fair and unfair dismissal

Because sickness absence falls within the definition of “capability” under section 98 of the Employment Rights Act 1996 (ERA), sickness is a potentially fair reason for dismissal. This means that employers can lawfully dismiss employees because they are ill, even if that illness amounts to a disability (Royal Liverpool NHS Children’s Trust v Dunsby [2006] IRLR351). Dismissal can be as a result of either a long-term illness or very frequent short-term absences.

Dismissals on grounds of ill-health which are based on an employee’s “capability” to carry out the role need to be distinguished from sickness absence-related dismissals based on allegations of “misconduct”, which is another ground for a potentially fair dismissal under section 98 of the ERA.

Such cases often involve frequent short periods of self-certified absence and allegations of “malingering”, where the employer believes that sickness is not the true reason for the absence and that the employee has been abusing the sick pay system. Employers often look out for a pattern, such as self-certificated absences falling on Fridays and Mondays.

The employer is not entitled simply to hold this belief without any basis. It must be a genuine and reasonable belief, having carried out a reasonable investigation (British Home Stores v Burchell [1978] IRLR 379). This chapter looks at some of the recent case law on “malingering”, including the growing trend towards using covert video surveillance to investigate suspected abuses of sick pay rules.

Finally, a third potentially fair reason for sickness absence-related dismissal under section 98 of the ERA falls within the category referred to in the legislation as “some other substantial reason”. This ground might be relied on by an employer when attendance has fallen below the level required by an attendance procedure. The case of Wilson v Post Office [2000] IRLR 834 provides a good example:

However, it is important to note that even where a negotiated absence procedure is in place, employers are still obliged to investigate all the circumstances, including the underlying reason for each separate absence, and to give the employee an opportunity to explain the position. A dismissal will not be fair merely because an employee has breached the terms of an agreed absence procedure.

Dismissal on grounds of sickness absence — capability

An individual is dismissed on grounds of “capability” where the employer concludes that as a result of sickness or injury, s/he is no longer capable of doing his or her job.

Sometimes an employee’s ill-health may amount to a disability. If so, s/he will be entitled to additional protection under the laws prohibiting disability discrimination. The law relating to disability discrimination is now contained in the Equality Act 2010 (EA 2010) and is looked at in Chapter 3 of this booklet — Special circumstances. Please note that the dismissal of a disabled employee on grounds of sickness absence is likely to be unlawful unless the employer has first made all reasonable adjustments to enable the employee to remain at work. Chapter 3 contains a discussion of the law governing “reasonable adjustments”.

Dismissals on grounds of sickness absence can be fair even if the employee has a current medical certificate and is still receiving sick pay. There is no legal rule that says it is unfair for an employer to dismiss someone before their sick pay has run out (Smiths Industries Aerospace & Defences Systems Ltd v Brookes [1986] IRLR 434). Equally, there is no rule that says it is fair to dismiss someone just because their sick pay has run out. If that is the only reason for the dismissal, it may well be unfair.

The “reasonableness” test (section 98(4) of the ERA)

Whether or not a dismissal on grounds of sickness absence is fair will always depend on the “reasonableness” of the decision, taking into account the particular circumstances of each case.

Dismissal following a period of long-term sickness absence

There is no rule that a dismissal will necessarily become fair after a certain period of absence. The length of the absence is just one factor to consider, and each case will depend on its own facts. The basic question to be addressed each time is: how long can the employer reasonably be expected to wait before taking steps to end the employment.

In the case of a dismissal for long-term sickness absence, an employer will usually be expected, as a minimum, to:

• do its best to find out the true up-to-date medical position (see below) and discuss this with the employee;

• conduct a careful review of the situation and discuss it with the employee;

• consider alternative options, for example whether there is any way of varying the employee’s duties to enable him or her to return to work. Each case depends on its own facts and more is likely to be expected of a large and well-resourced employer;

• consider alternatives to dismissal (such as ill-health retirement) where appropriate; and

• give the employee reasonable advance warning, framed in clear and unambiguous terms, that dismissal is an outcome under consideration, before reaching the decision.

Tribunals will take into account matters such as the size of the firm, difficulties in arranging for short-term replacements, the employee’s length of service, the nature of the illness, how long it is likely to last and whether the employer’s decision to dismiss was one a “reasonable” employer would have taken. The tribunal will not substitute its own view as to what is fair or unfair for that of the employer (Sainsburys PLC v Hitt [2002] EWCA 1588).

The need for medical advice

The employer must take steps to investigate the nature of the sickness and prospects for recovery. What kind of investigation is required will depend on the individual circumstances of the case.

Usually an employer will need to obtain medical advice. Certainly this would be expected in cases of long-term sickness absence, but short-term absences may also be the result of an ongoing medical condition that requires expert advice. Medical advice should be up-to-date and relevant to the condition and to the job carried out by the worker.

