Your rights: Forced out by sickness

By RICK HARGREAVES of Phillips Fox

If someone is facing forced medical retirement by an employer what obligations does the employer have to ensure things are carried out in accordance with employment law?

If the employee sees medical retirement as potentially detrimental to their career - for instance, that it may create difficulties with prospective new employers - what options do they have?

If they are forced to medically retire while still receiving ACC compensation how do all the payments work? Will the fact that they are paid out an amount equivalent to notice affect their right to compensation?

Your question describes what is known as a dismissal for incapacity. If an employee is sick or injured on a long-term basis, and not able to resume work, an employer is not obliged to hold their job open indefinitely. However, a dismissal based on incapacity must be justified and be carried out in a fair manner. The Employment Court has said that the test for a justified incapacity dismissal is whether the point has come "at which an employer can fairly call halt".

Some of the factors that an employer must consider before deciding whether to dismiss an employee on incapacity grounds include:

* The terms of the employment agreement.

* Whether the employee would be likely to have been employed long term if they had not been incapacitated.

* The nature of the employment, for example, whether the employee holds a key position.

* The nature of the illness/disability, how long it has continued, and what prospects there are for recovery.

* How long the employee has been employed to date - for instance, whether they are a long-standing, valued employee.

* Whether there is an alternative to dismissal, such as a return to work with adjusted duties.

If an employee believes that an incapacity dismissal will be detrimental to their career, they should try to retain their job by providing their employer with a "return to work plan".

The plan will outline the assistance (medical or otherwise) that the employee is receiving to improve their incapacity and give a timetable setting out the anticipated return to full or modified duties. An ACC case manager should be able to help with this.

A new employer will always want to be informed of any incapacity that may affect a prospective employee's ability to perform the job that is on offer. Often there will be an obligation in the job application form or the employment agreement that such relevant information be disclosed to the employer.

If an employee does not disclose relevant incapacity information an employment relationship problem may arise when the new employer discovers the true situation.

It is always wise for an employee to address their incapacity by trying to find a rehabilitation programme that will help them to return to full duties.

The ACC will take into consideration any income paid to an employee when it assesses that person's entitlement to compensation.

An employee who suffers a personal injury and is unable to work will continue to be entitled to ACC compensation for loss of earnings after their employment ends, as long as their incapacitation continues to prevent them from working.

If you are paid out an amount in lieu of notice, ACC could say that you have not lost any earnings during the period so you will not be entitled to earnings related compensation.

Employment Relations Service

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