Medical Incapacity In Employment Law

If someone is incapable of preforming his or her duties as an employee due to medical reasons it can be incredibly difficult for many employers. An employer must be able to run a business and cannot hold a job open indefinitely. But an employee should also expect some measure of compassion from the employer if they cannot work because they are sick.

There is no clear answer on when an employer can dismiss an employee on medical grounds. There needs to be justification under the Employment Relations Act 2000 and a fair process must be followed.

The Employment Court has recently reiterated that employers are able to dismiss an employee on medical grounds, particularly if the employee’s condition creates a health and safety risk in the workplace. However, employers need to be reminded on the importance of procedural fairness. In the case in question, Gillan v Amcor Flexibles (New Zealand) Limited, Amcor dismissed a long serving and skilled employee who was responsible for operating complex machinery because he began suffering regular epileptic seizures after working for Amcor for 22 years. The employee said that he was usually aware of an impending seizure at least 15 minutes prior to them happening, and was taking medication.

It was important in this case that part of the employee’s duties at times involved working from height standing on a ladder to reach machinery.

Amcor sought further medical information to assess the health and safety risk, and also considered a plan for the employee to return to work. One specialist recommended that the employee undertake a staged return to work. However, an occupational and environmental medicine specialist recommended that limitations be placed on the employee, including limiting shifts, including more periods of rest, and avoiding climbing stairs or working at height.

After considering the specialist reports, Amcor made the decision to end the employment on the grounds that it would be unsafe for the employee to carry out his full duties, and there was no time frame where a return to duties without the increased risk of injury would be possible.

The employee made a claim for unjustified dismissal. The Employment Court considered the general principles which confirmed that, so long as the decision was substantively and procedurally justified, an employer was able to dismiss an employee for a long term absence.

Procedural fairness required that the employer undertake particular steps, including:

(a) Allow the employee a reasonable time in the circumstances to recover. Dismissing an employee if they have sick days owing will not be seen as reasonable;

(b) The employer was required to carry out a fair enquiry and balance fairness to the employee and its practical business requirements;

(c) A fair and reasonable process will include notifying the possibility of dismissal and seeking input from the employee. Consideration of up to date medical evidence will be important;

(d) 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 are factors. If an employer does not follow the agreement it will almost certainly be an unfair process;

(e) Did the actions of the employer cause the employee’s condition? If yes, the employer may have to take additional steps to rehabilitate the employee;

(f) An employer is not obliged to keep a job open indefinitely;

(g) The relationship is a “two-way street”. A lack of engagement from an absent employee may count against any later complaint.


In the Amcor case the Court concluded that the employee had been given a reasonable opportunity to manage his seizures. Some 8 months had passed during which Amcor had requested comprehensive reports, looked at return to work plans, and held various meetings with the employee. Amcor had also taken into account the length of the employment, and the seniority of the employee’s position.

The restrictions one of the specialists had discussed regarding the employee’s return to work was relevant to Amcor’s decision. It had also considered a number of alternatives, including the employee working on a different machine. Overall, there was a health and safety issue, and while the employee’s condition might have been managed, returning to work on a limited basis with restrictions was not reasonable to Amcor.

So the Amcor decision not only reiterates the fair process an employer must carry out, it is also helpful where there is a risk to health and safety, even if the risk is relatively low, which may substantively justify an employer’s decision to dismiss on medical grounds.

Amcor was in a fortunate position to undertake a robust investigation over a long period of time, including considering several reports from medical specialists. It is unlikely that a small employer with limited resources would be able to devote the same effort and resources to undertaking the same level of enquiry. So more may be expected of a large well resourced employer as it will not be affected in the same manner as a smaller employer.