Medical advice should include a report from the employee’s own GP or specialist from whom they are receiving treatment (for which the employer must have the employee’s consent — see Chapter 6). The employer may also obtain advice from occupational health or an independent consultant. If there is a conflict between the medical opinions, the employer can choose which to rely on, as long as this choice is a reasonable one to make.

A good illustration of the importance of obtaining expert medical evidence is provided by the case of The Governing Body of Hastingsbury School v Clarke (UKEAT/0373/07):

Consulting with the employee

The employer must discuss the medical opinions with the employee, who is entitled to see all reports, and any letters or emails of instruction to the medical practitioner. In Rothwell v Pelikan Hardcopy Scotland Ltd [2006] IRLR 24, the employer’s occupational health unit discussed its report with the employee, but its failure to provide a copy of the report to the employee contributed to the tribunal’s finding that the dismissal was unfair.

The employer must consult the employee about his or her likely return to work or improvements in health. The employer should also consider whether any adjustments could be made to allow the employee to carry out his or her role and discuss these with the employee. These could include, for example, a temporary or permanent reduction in hours or changes of duties, offering counselling or mentoring and assessing whether there is other work available that the employee would be capable of doing instead.

However, even where an employee is disabled, the employer is not obliged to create a new job where one does not already exist. There are resources, including grants and guidance, available for example through the Access to Work scheme (further information is available at www.direct.gov.uk) and a tribunal will expect the employer to have investigated and accessed these resources where appropriate. Properly implemented, the new Fit Note regime ought to provide a useful basis for this discussion. The Fit Note is discussed in more detail in Chapter 2 of this booklet. The TUC has produced a guide to reps on the new Fit Note: Preparing for the new fit note: Guidance for union representatives, which is available online.

Consultation with the employee is essential, and is absolutely fundamental to a fair dismissal. A failure to engage in genuine consultation prior to a decision to dismiss is likely to make the resulting dismissal unfair (Rothwell v Pelikan Hard Copy Scotland Ltd [2006] IRLR 24). For example, in one case an employer commissioned a medical report on an employee’s sickness absence, which recommended he be retired. But the employer dismissed the employee without consulting him and the dismissal was therefore found to be unfair (East Lindsey District Council v Daubney [1977] IRLR 181).

Deciding whether to end the employment

The employee has the right to be accompanied by his/her union rep to all meetings concerning the possible termination of the employment.

A disabled employee has the right for reasonable adjustments to be made to the meeting arrangements to accommodate his disability, and this could include, for example, arranging for the employee’s disability advisor to be invited to the meeting, or making extra adjustments as to its timing or location. Any home visits should be organised sensitively, with a sensible amount of advance warning and the employee’s consent.

Occasionally, it may be a reasonable adjustment to allow a disabled employee to have a legally qualified representative attend the meeting. In the recent case of Yorkshire Housing Limited v Cuerden (UKEAT/0397/09), the claimant was absent with depression, a panic disorder and agoraphobia. The tribunal found that the employer’s refusal to agree to Mrs Cuerden’s request to be accompanied by a solicitor to a meeting she had requested to agree steps for a managed return was a “provision, criterion or practice”, and that the refusal placed her at a substantial disadvantage compared to others who did not suffer her disability.

Often, employees on long term sickness absence are understandably reluctant to meet with their employer. It should be emphasised that although an employee is not obliged to consent to an employer’s request to provide medical evidence or to attend a medical examination or a meeting, an unreasonable failure to do these things is likely to lead to a loss of the tribunal’s sympathy, as is any unreasonable failure to co-operate generally in the process. In particular, it may lead the tribunal to conclude that the employer was entitled to rely on whatever information it had available at the time and to decide that the dismissal was fair. In addition, contracts of employment often contain a contractual obligation on the employee to agree to a reasonable request to undergo a medical examination or to provide a medical report.

Dismissal should be the last resort. If an employer dismisses an employee without carrying out proper investigations and looking at alternatives (such as reduced hours or changes to the job) the dismissal will almost certainly be unfair.

Reps should remember that information generated about an individual’s health (including, in an appropriate case, internal company documents, memoranda and emails) is likely to fall into the category of “sensitive personal data” for the purposes of the Data Protection Act 1998, entitling the employee to make a Data Subject Access Request to the employer for a copy of the information held by the employer about him or her (see also Chapter 5). The employer is not allowed to charge more than £10 for providing the data, and guidance on how to make a request can be found at the information commissioner’s website: www.ico.gov.uk.

What if the employer caused the illness or injury?

Even if an employee is off sick after an accident, or after having been a victim of a crime, or even following a work-related injury, this does not mean that s/he cannot be dismissed as a result of sickness absence. However, the reason for the absence still plays a part, as the tribunal has said that the cause of the illness should be taken into account when deciding whether the dismissal is fair (Frewin v Consignia EAT/0981/02).

