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Medical Incapacity

Published 01 Dec 2013

Illness (or injury, incapacity) may be grounds for terminating the Employment relationship if the condition adversely affects the Employee's ability to carry out tasks the position requires.

It has been well established that the Employer is not expected to hold a position open indefinitely if the Employee is unable to perform his or her duties due to illness, injury or some other incapacity. Thus, there can be a point where the Employer can fairly "cry halt"1. The Employer will still need to show that its decision to terminate was substantially justifiable and procedurally fair.

Since medical can lead to the termination of the Employment relationship at the Employers’, Employers will need to take into account a number of factors before making the decision. These include:
  •  The Employment Agreement ('EA'), EAs generally provide a good starting point as most address medical incapacity;
  •  The nature of the Employment and the position held by the Employee.  Some positions may be easier to keep open for longer periods of time than others;
  •  The nature of the illness or injury, its duration and prognosis; and
  •  Other matters that may be of relevance.

In making a decision the Employer needs to be procedurally fair and then make a decision accordingly.3

Employers should seek advice before initiating the process. Our consultants are able to help, call us now on 0800 15 8000. 

In addition, our Discipline and Dismissals eBook contains an informative section on medical incapacity. Employer Support Package members can read this in the Library section of the Employers Toolbox Online.

1 Hoskin v Coastal Fish Supplies Ltd [1985] ACJ 124. 127.
2 Angus v Ports of Auckland Limited NZEmpC AK [2011] NZEmpC 160 [25 November 2011].
3 Angus v Ports of Auckland Limited NZEmpC AK [2011] NZEmpC 160 [25 November 2011].