Ill-health dismissal and the law - part 1

Gillian Howard reviews the long-standing principles of employment protection and the statutory dismissal procedure as they relate to ill-health dismissals in the first of a two-part article.

Commenting on the difficulties for occupational health practitioners associated with ill-health dismissals, one legal textbook¹ says:"Any member of a profession whose main purpose is to care for an individual will find it hard to be associated in any way with depriving a patient of his opportunity to work."

Excessive short-term absence and long-term ill health are, nevertheless, potentially fair reasons for dismissal under the heading of"capability", which is one of five categories of potentially fair reasons for dismissal. Capability is covered under s.98(2)(a) of the Employment Rights Act 1996.

Ill-health dismissals, however, are not merely a matter of ensuring that a fair procedure has been followed as required by the 1996 Act. Failure to follow exactly the new statutory dismissal procedure (introduced in October 2004 under s.32 and Schedule 2 of the Employment Act 2002, see box 1) will lead to a dismissal being deemed to be automatically unfair, with any compensation being increased by between 10% to 50% (capped at £58,400).

More difficult to satisfy, however, are the requirements of the Disability Discrimination Act 1995 (DDA), which are particularly relevant to ill-health dismissals as acute or chronic (ie long-term) ill-health cases may be considered a "disability" as defined in s.1 and Schedule 1 of the DDA as amended.

This article will focus on the management of sickness absence cases in terms of the fairness or otherwise of potential dismissals.

Fair dismissal and ill-health absence

"Capability" of an employee is defined in s.98(3)(a) of the 1996 Act as being "assessed by reference to skill, aptitude, health or any other physical or mental quality". In other words, the Act provides that not being able to perform the duties for which the employee is employed because of a health problem, either physical or mental, can constitute a potentially fair reason for dismissal.

Categories of sickness absence

For the occupational health professional, it is helpful to consider the relevant legal provisions according to four categories of absence/absentee:

long-term, chronic or acute ill health;

genuine short-term, persistent or intermittent ill-health absence, and frequent unconnected periods of absence;

the lazy malingerer; and

the fraudulent malingerer.

For the vast majority of cases (which fall within the first two categories), there are a number of factors (based on case law) that employment tribunals expect employers to take into account when determining whether or not it is reasonable to treat an employee's ill health as a sufficient reason for dismissal. These factors include the nature of the employee's job, their length of service, whether they have reached their maximum entitlement to sick pay, whether there is a permanent health insurance (PHI) scheme, whether their role can be filled temporarily even for a lengthy period of time, the quality of medical evidence obtained and whether the employer has consulted properly with the employee following receipt of the medical report (see box 2 for a summary).

Long-term, chronic or acute ill health

If an employee is absent from work for a "prolonged" period due to ill health, the situation is likely to be covered by case law relating to "capability", as mentioned above - no employment tribunal has ever defined "prolonged" or "long-term" absence. As long ago as 1976, in Spencer v Paragon WallpapersLtd² the Employment Appeal Tribunal (EAT) laid down three key considerations for determining whether a dismissal following chronic ill health is fair and whether or not "… in all the circumstances, the employer can be expected to wait any longer":

the nature of the illness;

the length of the continuing absence; and

the employer's need for the work to be done.

In addition, the employer needs to have consulted with the employee, investigated the medical position and considered alternative employment.

The DDA as amended requires a dismissal for chronic (or acute) ill health to consider whether an employee suffers from a relevant disability, which should be established through consultation. The requirement that reasonable adjustments be made in such cases has considerably extended the scope for claims of unlawful discrimination. Examples of reasonable adjustments are:

allocating some of the disabled employee's duties to another employee;

transferring the employee to fill an existing vacancy elsewhere in the company; and

altering the employee's hours of work.

Whether it is reasonable for an employer to make any particular adjustment will be a question of fact in each case, with cost and effectiveness being taken into account.

Recent decisions on the question of what constitutes a reasonable adjustment have included a requirement for an employer to make a reasonable adjustment to a sick pay scheme (Meikle v Nottinghamshire County Council³) and a requirement for an employer to offer a position to an employee without the normal competitive interview (Archibald v Fife Council⁴).

Since the removal in December 2005 of the requirement that mental illness may be a relevant condition for the purposes of the DDA, only if it is "clinically well recognised", it has been easier for employees to claim that conditions such as work-related stress fall within the scope of the Act. (This and other relevant matters will feature in the second part of this article.)

Medical evidence

While the decision to dismiss an employee is not a medical question, whether or not an employer has investigated the medical evidence will be a factor in determining if a dismissal is fair.

