When an employee takes ill and is unable to work, the business often has no choice but to consider separation. We sometimes assume that a severance payment would be due to the employee but true medical redundancy under our labour law is actually quite rare.
A medical redundancy occurs when an employee is dismissed after being incapacitated owing to a workplace injury or where they contract one of the diseases that is prescribed as an occupational illness. This article will be focusing on the diseases only. Examples include anthrax infections, cancers caused by exposure to ionizing radiation, heart or kidney disease caused by lead, certain types of skin or lung cancers, and toxic hepatitis from chemicals and solvents. To qualify for redundancy, the employee would need to show that their employer’s business is one in which there is exposure to the dangerous materials.
We once received a claim for medical redundancy after the patient was diagnosed with stress. To be clear, you are absolutely not entitled to medical redundancy if you are stressed-out. Also not included on the list of occupational diseases are diabetes, hypertension or any form of mental illness.
A worker claiming medical redundancy should have a report from a doctor confirming the diagnosis. Some doctors include in their report a recommendation for the employee to be made medically redundant, but this is neither necessary nor encouraged. Once the diagnosis has been made, the entitlement to redundancy is a purely legal issue, so doctors should not raise their patients’ expectations of payment from their employers.
Often, an employer and a worker will agree to treat a disease as being grounds for medical redundancy even when it is not included in the prescribed list. There are pros and cons to this approach. A notable advantage is that redundancy payments attract less income tax than an ex gratia payment would. Note, however, that if a business pays medical redundancy in circumstances where it need not do so, it could be more difficult to defend a lawsuit for negligence brought by that employee for causing the illness. The business could be presumed to have accepted that the disease was caused by their unsafe work environment.
Medical redundancy is calculated in the same manner as a normal redundancy payment. That means that the worker needs to be continuously employed for at least 2 years to benefit. An employee who has served 2 years or more under successive fixed-term contracts that were renewed without interruption would therefore qualify for payment. In contrast, a consultant or some other form of independent contractor would not be eligible, regardless of the term of their contract, because they are not an employee. For assistance in calculating a redundancy payment, you can use Myers, Fletcher & Gordon’s redundancy calculator found at www.myersfletcher.com/redundancy
Redundancy, whether for medical reasons or otherwise, is always preceded by a termination of employment and therefore carries risk of a claim of unjustifiable dismissal. Termination of employment should always be treated as a last resort after other suitable measures have been explored. The fact that an employee has exhausted their paid sick leave entitlement and is still unable to work as before does not necessarily mean that the employee should be dismissed.
A carefully crafted employment contract is critical. It can set out the obligations and expectations of both employer and employee if the latter falls ill on the job. In the absence of agreement to the contrary, the business would be required to consider reasonable accommodation for sick employees who can still work, including the possibility of reduced hours or responsibilities (with a reduced salary), a change in shift or extra break time throughout the day. Granting unpaid leave of absence for the employee to complete treatment or therapy might also be considered reasonable, depending on the circumstances. Understandably, there are some situations where no operation can save the employment relationship and the difficult decision must be made to separate.
Gavin Goffe is a partner at Myers, Fletcher and Gordon, and is the head of the firm’s Litigation Department. He may be contacted at firstname.lastname@example.org or through the firm’s website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.