medicine for incapacity

Ending Employment For Medical Incapacity 

I’ve written before about what counts as a good reason to dismiss an employee. Those reasons include misconduct, poor performance, redundancy, and even incompatibility.

But what if your employee is physically incapable of working?

Medical incapacity may seem like a harsh reason to end someone’s employment. But it can be a fair basis to dismiss, in rare cases.

Why is that so?

Continuing to keep an employee on your books who no longer actually works for you, has its costs.

The work you employed them to do, may not get done. You may be unable to fill their role on a temporary basis. Other staff may have too much on their plates to cover the extra duties.

If you’re facing this pressure, you’re not obliged to hold the sick employee’s job open forever.

But remember, the onus is on you to justify ending employment. So you shouldn’t rush to dismiss when your employee catches a cold.

It will more likely be fair to end the employment if:

  • Your employee is off work for several months, and will be unable to work for the foreseeable future; and
  • You cannot be reasonably expected to hold your employee’s job open for them in the meantime.


At what point can you say the employee is no longer physically able to work?

You can’t dismiss someone at the first sign of an injury or illness. They may shortly recover. Moreover, their employment agreement will likely allow them time off for sick leave. You must allow them at least that time.

Nor can you dismiss them because they haven’t been at work for several months if they are likely to return soon.

But if several months pass by and the employee still has not returned, it’s time to dig deeper.

You need to know more about when the employee is likely to come back. Or if they will come back in the foreseeable future.

If the employee has no likely return date, that will put you on safer ground to consider dismissal.

To make that call, you’ll need information from your employee about their likely recovery time. We’ll deal with that below.


At first you may find it easy to cover for someone who is off work because of an injury.

But that may start to wear thin when the employee doesn’t return to work after many months.

The person providing temporary cover may want permanent employment. If you don’t give it, they’ll leave, and you’ll be back to where you started.

Or maybe the job is difficult to cover on a temporary basis. Perhaps there aren’t many candidates who can do the work your sick employee does. Or perhaps other staff have too much on their plate to do the extra work of covering for the sick employee.

The more difficulty your business faces, the more likely it is you’ll have good reason to dismiss.


What information do you need to decide whether to dismiss? You already know about the problems your business faces. You’re dealing with that daily.

What you don’t know is when, or if, your employee will return to work. The only way to get that information is to ask the employee.

A good employment agreement will let you request your employee to undergo a medical examination. The examination will be at your expense, but you should have the employee’s consent to review the results.

If the employee doesn’t want to be examined, or you don’t have the right to request them under their employment agreement, it’s unlikely you can force them. But you can tell them that you are considering whether to end their employment. If they don’t provide the information you seek, you’ll have to make a decision based on the limited information about their incapacity that you do have.


That leads us into a fair process. A fair dismissal will be both for good reason (e.g. medical incapacity) and be carried out fairly.

The first step in a fair procedure in this case looks like writing to the employee:

  • to advise you are considering whether their employment can continue given their apparent incapacity;
  • inviting them to a meeting to provide you wih information about their likely recovery and to discuss any alternatives to dismissal; and
  • advising them that dismissal may result and that, because of the serious nature of the meeting, they may bring a support person.

As with any fair process, the key is communication. Let the employee know what you are thinking before you make a decision. Tell them the options as you see them. Then, once you have met with them, carefully consider their feedback before you finalise your decision.


In considering the employee’s feedback, you need to consider any alternatives to dismissal. Your meeting with the employee may give rise to other options. You are obliged to consider such alternatives to dismissal. These could include:

  • Offering return to work with light duties;
  • Allowing the employee to return part time; or
  • Considering a different role for the employee.

A reasonable employer will do all they can to aide in the employee’s recovery. So you should consider these options as part of your consultation with the employee. Only if you have good reason to refuse these options should you move to dismiss.


Ending the employment of a medically unfit employee is a difficult matter. You can’t rush things. You need to give the employee sufficient time to recover.

If after a reasonably lengthy period there is still no likely return-to-work date, and you cannot continue to hold their job open, you might dismiss.

But you must only dismiss if you are truly of the view they won’t return soon and you cannot possibly accommodate their return to work. Those are high thresholds to meet.

The fairness of your conclusions will depend a great deal on the quality of the information you have at hand. Get as much information as possible before you decide whether to dismiss. Ask the employee to provide access to their doctor and copies of medical records. Speak to the doctor if you can.

Communicate with the employee all along the way. Ultimately, if you act fairly, you may find that the employee reaches the same conclusion that you do as it slowly dawns on everyone involved that termination of employment is the only realistic answer.

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