In almost all cases, consultation with a doctor (ie a qualified occupational health physician) will be necessary; sometimes a consultant who specialises in the particular medical condition should be involved. A medical expert's report is unlikely to be of assistance, however, unless they are properly and fully advised as to all the relevant circumstances. This will include reading the relevant GP records before seeing the individual and reviewing a thorough job description so that they know the scope and extent of the duties involved. The occupational health physician should be asked to give a prognosis and an indication of the likelihood of the employee returning to their position, an indication of adjustments that need to be made to the position or alternative duties that the employee may be able to undertake.

If an employee refuses to consent to the release of medical information, the reasonableness of the employer's actions will be considered in the light of information available and it may be reasonable to dismiss the employee even if the available medical evidence suggests the contrary.

In rare cases, employers are not obliged to accept medical evidence as conclusive evidence of inability to work if there is other more compelling evidence. In Hutchinson v Enfield Rolling Mills Ltd⁵, the EAT held that an employer is entitled to "look behind medical certificates". In this case, a medical certificate stated "sciatica" but Mr Hutchinson was seen marching on a union rally in Brighton. The EAT held that the employer was entitled to refuse sick pay on the basis that Mr Hutchinson's medical condition did not render him unfit for work.

Some employers are suspicious when employees who are off sick are seen exercising in the gym, walking in the park or drinking in the pub. However, gentle exercise or going out for a drink are not necessarily inconsistent with being unfit for work. In Belgium, doctors are able to issue medical certificates that require the employee to remain at home.

It is important to note that not all duties are suspended when an employee is off sick. In Marshall v Alexander Sloan & Co Ltd⁶, Mrs Marshall had been dismissed after she had refused on several occasions to remove merchandise from her car. She had contended that, as she was off work sick, her employer had no right to give her such an instruction and that her contract of employment was suspended. She was dismissed and the EAT upheld the dismissal as fair: "Business common sense requires only that when an employee is off sick, he is relieved of the obligation to perform such services as the sickness from which he is suffering prevents him from carrying out, not that all the employee's obligations are suspended."

Similarly, it is not necessary for an employer to prove that an employee can do none of the duties that they are employed to do if their ill health prevents them from doing the material or critical duties only. In Shook v London Borough of Ealing⁷, Ms Shook, a residential social worker in a home for handicapped children, was unable to lift or carry owing to a bad back and was eventually dismissed from her post. Her argument that she was not disabled from all her duties and that therefore her capability dismissal could not stand was rejected. The EAT held that such a dismissal has to "relate to" the capability for performing work of the relevant kind, even though the performance of some duties may have been unaffected.

Short-term, persistent or intermittent ill-health absence

A poor absence record can amount to a potentially fair reason for dismissing an employee on the grounds of "some other substantial reason" under s.98(1)(b) of the 1996 Act. If an employee has a poor sickness absence record, it is important to ensure that the employer carries out a fair review of that record and the reasons for the absences in consultation with the employee. This may bring to light an underlying disability or bring a potential related claim to the employer's attention. Appropriate warnings should be given regarding expected levels of attendance and the consequences of failing to improve, including dismissal where appropriate.

In Wharfedale Loudspeakers Ltd v Poynton⁸, the EAT held that it is fair for employers to treat absences caused by genuine sickness as some other substantial reason "and dismiss accordingly after all the 'cautions' and reviews". Mrs Poynton had an unsatisfactory attendance record attributed to sickness.This continued after a third and final warning and she was dismissed. Although the reason for her dismissal related to her absence record, the EAT held that it came under the heading of some other substantial reason; it was neither conduct nor capability:"It was clear from the settled cases that persistent absenteeism, albeit on genuine sickness grounds, may well justify the dismissal of an employee, particularly if the employee held a responsible position. The correct test was whether the employer was reasonable in treating Mrs Poynton's attendance record as a whole, including the last illness and the fact that her attendance had improved after the final warning, as justifying her dismissal…"

There are three critical steps for an employer to follow as laid down in case law^{8, 9, 10,11}.

First, the employer should review the absence record. It may decide on a trigger for a review of attendance records, eg all those with more than 10 days off in a year or three spells in a rolling 12 months. Based on this initial review, the employer should decide whether to discuss the reasons for the non-attendance with the employee in an "interview of concern".

