Managing incapacity: unfair dismissal

Section 6 of the Personnel Today Management Resources one stop guide on managing incapacity. Other sections.


Use this section to

Gain an understanding of the fair reasons for dismissal

Prepare a defence of fairness for a tribunal

Put in place procedures to ensure adequate processes are in place to avoid unfair dismissal claims

We tend to think that this is the least of the evils when looking at all the different liabilities that arise in the context of managing incapacity. Nevertheless, since the maximum compensatory award is a hefty £53,500 and bearing in mind that most sick employees have a limited ability to mitigate their loss, it cannot be ignored.

Potentially fair reasons for dismissal

The onus will be on you to show that the incapacitated employee has been dismissed for one of five potentially fair reasons. If you are unable to show that you have dismissed for one of these reasons, the dismissal will be held to be unfair.

  • the capability or qualifications of the employee to do work of the kind he was employed to do;

  • the conduct of the employee;

  • the employee was redundant;

  • the employee cannot continue to work in the position held without contravening some statutory provision;

  • there is some other substantial reason justifying dismissal of an employee holding the position which the employee holds.

    There are two potential fair reasons for dismissing an individual who is incapacitated for work: capability or conduct. It is fair to say, however, that over the past 10 years, tribunals have made it clear that they expect to see employers deal with this under the capability head, rather than conduct unless the employee is not co-operating.

    Procedural fairness

    A tribunal will then go on to decide whether an employer has acted reasonably in treating the potentially fair reason as sufficient for dismissal. Each case will turn on its particular facts, but there are a number of principles that the tribunal must follow in determining reasonableness:

  • has the employer acted reasonably?

  • can the employer justify its decision on the basis of the information it has?

  • size of the undertaking

  • has the correct procedure been followed?

  • is the decision to dismiss equitable?

    In the case of an incapacity dismissal, a tribunal will consider the duration of the illness and the needs of the employer. It will decide whether the employer could reasonably be expected to wait any longer for the employee. If the tirm dismisses an employee following the rejection of a claim by the insurers for benefits under a permanent health insurance scheme provided the employee's potential return to work has been proactively managed throughout the absence, it is likely a tribunal would decide that 26 weeks amounts to an appropriate period of time to wait.

    The tribunal will also consider what level of consultation the employer has had with an employee, whether it has sought medical advice and what suitable alternative positions have been offered to the employee.

    The importance of following a fair procedure cannot be underestimated and it mostly turns on good medical evidence. However, if you bring a holistic approach to managing incapacity you will be thinking in any event, about the importance of communication, the quality of the medical evidence, the evidence of risk assessments and the determination as to whether to make reasonable adjustments. In so doing you are likely to sidestep any problems in relation to unfair dismissal liability.

    Contributory fault

    A quick point on contributory fault; do not overlook this. If your employee has failed to follow a doctor's advice this may be relevant to an unfair dismissal claim for damages in relation to the compensatory award.

    FAIR PROCEDURE CHECKLIST

  • Where poor performance is an issue, discuss it with the employee and explain that he or she is not performing to acceptable standards

  • The employee should be given the opportunity to give an explanation and adequate time to improve performance

  • If any stress-related factors come to light at performance interviews, the employer will be on notice of the health risk and needs to take reasonable steps to remove the risk

  • Involve the employee in the process by asking what steps could be taken to remove the stress.

  • Where the stress relates to poor supervision or inadequate training, take appropriate steps to train managers and supervisors

  • Where the stress relates to others in the workplace, eg, stress carriers, bullying or management style, remedial steps will almost certainly involve discussion with the third party. Whether any further steps need to be taken, such as disciplinary action, will depend on the results of any investigation.


    One stop guide to managing incapacity: other sections

    Section 1: Incapacity and the law
    Section 2: Sickness absence
    Section 3: Health and safety of staff
    Section 4: How to manage workplace stress
    Section 5: Disability discrimination
    Section 6: Unfair dismissal
    Section 7: Drugs and alcohol
    Section 8: Document creation, preservation, access
    Section 9: Best practice
    Section 10: Resources
    Section 11: Jargon buster