Medical Incapacity

15 June 2018

This issue was recently addressed in the Employment Court in Lyttelton Port Company Ltd v Chris Arthurs [2018] NZEmpC 9.

Briefly, the facts that gave rise to the case were that Mr Arthurs was a cargo handler with the company since 2000.  In 2008, he witnessed a fatal workplace accident and then, in 2014, a friend and colleague of Mr Arthurs’ was involved in a second fatal workplace accident.  This led to Arthurs suffering from PTSD arising from the accidents, and going off work (sick) in December of 2014.  He did not return, and provided numerous medical certificates from his GP, although these had very little information about his condition or ability to return to work.  Additionally, and compounding matters, Mr Arthurs also suffered a non-workplace injury to his shoulder.

Seven months later, in July 2015, the company began an enquiry into Mr Arthurs’ medical status, and sought a prognosis for recovery and ability to return to his role.  As part of this enquiry, LPC obtained a medical report from Mr Arthurs’ doctor, as well as an independent specialist evaluation.  The medical information indicated that there was no clear recovery time and that it was possible he would never fully recover.

Based on the above, LPC terminated Mr Arthurs in December 2015 on grounds of medical incapacity on the basis that there was no likelihood of him returning to work in the foreseeable future.

The matter went to the Court, and the Court confirmed that there comes a time when an employer "can fairly cry halt" in medical incapacity situations, and set down the following key principles to consider in such cases:

  • The employer must give the employee reasonable time (in the circumstances) to recover from the injury or illness; 
  • The employer is required to carry out a fair enquiry and then to make its decision about whether to dismiss the employee, balancing fairness to the employee and the reasonable dictates of its practical business requirements; 
  • Fair and reasonable procedure will include notification of the possibility of dismissal and a fair enquiry enabling an informed decision, including seeking input from the employee; 
  • The terms of the employment agreement and any relevant policy, the nature of the position held by the employee and the length of time the employee has been employed with the employer are factors that are likely to inform an assessment of what is reasonable in the particular circumstances; 
  • Where the actions of the employer caused an employee’s condition, the employer may have an ongoing responsibility to take reasonable steps to rehabilitate the employee; 
  • Even in a large organisation, an employer is not obliged to keep a job open indefinitely; and 
  • The relationship is a "two-way street". A lack of positive engagement from an absent employee may count against any later complaint.

In spite of these guidelines, which we view as helpful, this remains a very complicated area, as any terminations (even on medical grounds) may be challenged by way of personal grievance as an unjustified termination.

In our view the core issue is not how long the employee has been off work, but the prognosis for recovery.  If the prognosis is for a long or uncertain period of absence, then termination may be justified.  With the correct process medical terminations can be successfully managed and may ultimately be in the interests of both parties.  Contact us for advice on your specific situation.

You can access a detailed summary of the case here

You can access the full decision of the Court here.