An employee who is absent from work for a long time because of sickness or ill-health is entitled to a certain level of sympathetic consideration from their employer. An employer is not however required to employ an employee indefinitely in circumstances where the employee has been unfit for work for some time.

Absence Management

Employers should have procedures in place for dealing with medium to long term absence. A consistent application of the procedures assists an employer in demonstrating reasonableness if capability related dismissals are subsequently challenged by the employee.

Generally speaking the questions to be asked are:

  • What is the duration of the employment?
  • How long it is expected the employment would continue i.e. to normal retirement age/fixed-term/ specific purpose?
  • What is the nature, effect and likely duration of the illness?
  • What is the medium to long prognosis/medical opinion on the likelihood that the employee will return to work?
  • What do the terms of the sick pay policy provide – has the employee exhausted the sick pay scheme? »» In all of the circumstances would it be reasonable to expect an employer to wait any longer for the employee to recover and resume his or her duties?
  • Is there a disability/PHI Scheme and what is the employees status with regard to same?

Contracts of employment and/or the Company sick pay policy (if applicable) should provide for the right to refer an employee to a medical practitioner. It is also important that the contract and the policy explicitly provide that the employee authorises such medical practitioner or specialist to disclose the results of their examinations to the Company. Employee should, after a certain period of absence, be referred to a nominated medical practitioner. Depending on the outcome, a step plan should then be devised regarding subsequent assessments/return to work plan and/or specialist intervention depending on the nature of the illness.

Where the reason cited for the absence is work related stress, employers should be mindful that personal injuries claims could be initiated and increased vigilance should be exercised. Depending on the circumstances surrounding the certification, the company’s employer’s liability insurer may need to be notified of potential legal proceedings. It is recommended that medical referrals are expedited in cases of work related stress – with almost immediate referral being optimal.

Dismissals on the Grounds of Ill Health

In all cases of dismissals on the grounds of ill health is being considered enquiry should be made as to medium to long term capacity to return to work. The employer should consult with the employee regarding ability to return to work (or return to alternative position where appropriate) and the steps that will be taken by the employer if the employee is not in a position and/or willing to return to work.

Permanent Health Insurance (PHI)

A PHI policy may be in place to provide benefits to an employee who is unable to work by reason of illness or injury. PHI polices commonly defer the payment of benefits until the employee has been unable to work for a specified period. The “deferment period” differs in length from policy to policy. Employers considering the position of an employee on the expiry of sick pay entitlements (if any) should review their PHI policy carefully and well in advance of dismissing an employee. Dismissing an employee before establishing if they may be entitled to benefits under a PHI policy or whilst they are in receipt of benefits could entitle the employee to claim damages for breach of contract for being wrongfully deprived benefits under the employer’s PHI policy.

Employers need to thread very carefully where a PHI policy is in place and the employee has not yet passed the deferment period (employees should be afforded the opportunity to access the scheme). Those in receipt of PHI are regularly assessed by the insurers to determine eligibility. In many instances employees who have availed of PHI for some time may be rendered ineligible for benefits by the insurers. Employees in receipt of PHI remain in the employment of the employer, therefore the employer is faced with a predicament when PHI cover is pulled. The employer should send the employee for an assessment to ascertain fitness to return to work. There are often situations where the company doctor certifies the employee unfit to work and the insurer has taken the employee off cover. It is a matter for the insurer to determine the what constitutes “incapacity” within the scope of the particular policy. There may be a conflict between an employee’s fitness to return to his or her job and the definition of “incapacity”. It is likely that these will not always be aligned. An employer will then be required to assess its options in line with the criteria set out above.

Ill Health Early Retirement

Early retirement by reason of ill-health may be an option for employees who are unable to continue working. Many occupational pension schemes allow members to retire and claim their pension before normal retirement age if they are suffering from ill-health or incapacity. Depending on the age of the employee and the terms of the scheme, this is undoubtedly something that should also be explored by employers before a decision to dismiss an employee is taken.

Case Law

Doherty v Marks and Spencer [2013] 5 JIEC 0102

The employee was employed from May 1993 as a sales advisor until the time of her dismissal in May 2010. The employee was requested to transfer to the food section of the store. The employer was advised that the employee could not do so due to a historic non work related injury. In the alternative, the employee was requested to transfer to the café. The employee claimed at the hearing that she was told that if she did not move to the food section – there was no job for her. The employee did not take up the offer in the café as she was absent on sick leave from 5 May 2009. A meeting was held in March 2010 where the employee stated she was unfit but work but would revert with a date for her return to work in April 2010. The employer then wrote to the employee noting they could not keep her position open indefinitely and if she could not return to work on 10 May 2010 she would be dismissed on the grounds of ill-health. The EAT upheld the dismissal as being fair.

