When Can You Dismiss an Employee for Sickness Absence?
An employee in a small business has been off work for seven months with anxiety and work-related stress. The owner has kept the role open, arranged cover and stayed in contact but the temporary arrangements are becoming difficult to sustain. The employee wants to return, although there's still no confirmed return to work date. At what point can the employer reasonably say they can't wait any longer?
Dismissal for ill-health capability can sometimes be fair but there isn't a set period of sickness absence after which it becomes acceptable. What's important is the evidence available, what a return might realistically involve and whether the business can reasonably continue to operate with the absence.
This post is for: SME owners and managers dealing with prolonged or repeated genuine sickness absence, particularly where stress or mental health is involved.
You'll leave with: a way to assess the decision and understand what the courts have considered important.
It doesn't cover suspected dishonesty about sickness or the separate issue of poor performance while an employee is at work.
Find out what a return to work might realistically involve
Before deciding how much longer to wait, the employer needs an informed view of the employee's health and likely ability to return. A fit note tells you something about their current capacity but it's unlikely to answer the questions that matter most to the business. Is a return likely within a reasonably foreseeable period? Would reduced hours help at first? Are there duties the employee could do safely, even if their normal role isn't yet manageable? What level of work might the employee realistically be able to manage over time?
An occupational health assessment can be useful here, provided the referral asks relevant questions. An SME doesn't need its own occupational health service; it can arrange an assessment through an external provider, with the employee's agreement. In our example, the owner should explain the essential requirements of the role and ask what changes could support a return. They should also discuss the findings with the employee, rather than treating the report as a decision made on the business's behalf.
If the medical picture remains uncertain, the owner needs to understand what further information would genuinely help and whether it's sensible to obtain it. An employee can decline an occupational health assessment but the employer should explain why the information would be useful and consider what decisions it can reasonably make from the available evidence.
Mental health conditions such as depression or anxiety may amount to disabilities under the Equality Act 2010 if they have a substantial and long-term adverse effect on normal day-to-day activities. Where disability is involved, employers must consider reasonable adjustments and be aware of the additional protection against discrimination arising from disability. Those protections are relevant even where the employee hasn't been employed long enough to bring an ordinary unfair dismissal claim.
If work is contributing to the illness, address that too
Suppose the employee says their anxiety developed after responsibilities expanded without enough support. It would make little sense to discuss a phased return to work while leaving the same situation and pressures unaddressed. The employer needs to understand what at work may have contributed to the problem and then make decisions about what can be changed.
Employers have a legal duty to assess and manage work-related stress risks. Acas advises carrying out an individual risk assessment when an employee reports work-related stress. For a smaller business, this can be a straightforward discussion and written record of the risks that are identified, who's affected and what action will be taken to reduce or remove the risk.
HSE's guidance identifies workload and working patterns, the control people have over their work, the level of support provided, working relationships, role expectations and how change is handled as areas to consider. The assessment should identify the particular pressures involved, what changes are needed, who's responsible for making them and when their effectiveness will be reviewed. Businesses with five or more employees must record the significant findings of their risk assessments, although keeping a written record is sensible for smaller businesses too.
The employer should also consider whether a phased return, adjusted responsibilities, different working arrangements or suitable alternative work could help. Not every suggestion will be workable in a small business but it's important to examine realistic options and explain why any have been ruled out.
A stress risk assessment looks at hazards in the work. Medical advice helps establish what the individual can manage. The employer needs both perspectives when planning a safe, sustainable return.
How long can an employer reasonably be expected to wait?
There's no fixed period of sickness absence after which dismissal becomes reasonable. The courts have reached different conclusions depending on the medical outlook, the employee's circumstances and the employer's ability to manage the continued absence.
In Spencer v Paragon Wallpapers Ltd (1977), dismissal was upheld after around two months' absence, even though medical advice suggested the employee needed another four to six weeks off. The employer had experienced an unexpected increase in demand, consulted the employee and obtained medical advice before making its decision. However, the Employment Appeal Tribunal was clear that the case didn't establish a general rule about how long employers should wait.
In BS v Dundee City Council (2013), an employee had been absent for around a year with depression. Occupational health anticipated a possible return within one to three months but the employee himself was uncertain about his recovery. Although an employment tribunal initially found the dismissal unfair, the Court of Session held that it hadn't properly weighed up the medical evidence, the employee's own views and the employer's circumstances. It sent the case back for reconsideration without deciding whether the dismissal was fair. The case illustrates why a possible return date matters but doesn't automatically mean an employer must continue waiting.
