The Government's recent announcement of changes to the Holidays Act 2003 has again put the spotlight on sick leave.  Every winter, as if on cue, employees absences increase as the flu does the rounds.  For the most part, use of sick leave is genuine and employees return to work after a few days, with minimal impact on productivity.  A more challenging situation for employers arises where sick leave is being misused or where an employee is suffering a genuine medical condition and his extensive absences impact on his ability to do his job.

Dealing with misuse of sick leave

If an employee exhibits a pattern of regular weekly absences or frequently phones in sick on a Friday or Monday, employers may begin to doubt the genuineness of her leave.  Particularly where an employee;s terms and conditions of employment provide for additional paid sick leave over the standard 5 days' statutory entitlement, there is a potential for misuse and, consequently, reduced workplace productivity.

Under the current law, employers may request a medical certificate in two situations, the first being where an employee is absent for three or more calendar days.  The employer can also request a medical certificate where the employer has reasonable grounds to suspect that sick leave is not genuine, provided that it provides the employee with notice of its concerns as to the authenticity of sick leave and covers the reasonable cost of obtaining proof.

As part of the proposed changes to the Holidays Act, an employer may soon be able to request a medical certificate even for an absence of only one day, provided the employer agrees to meet the cost and makes the request.

Unions and employee groups have argued that the provision is draconian since it would remove the current requirement that an employer must first have reasonable grounds that sick leave is not genuine.  Some have argued that the change could be impractical given that an employee may be too unwell to make a trip to the doctor or may be unable to secure an appointment on their day off.

In reality, it seems unlikely that employers will elect to incur the expense of covering an employee's medical certificate for an occasional, short term absence, even if they have the power to do so.  Employers will of course continue to be bound by the duty of good faith in their dealings with employees and any use of the proposed discretion will be subject to that.

Medical incapacity

In addition to dealing with workers who misuse sick leave, an employer may find itself facing a situation where an otherwise good employee becomes genuinely unwell and needs to take regular and prolonged absences from work.  Once sick leave used exceeds the statutory or contractual entitlement, an employer may permit additional paid sick leave at its discretion or, alternatively, require an employee to take unpaid leave or annual leave.

One of the key duties implied into an employment agreement is the obligation that an employee will be available and ready to work his contracted hours.  Long absences will impact upon an employee's ability to discharge their responsibilities of his roe and can consequently have an adverse impact on workplace productivity, particularly in small businesses where tasks cannot easily be reassigned.  Consequently, employers cannot reasonably be obliged to hold open a job indefinitely for an employee who is absent due to ill health.  This has been recognised by the Employment Court which famously ruled in Hoskin v Coastal Fish Supplies Ltd {1985} ACJ 124 that there may come a point "at which an employer can fairly cry halt" and dismiss an employee on the grounds of medical incapacity.

All the same, the courts consider termination of employment a last resort and expect employers to go to considerable lengths to accommodate a sick employee.  Any decision to dismiss will be subject to the standard test of justification: whether the employer's actions were what a fair and reasonable employer would have done in all of the circumstances at the time the dismissal occurred.  Following a proper process and dealing withe employee in good faith are therefore paramount.

Proper Process

The first step in dealing with an ongoing absence is to write to an employee outlining the company's concerns and inviting her to a meeting.  This provides an opportunity to inquire about the nature of the employee's incapacity and ascertain the prospect of recovery.

As part of its inquiry, an employer may request that the employee provide a medical report detailing his condition, but only if this request is fair and reasonable and only if the employee gives his consent.  In the case of Radio NZ Ltd vs Snowdon EC Wellington WC 24A/03, 17 July 2003, the Employment Court found that the employee concerned was entitled to refuse to provide medical information, as to do so was evidence of bad faith.  Where express provision is contained in an employment agreement, the employer may require an employee to undergo a medical assessment by a company-appointed doctor, but only with the employee's consent.

Where medical information suggests there is a reasonable prospect of recovery, an employer should consider options for rehabilitation, such as a gradual return to work.  Alternatively, a company may choose to employ someone on a fixed-term basis to cover the duties of the ill employee, pending her recovery.  In the case of Jack v Ministry of Justice {2004} 1 ERNZ 516, the court ruled that the employer was in breach of its obligations after it made no effort to rehabilitate an employee after she provided evidence that her health would permit her to work part-time.

Having completed a thorough inquiry, an employer should consider termination only where it has been established that there is no reasonable prospect of recovery or where an employee's role is such that a temporary cover or gradual return to work is not suitable.  Even then, the courts will expect an employer to have explored alternatives to dismissal and to have followed a fair and reasonable process.  To that end, the employee with an opportunity to provide additional medical information prior to his termination.

Summary

The Government's proposed amendments to the Holidays Act will permit employers to require a medical certificate even where employees are absent for less than three days, provided they cover the associated costs.  Despite criticism of the change, it seems unlikely that the power will be widely used and employers will likely request proof of illness only where they have real concerns as to whether sick leave is genuine.

The law around dismissal for medical incapacity remains unchanged.  Although an employer cannot reasonably be expected to hold open a sick employee's job permanently, the courts treat termination as a last resort and suitable alternatives to dismissal should always be explored.

(SOURCE: By John Christie, Solicitor, Kiely Thompson Caisley, a specialist employment law firm, New Zealand Employers Bulletin 13th August 2010)