Second, if an interview of concern is held, the employer should ensure that it encourages the employee to explain why they have an unacceptable level of absence from work; trivial reasons provided on self-certificates should be challenged. The employee should be shown a table showing the dates, spells, numbers of days taken and the reasons given, and ask for an explanation. A separate weekly calendar with the days off marked in red should also be shown to the employee to help to ascertain whether there is any pattern emerging (Mondays and Fridays, before or after bank holidays, and so on). The employee should be asked if there are any underlying medical reasons to explain this pattern and level of absence. If, following further investigation, no accepted, underlying medical reasons for non-attendance are identified, the employer should warn the employee that their continued employment may be in doubt unless they are able to show a sustained and substantial improvement in their attendance at work. Further investigation may include a referral to their GP with instructions to examine the employee and to report on whether there are any serious underlying medical reasons for the absence record (the absence record and copies of the self-certificates should be sent to the GP).

Third, at the final dismissal stage, the employer must follow the statutory dismissal procedure (send a letter inviting the employee to a full disciplinary hearing with the right to be accompanied, then to give a right of appeal if the employee is dissatisfied with the outcome).

Case law supports the view that employers are entitled to set a limit on repeated, short-term absence. In International Sports Co Ltd v Thomson⁹, Mrs Thomson's absence record only reduced from 25% absence to 22% after "warnings" over a period of nine months. The EAT held that:"This was a case where the reasonable employer was entitled to say 'Enough is enough'." The EAT emphasised that the bona fides (authenticity and genuineness) of the medical certificates were not at issue. It noted that investigating medical or self-certificates might be of little assistance in such cases of transient and unrelated absences because there will often be a paucity of medical evidence (especially, since 1981, MED 3 statements have been available only after seven days of absence).

Malingerers

As mentioned above, there are two types of malingerer: lazy malingerers and fraudulent malingers. Fraudulent malingering occurs where an employee falsifies all symptoms. In many cases, the employee may have some symptoms but exaggerates the impact they have on their ability to work or function.

One form of fraudulent malingering is simulation, in which an individual, having denied the existence of a problem that would account for the symptoms (for example, in the case of drug abuse), imitates the symptoms of a specific disability or dissimulation.

A further form of malingering is false imputation, in which an individual has valid symptoms but is dishonest as to the source of the problems, attributing them, for example, to an industrial accident when the cause was, in fact, an injury occurring in the home. Malingering has been well documented¹².

If an employer suspects that an employee is not genuinely ill, ie is a fraudulent malingerer, it should carry out a full investigation. This may include covert surveillance, but the employer must ensure that the employee's rights in respect of privacy are not infringed¹³.This means giving clear instructions to the private detectives or managers who will conduct the surveillance not to film in an intrusive manner (eg into the employee's home with long lenses) or to inveigle their way into the employee's home under false pretences. While the courts may not prevent such evidence from being used, they may issue serious financial penalties for allowing it to happen.

If, on investigation, it appears that the absences are not due to genuine illness, the issue will be one of conduct and should be dealt with as a disciplinary matter.

The test for establishing whether or not the employee is malingering rather than genuinely ill is the same test as for all other issues involving employee honesty as established in British Home Stores Ltd v Burchell¹⁴:

Does the employer have an honest belief that the employee is guilty?

Is that belief reasonably held?

Has the employer carried out an adequate investigation?

Once the employer is satisfied that the employee is not genuinely ill, it should commence a staged disciplinary process, clearly stating the attendance levels expected and progressing through the procedure as appropriate if there is no improvement. As soon as the employer contemplates dismissing the employee, it will need to follow the statutory dismissal and disciplinary procedure. A failure to comply with these provisions could make a potentially fair dismissal automatically unfair and/or increase any compensation awarded by between 10% and 50%.

Conduct or "attitude" problems falling under the category of some other substantial reason cover employees who are demotivated or annoyed at something that has happened or not happened at work. Effective and robust management of such an employee, with a return-to-work interview and an informal warning, may be sufficient to ensure there is no repetition, although some employers may insist that the employee provides a private medical certificate on each day of sickness absence.

A more serious category is "gross misconduct", where an employee's absence is premeditated, deliberate and dishonest. The classic case that illustrates this point is Bailey v BP Oil Kent Refinery Ltd¹⁵. Mr Bailey had asked and had been refused a week off over Easter to go to Majorca, having an entitlement of only three days available. Nevertheless, he booked a seven-day holiday and took the time off. He booked the days to which he was entitled as holiday and took off two further working days for which he certified himself as unfit for work due to "gastric stomach".

Lord Justice Lawton held: "Luck did not go or return with him. He had been seen in Majorca by two other employees at the refinery, one of whom was the assistant maintenance engineer."This was a case of three offences of gross misconduct: fraud on the sick pay scheme, pre-meditated disobedience of a lawful instruction, and lying.

The second part of this article will deal with the disability discrimination aspects of ill-health dismissals and the impact of the DDA 1995 on such dismissals.