The outcome was different in O'Brien v Bolton St Catherine's Academy (2017). After more than a year's absence, the employee produced fresh evidence at her dismissal appeal suggesting she might be fit to return. The school upheld her dismissal without adequately exploring that development or explaining why it couldn't manage a little longer. The Court of Appeal upheld findings of unfair dismissal and disability discrimination. It also recognised that while the disruption caused by prolonged absence may sometimes be obvious, employers may need to provide specific evidence of why further waiting would cause difficulties.
The courts also recognise that waiting indefinitely isn't always reasonable. In McAdie v Royal Bank of Scotland (2007), the employer had contributed to the employee's illness but both the medical evidence and the employee's own comments indicated no realistic prospect of returning. The Court of Appeal upheld the dismissal as fair. An employer's contribution to an illness may mean greater efforts or more time are reasonably expected but it doesn't necessarily prevent dismissal.
For an SME, the difficult question is often whether waiting a little longer is likely to make a meaningful difference. In our example, the owner needs to consider what the latest medical advice says about a possible return, whether the changes identified through the stress risk assessment could help and how much longer the existing cover arrangements can realistically continue.
If a return looks possible within another six weeks and the business can manage until then, that's relevant. If there's no foreseeable return and the arrangements are becoming unsustainable, the owner should be able to explain the specific difficulties and why further waiting isn't reasonable. The size and resources of the business matter, although any disability-related obligations must still be considered.
What about genuine but unpredictable absences?
A different difficulty arises when an employee returns to work but has recurring periods of illness that are hard to predict. They may perform well when they're present, yet short-notice absences repeatedly leave the business struggling to cover essential work. This needs to be considered as a sickness absence issue, rather than treated as misconduct.
In Lynock v Cereal Packaging Ltd (1988), the Employment Appeal Tribunal recognised that an employee being fit at the time of dismissal doesn't automatically make dismissal unfair. Employers need to consider the overall absence history, including the frequency and duration of absences, periods of good health, the likelihood of recurrence and the effect on the business. The court also emphasised the importance of approaching genuine illness with sympathy and understanding.
Where absences may be linked to a disability, employers must also consider whether reasonable adjustments are needed. In Griffiths v Secretary of State for Work and Pensions (2015), the Court of Appeal confirmed that an attendance policy could disadvantage disabled employees even when it applied equally to everyone. Although the particular adjustments requested weren't considered reasonable in that case, employers shouldn't assume that standard absence trigger points will always be appropriate.
For an SME, the practical approach is to discuss the recurring absences with the employee, seek medical advice where it could help clarify future attendance and explore adjustments that might make the situation more manageable. The business should also record the actual impact of the absences, perhaps repeated cancellations of customer appointments because nobody else is trained to cover. If continued attendance difficulties could put the employee's job at risk, they need to understand that and have an opportunity to discuss the situation.
Do employers have to give several warnings before dismissing for ill health?
Not necessarily. A genuine medical incapacity case isn't the same as misconduct or poor performance that someone can reasonably be expected to correct. In Holmes v QinetiQ Ltd (2016), the Employment Appeal Tribunal confirmed that the Acas disciplinary Code didn't apply to a dismissal based on genuine ill health where no culpable conduct or performance issue was alleged. But a fair process is still essential.
For an SME, the process needn't be complicated. The employer should bring together the absence history, medical advice, discussions with the employee and any adjustments or alternative arrangements already considered. If dismissal is being considered, invite the employee to a formal meeting, explain that their employment may be at risk and give them a proper opportunity to respond. Any decision to dismiss should be confirmed in writing, with an opportunity to appeal.
You don't need a separate medical capability policy but you should follow any relevant sickness absence or dismissal procedures already in place, including contractual requirements.
And don’t forget that meetings may themselves need adjusting where an employee's mental health makes attendance difficult. Allowing a companion, changing the format or obtaining a written response can help ensure the employee is properly involved.
What should the business be able to explain before deciding?
A medical capability dismissal can be fair but it needs to be a reasoned decision made after proper consultation. Before reaching such a decision, it's recommended that a manager is able to answer these questions:
What does the current medical information say about a return or about the likely pattern of future absences?
Have we examined any work-related causes, assessed stress risks where relevant and acted on what we found?
What adjustments, temporary arrangements or suitable alternative work have we considered and which options could realistically help?
What practical difficulties is the absence causing this business and what would be the effect of waiting longer?
Has the employee had a meaningful chance to respond, including to any new medical evidence, before the decision and on appeal?
If those answers are uncertain, there may still be useful work to do before making a dismissal decision. If they're supported by the evidence, the employer will be in a better position to explain why further waiting or support isn't reasonably workable. That won't make a difficult decision easy, but it gives both the employee and the business a fairer basis for reaching it.
Disclaimer
This article provides general information and practical guidance for employers in Great Britain. It isn't legal advice and shouldn't replace advice on individual employment circumstances. Different employment-law rules apply in Northern Ireland.
