Lawful dismissal on medical grounds

8 August 2018

The Employment Court has confirmed the core principles to follow in situations where employers are seeking to end an employment relationship on medical grounds. In Lyttleton Port Company v Arthurs 2018, Mr Arthurs was an employee cargo handler of the company. He suffered PTSD as a result of witnessing a fatal workplace accident in 2008 and then having a friend and colleague become involved in a second fatal workplace accident in 2014. He took sick leave in December 2014 using a series of medical certificates, and during this time suffered a non-workplace shoulder injury. In July 2015, medical information from his doctor as well as a further medical specialist evaluation obtained by the company indicated no clear recovery time and the possibility that he might never recover. In December 2015 the company terminated his employment on the basis of medical incapacity and unlikelihood of a return to work in the foreseeable future.

The Employment Relations Authority agreed with Mr Arthurs’ claim that this dismissal was unjustified. On appeal, the Court found that the employer can fairly ‘cry halt’ in certain medical incapacity situations and overturned the Authority’s decision. The key principles the Court set down for consideration in such cases included:

  • provision to the employee of a reasonable period of recovery time;
  • the use of fair enquiry and decision making to balance fairness to employee and practical business requirements;
  • the application of a fair and reasonable procedure which includes seeking the employee’s input and notifying the employee of the possibility of dismissal;
  • the terms of any relevant policy and the employment agreement including consideration of the nature of the employee’s position and the duration of employment to inform what is reasonable;
  • reasonable steps taken to rehabilitate the employee where the employer’s actions have caused the employee’s condition;
  • recognition that an employer is not obliged to keep an employee’s job open indefinitely; and
  • lack of positive engagement by employee.

On the facts of this case, the Court found that the company had acted reasonably in pursuing an enquiry process and was objective in its consideration of the medical information it had obtained before making its decision. The Court was also critical of the employee who had shown a lack of constructive engagement throughout the process.

(SOURCE: Quigg Partners, July 18, 2018, retrieved from

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