The author acknowledges input into this article from Rebecca Kettell, Shadbolt & Co LLP.

References
1. Kloss D (2005) Occupational Health Law (4th ed), Oxford: Blackwell Science.
2. [1976] IRLR 373.
3. [2004] IRLR 703.
4. [2004] IRLR 651.
5. [1981] IRLR 318; see also Sickness certification: looking behind GPs' certificates , OHR 121, May/June 2006.
6. [1981] IRLR 264.
7. [1986] IRLR 46.
8. EAT 82/92.
9. International Sports Co Ltd v Thomson [1980] IRLR 340.
10. Rolls-Royce Ltd v Walpole [1980] IRLR 343.
11. Lynock v Cereal Packaging Ltd [1988] IRLR 510.
12. Halligan P, Bass C and Oakley D (eds) (2003) Malingering and illness deception, Oxford: Oxford University Press.
13. Jones v University of Warwick (Court of Appeal) [2003] 1 WLR 954.
14. [1978] IRLR 379.
15. [1980] IRLR 287.

Box 1: Statutory dismissal procedures Since 1 October 2004, employers contemplating a dismissal must follow a three-step statutory dismissal procedure1. First, the employer must write to the employee setting out the reasons or circumstances that have led it to contemplate dismissing the employee and inviting the employee to a meeting to discuss the matter. Second, once the employee has had a reasonable opportunity to consider the employer's letter, the employer must hold the meeting, to which the employee may bring a trade union representative or fellow worker. After the meeting, the employer must notify the employee in writing of its decision and of the employee's right to appeal. Third, the employee's appeal must be heard at a further meeting and the employer must then notify the employee of its final decision. Failure to follow this three-step procedure will lead to a finding of automatically unfair dismissal under s.98A of the Employment Rights Act 1996 as amended. 1. See also "Employers may be caught out by dispute resolution procedures", OHR 118, November/December 2005, pp.9-10.

