When is it fair to dismiss on grounds of ill-health?

By Ian Hunter, James Froud


Under the Employment Rights Act 1996, ‘capability’ is one of the potentially fair reasons for dismissal. However, an employer must show that it was reasonable in the circumstances to dismiss the employee for reasons relating to capability.

In BS v Dundee City Council, the Scottish Court of Session considered the case of an employee who had been dismissed following a period of sickness absence lasting over a year. The dismissal occurred nine days after the employer was presented with a medical report for the employee which estimated that he should be fit to return to work within one to three months.

The Employment Tribunal held that no reasonable employer would have dismissed the Claimant only nine days after receiving such a report. Further, the Tribunal held that the procedure adopted by the Respondent in reaching its decision to dismiss the Claimant was not reasonable. It considered the fact that the employee's dismissal may have caused him distress, and could have contributed to the recurrence of his symptoms.

The Respondent appealed to the Employment Appeal Tribunal which upheld their appeal. The EAT criticized the ET's decision on a number of grounds and held that the ET was wrong to conclude that the dismissal was unfair without considering whether the employer could reasonably have been expected to wait any longer before dismissing the employee. The Scottish Court of Session agreed.

The relevant case law states that:

  • An employer must carry out a ‘balancing exercise’ between the likely length of the continuing absence and the needs of the business. In this case, the employee had exhausted his entitlement to sick pay and the employer (being a large company) had a team to cover such absences, but also had ongoing obligations in respect of the employee. It is essential to consider the question of whether the employer can be expected to wait longer.
  • Provided that an employer has investigated the cause of the absence and has obtained proper medical evidence, it is not relevant to ask whether there was more that the employer could have done. In this case, the employer had an up-to-date medical report and could rely on that.
  • An employee’s view on his health must be taken into account, though this is a factor that can operate both for and against dismissal. In this case, when called to a meeting to discuss the possibility of dismissal, the employee said that he did not consider his health to be any better.

Points to note:

  • The Employment Tribunal in this case considered it relevant that the employee had 35 years' continuous service. This is an important factor to be considered when deciding the reasonableness of a dismissal for misconduct. However, the Court of Session considered that it is not automatically relevant to a dismissal for incapacity.
  • This was a claim of unfair dismissal. The employee did not claim disability discrimination. In cases where a claim for disability discrimination is made, there are other tests for the employer to consider.