If the sickness is the result of a work-related injury (including psychiatric injury resulting from workplace bullying or work overload) an employee may have grounds to recover compensation through a personal injury claim (see Chapter 2) or in cases of very serious bullying or harassment, through a claim under the Protection from Harassment Act 1997 (see Chapter 6). The case of McAdie v Royal Bank of Scotland [2007] EWCA Civ 806 is an important decision on long term sickness absence:

As always, each case will depend on its own facts. In this case, Ms McAdie was on long-term sick leave suffering from work-related stress, following her employer’s failure to deal properly with her grievances, including alleged bullying by her line manager. She had turned down offers of redeployment and had confirmed openly to the bank that she was unable to return to work at all. In these circumstances, the bank was left with no alternative but to end the employment.

Ms McAdie’s case concerned the question of “liability” — can a dismissal ever be “fair” where the employer caused the injury that led to the absence. A second important question is whether the fact that the employer’s behaviour caused or contributed to the dismissal will impact on the size of the compensatory award made by the tribunal. This is particularly important in the case of employees on long-term sickness absence who have exhausted their sick pay entitlement and who cannot work as a result of their employer’s actions, for example because of an on-going psychiatric disorder caused or made worse by the bullying.

The situation is complex but important, and legal advice should be sought. Whether or not a dismissal is fair is only one part of the equation. Of perhaps even greater importance is the question of whether that employee will be able to recover compensation for lost earnings following the dismissal.

The compensatory award in a claim for unfair dismissal is intended to compensate the employee for the financial losses suffered as a result of the dismissal, to the extent that those losses are caused by the employer (Section 123(1) and (2) ERA 1996). The amount awarded is subject to a cap which is revised each February. Only financial losses can be awarded in a claim for unfair dismissal (Dunnachie v Kingston upon Hull City Council 2004 UKHL36).

Although Section 123 states that the amount to be awarded is “such amount as the tribunal considers just and equitable in all the circumstances”, in practice the law is clear that in a claim for unfair dismissal, no claim can be made for non-financial losses, such as losses resulting from personal or psychiatric injury or injury to feelings caused by the employer’s actions. This contrasts with laws prohibiting discrimination, where compensation for injury to feelings and personal injury resulting from acts of discrimination is recoverable.

The case of Edwards v Governors of Hanson School (EAT/314/99 [2001] IRLR 733) suggested that when deciding the size of a compensatory award, the tribunal is allowed, in exercising its discretion to decide what is “just and equitable”, to take into account the employer’s bad behaviour (in that case, an alleged campaign of harassment) that contributed to the employee’s illness. However, the more recent Court of Appeal decision in GAB Robbins v Triggs ([2008] EWCA Civ 17) takes a more restrictive approach:

Note, importantly, that if the employer’s behaviour had amounted to discrimination, then Mrs Triggs would have been able to bring a claim for unlawful discrimination in the Employment Tribunal. In contrast to claims for unfair dismissal, discrimination claims can result in uncapped compensation, which can include compensation for injury to feelings and personal (including psychiatric) injury resulting from the acts of discrimination.

The McAdie and Triggs cases both show how vital it is to get early legal advice when considering this kind of claim, to make sure that the right sort of claim is brought, in time, and in the right court.

Dismissal following frequent short-term sickness absences

In the case of dismissal for frequent short-term absences, employers will usually be expected to have:

• explained clearly the standard of attendance expected;

• followed the absence policy in a consistent, non-discriminatory way;

• provided opportunities to improve in accordance with the policy;

• spelled out to the employee the risk that continued failure to meet the standard expected may result in dismissal; and

• given the employee the chance to explain the reason for the absences.

Frequent short-term absences may have an underlying medical cause, and an employer contemplating dismissal for excessive intermittent sickness absence would usually be well-advised to seek some expert medical guidance on the employee’s condition and on the likelihood of further absences.

Tribunals would expect the employer to take into account factors such as the employee’s previous attendance record and employment history, the nature of the employee’s job and the effect of absences on the employer’s ability to organise work effectively, the nature of the illness and the likelihood of its recurrence, and the length of absences compared with the intervals of good health (Lynock v Cereal Packaging [1988] IRLR 510).

In a production setting, for example, frequent intermittent absence may damage the employer’s ability to plan effectively and this is likely to be an increasingly important factor with the use of tightly planned rotational systems, just-in-time technology and annualised hours. The more specialised the employee’s role, the harder it will be for other employees to step in at short notice. Tribunals will always look at the size and resources of the employer.

In the case of Leeson v Makita Manufacturing Europe EAT/0911/00, the EAT held the dismissal of an employee who had frequent absences for genuine reasons to be unreasonable because it had more to do with the employer’s wish to make an example of the employee to deter others, than with dealing with the employee’s genuine sickness.