Box 2: Determining the fairness of ill-health dismissals The extent to which the following factors have been taken into account will determine the reasonableness of a decision to dismiss, ie whether sufficient account has been taken of "equity and the substantial merits of the case" and "the circumstances of the case, including the size and administrative resources of the undertaking" (the requirements set out in s.98(4) of the 1996 Act). The nature of the employee's job A very senior employee with rare or unique skills may be dismissed fairly and within a shorter timescale than someone else with less scarce skills. In East Lindsey District Council v Daubney1, Mr Daubney, the council's surveyor and public health officer, had a stroke that left him "lacking in confidence and unsure of recent memory". He also suffered from acute anxiety symptoms. He was dismissed on grounds of ill health without being given an opportunity to state his case or to seek an independent medical opinion. The quality of the medical advice If an expert occupational health physician or consultant gives unequivocal advice concerning a prognosis, based on a detailed submission from the employer as to the job duties and person specification, the employer is entitled to rely on that advice. In Daubney the medical advice was brief, "verging on the inadequate", where the doctor had written "unfit to carry out duties of this post and should be retired on the grounds of permanent ill health". In WP Computers Ltd v Passmore2 Mr Passmore's own doctor, in consultation with the treating psychiatrist, had declared Mr Passmore fit to return to work, on a certain daily level of medication. WP Computers' occupational health physician saw no reason to examine Mr Passmore personally, but reported rather more pessimistically on the probable results of Mr Passmore returning to work under any great strain. He did not, however, recommend that Mr Passmore should not return to work. The occupational health physician said that there was no point in seeing Mr Passmore and that the employer should "just write to the employee and terminate his contract" - which is what the employer did. The EAT held that it was patently unfair to act on the advice of a doctor who had not examined the employee and who had given equivocal advice. The employer should have asked the occupational health physician for "amplification and clarification". In such cases, the medical expert should be asked six questions3 (for the layperson to see): When will your patient be fit to return to work? When fit to return to work, will your patient have any residual disabilities? If yes, will these be permanent or temporary? Will your patient be able to render regular and efficient service? If not, what duties would you recommend that your patient does not do? Will your patient be continuing with any medication or treatment and, if so, in your opinion are there contra-indications in relation to the nature of the duties that your patient will undertake upon their return to work? Consultation with the employee In both Daubney and Passmore, the EAT held that, in sickness dismissals, the employer is required to investigate the medical condition per se and how the employee's actual medical condition impacts on them and their ability to do the job (individuals respond very differently to illness and medication and in their desire to return to work even if it is on reduced duties). The duty to consult with the employee at all stages is particularly onerous in ill-health cases, discussing the up-to-date medical reports and how the employee views the contents of the report - see Eclipse Blinds Ltd v Wright4, where the Court of Session held that only in exceptional cases is it reasonable not to consult with an employee on sick leave before dismissing them. Supportive employers should encourage retraining and extend sick pay until every possibility is exhausted. Conflicting medical evidence In relatively rare cases, two expert medical opinions may clash. For example, a treating psychiatrist may declare their patient well enough to return to work (on the grounds that work is therapy), while an occupational health physician assessing the risk to the individual and to the business may decide that the return to work is too early in their normal role. Provided that the occupational health physician has properly considered the functional capacity of the individual and the nature of the risks to the business, the employer is entitled to take the opinion of the occupational health physician in such cases. In GN Netcom Ltd v Whitwell5 the specialist told Mrs Whitwell to "give it a go" after several months off sick with tinnitus. Her condition caused disturbance to her hearing and balance. She worked in noisy conditions making ear pieces for telephone equipment. The Employment Medical Advisory Service doctor, who did not see Mrs Whitwell, observed that tinnitus had various symptoms that would be a hazard to her in the workplace. Her dismissal was held to be fair. In British Gas plc v Breeze6, Mr Breeze, a long-standing employee employed to dig trenches, had a hip problem that was exacerbated by a slip at work. His employer arranged for him to see an occupational physician, who reported that his hip condition was severe and expressed his view that he would not be fit to resume his full job. Mr Breeze, however, wanted to return to work and his GP supported him in this. The occupational physician suggested that an independent report from a consultant orthopaedic surgeon could resolve the issue. British Gas did not take up this suggestion and dismissed Mr Breeze on the basis that he was no longer able to do his job. The EAT held that further medical advice should have been sought in this case and that the dismissal was unfair. Waiting for treatment to be completed In Rao v Civil Aviation Authority7, the Court of Appeal confirmed that failing to wait for a specialist's treatment to be undertaken, which was material to the recovery or non-recovery of the employee, was fatal to an employer. In this case, Mr Rao was to go, on the orders of a Dr Williams, for a "kill or cure" therapy, ie intensive rehabilitation. Mr Rao was an air-traffic controller whose frequent short- and long-term absences had caused great resentment among his colleagues. Doubts had been raised as to whether there was any organic basis for Mr Rao's absences. Some doctors thought that he was a malingerer, with one observing that his medical problems appeared to interfere with his work but not with his leisure occupations; other doctors thought that there was, or might be, some organic basis for Mr Rao's problems and took the view that he perhaps had a very low tolerance of pain or discomfort. Mr Rao received a number of warnings about the consequences of his continued absences from work and was finally dismissed. The Court of Appeal upheld the employment tribunal's decision that the employer could and should have "stayed" any decision to dismiss Mr Rao until his latest and last attempt at treatment had been completed. Redeployment Whether or not the employer has considered redeployment is critical, both in terms of ill-health dismissals and whether or not they are deemed to be fair, but also in terms of the employer's positive duty to consider making "reasonable adjustments to the workplace" under s.6 of the DDA. In Shook v London Borough of Ealing8, efforts were made to find alternative employment for Ms Shook elsewhere within the council's organisation, suitable to her health limitations. She was notified of 18 vacant posts of roughly comparable status. She applied for three vacancies that appeared to her to be suitable and was offered one of those. She rejected the offer, however, on personal grounds. Her employer was viewed as having fulfilled its obligation to find alternative employment within the organisation. Whether and when to dismiss In cases of mental illness or where a specialist opinion ought to be sought, it is necessary to take into account whether or not the employer has considered all the available medical evidence before taking any decision to dismiss. "Incapacity on the ground of mental health is an exceptionally delicate and sensitive field," as Lord McDonald said in Thompson v Strathclyde Regional Council9. However, it is the employer's, not the doctor's, responsibility to balance the company's needs against the employee's and decide whether and when to dismiss. It may be that the employer can reasonably be held to not be able to wait any longer. Allowing for recovery or reduced duties Employers are not expected to wait indefinitely for the return of employees on long-term sick leave. In Spencer v Paragon Wallpapers Ltd10, the EAT laid down three key factors to consider when determining whether a dismissal on ill-health grounds is fair or not: the nature of the illness; the likely length of the continuing illness; and the employer's need to have the work done and the circumstances of the case. References 1. [1977] IRLR 181. 2. EAT 721/86. 3. Adapted from the BMA "Model letter to a general practitioner". 4. [1992] IRLR 133. 5. EAT 517/92. 6. EAT 503/87. 7. [1994] IRLR 240. 8. [1986] IRLR 46. 9. EAT 628/83. 10. [1976] IRLR 373.