Kennedy v Leonard & Tolan [2011] 5 JIEC 1101

The employee had been employed as a secretary from 11 April 2007. Issues arose regarding the claimants punctuality and also in relation to a pay rise and the respondents discussed those matters with the claimant at various meetings. In or around mid- 2008 the employee claimed she was being bullied and was on sick leave for some time. In order to avoid over loading the claimant, the employers hired a temporary secretary. The claimant suffered ill health again in January 2009 and subsequently she was absent on sick leave from 30 March 2009. The employer suggested mediation and she was invited to attend a meeting on 8 April 2009. The employee did not attend the meeting, claiming she was medically unfit. Further attempts were made to resolve the employee’s workplace concerns by way of mediation. Consequently, by letter dated 3 September 2009 the employee was formally dismissed from her employment.

The EAT upheld the dismissal noting that in all the circumstances, the employer acted reasonably in relation to the employee. They attempted to resolve the alleged bullying informally and attempted to arrange an investigation, which the claimant refused to attend on health grounds. When the claimant was subsequently medically examined, the medical conclusion that it was unlikely the claimant would ever be able to return to her employment without experiencing undue stress. This was found by the EAT to justify the decision to dismiss.

McGrath v Irish Distillers [2007]

The employee was employed by Irish Distiller since September 1985. In September 2001 she went on maternity leave, returning in May 2002. After her return she was unhappy with the case against the company under the Maternity Protection Act. She won her case in January 2005. In August 2004 she had a miscarriage and subsequently was absent from work on sick leave until her dismissal on the 28th October, 2005. The Tribunal held that the employee was unfairly dismissed. The procedure adopted by the employer in dismissing the employee was unfair by reason of the fact that undue haste was used. After twenty years’ service with the respondent the claimant should have been spoken to by members of management prior to making the decision to dismiss her. As the employee was unavailable for work due to illness, she had suffered no loss and therefore was entitled to the minimum permitted compensation (4 weeks’ pay). The claimant was also entitled to eight weeks minimum notice under the Minimum Notice and Terms of Employment Acts 1973 to 2001.

Aspden v Webbs Poultry & Meat Group (Holdings) Ltd

The employee commenced employment with Webbs in 1978 and held various managerial positions. The Company introduced a PHI scheme after the employee commenced employment. The terms of the scheme provided that if an eligible employee was prevented from work by reason of sickness or incapacity, then he would be paid an amount equivalent to three quarters of his last annual salary until death, retirement or the date on which he ceased to be an eligible employee, that is, on termination of employment. The employee suffered a bout of influenza in 1988 and was absent from work thereafter due to angina. A number of months after the employee commenced sick leave, he was orally given three months’ notice of termination, subsequently confirmed in writing. The employee brought proceedings for wrongful dismissal, claiming that it was an implied term of his contract that, save for summary dismissal, his employment would not be terminated during any period when he was incapacitated for work. The Court held in favour of the employee in this instance.

Entitlement to Annual Leave During Sick Leave

Since 2009, there has been much uncertainty regarding the accrual of annual leave entitlement during periods of sick leave.

Before 2009, the legal position in Ireland under the Organisation of Working Time Act 1997 (the “Act”) was that employees do not accrue annual leave during periods of sick leave. In January 2009, the Court of Justice of the European Union (“CJEU”) held in the joint reference of Stringer v Revenue and Customs Commissioners and Schultz- Hoff v Deutsche Rentenversicherung Bund (“Stringer”) that an employee who was on sick leave and was therefore unable to take his paid annual leave was entitled to take it at a later time, after the period of sick leave had ended. Former employees in the same position were entitled to compensation in lieu of any accrued but untaken annual leave.

On its face, Irish legislation on the accrual of annual leave during sick leave is not consistent with the decision in Stringer. There have been many subsequent decisions from the CJEU which support Stringer as such this creates a dilemma for Irish private employers.

In Ireland, the Stringer decision has been distinguished by the Labour Court in the case of Roskell Limited v Rikmanis in 2012. The Labour Court did not have to determine the hard issue in this case as the employee remained on sick leave when the case came before the Court. On this basis, he was not in a position to take his leave. The Court did note however that as Roskell Limited was a private employer – the doctrine of direct effect could not apply and as such the decision of the CJEU has either no application to private employers. The Court went onto state that “The principles applicable in deciding whether the Court can depart from a seemingly clear provision of domestic law so far as to give a meaning consistent with the wording and purpose of a Directive involves difficult and complex legal questions“. To date the Court have not addressed these complex questions which leaves an employer in an unsatisfactory situation as to what the appropriate course of action should be. Our view is that the Act and Directive are inconsistent. The inconsistency would appear to require legislative intervention. It seems likely that were a question to be referred to the CJEU on this point, that the CJEU would find that the Directive has not been appropriately implemented.