Frustration of contract

A contract of employment will automatically come to an end in the event that it becomes impossible for an employee to perform their duties. This is called a frustration of contract. Once a contract has been frustrated, all rights under it cease and there will have been no dismissal, which means the employee will not be able to bring a claim of unfair dismissal. It is possible for a contract to become frustrated through illness, in which case the following factors are likely to be taken into account:

• the duration of the illness;

• the nature of the employment;

• the terms of the contract;

• the employer’s need for the work to be done and the need for a replacement;

• whether the employee is still being paid; and

• whether a reasonable employer could be expected to wait longer.

However, because an employee is left with no legal right to challenge the termination of their employment, tribunals are very reluctant to find that a contract has been frustrated in these circumstances. For example, in the case of Thorold v Martell Press EAT/343/01, the EAT commented that the operation of the law of frustration in cases where employment is lost through incapacity could lead to injustice. In cases such as this, it said that the employee should look at what rights they have to be protected against disability discrimination, which may require the employer to offer alternative work under the existing contract.

Ill-health retirement

Some employers offer ill-health retirement to employees who become too ill to work. This will almost always be seen as a mutual termination of employment rather than a dismissal, which means that an employee will not be able to challenge it later as an unfair dismissal.

In a recent important case, First West Yorkshire Limited v Haigh (UKEAT/0246/07), the EAT held that employers have an implied obligation not to unreasonably deprive employees of ill-health benefits.

Surveillance of employees on sick leave

A particular area of concern for workers and union reps is an apparent increase over recent years in the use of covert surveillance to monitor the activities of workers who are off sick and claiming sick pay. A recent example is the case of McCann v Clydesbank College UKEAT0069/09:

The use of covert surveillance by employers is on the increase following the decision in McGowan. Unions including Unite recommend that reps negotiate clear agreements or codes of practice to protect staff from unwarranted surveillance and monitoring, making sure everybody knows clearly where they stand and committing employers to basic principles for privacy protection, including the need to set out the precise limits of any monitoring.

Unite recommends that reps should try to negotiate the right to be consulted whenever covert monitoring is suggested or implemented, and for any use to be limited to cases where monitoring is needed to protect the safety, security and integrity of the organisation. It should not be used to monitor workforce performance or attendance. Reps could also negotiate the right to audit any instances of the use of covert surveillance after the event, to keep the practice under critical review. Any surveillance must be strictly time-limited and attempts to extend monitoring into employees’ private lives should be fiercely resisted.

Covert surveillance is governed by the Data Protection Act 1998 and by Part 3 of the Information Commissioner’s Code of Practice Monitoring at Work. The Information Commissioner advises that covert monitoring of workers can rarely be justified and should not be carried out unless it has been authorised at the highest level of the organisation. The employer should be satisfied that there are grounds for suspecting criminal activity or equivalent malpractice. The Code states that covert monitoring must only be used as part of a specific investigation and must stop once the investigation is complete.

The European Convention on Human Rights and the Human Rights Act 1998 (HRA), state that workers have a right to respect for their private and family life, home and correspondence. This right extends to life at work as well as at home. Tribunals are required to take the HRA into account in all their decisions. However, cases like McGowan and McCann demonstrate the tribunal’s willingness to find that even though surveillance of the home clearly interferes with the employee’s right to privacy, such actions in appropriate cases can be justified as a “proportionate” means of protecting the employer’s resources, where there are reasonable grounds to suspect serious acts of dishonesty.

Even where the legal position allows surveillance, employers who resort to covert snooping tactics against their own employees risk creating a demoralised, distrustful and fearful workforce and an authoritarian reputation.

Surveillance was also in evidence in another sickness absence case, Corus v Mainwaring ([2007] UKEAT/53/07):

Can a person on sick leave be required to attend a disciplinary meeting?

It is not uncommon for an employee who is subject to a disciplinary procedure to take sick leave, and the question often arises whether that person is entitled to refuse to attend disciplinary meetings scheduled to take place during their absence. It does not follow that just because an individual is on sick leave s/he can never be required to attend disciplinary meetings. Employees should never ignore meetings or fail to attend simply because they are on sickness absence, even if that absence is certificated. Each case will depend on its own facts including, for example, the nature of the illness, the length of the likely absence and whether the employee has a disability. The safest course is to ask the GP to write a short letter to the employer confirming that the employee is not well enough to attend the meeting, if possible providing a timescale as to when s/he is expected to be fit enough to participate and suggesting any adjustments that could be made to meeting arrangements.

Time limits

A claim for unfair dismissal must be brought within three months from dismissal. The time limit for a claim for unlawful discrimination is three months from the date of the discriminatory act. Time limits are strictly enforced and only in exceptional circumstances will they be extended.