Can it ever be fair to dismiss an employee for sickness incapacity when the employer has caused, or at least contributed to, that ill health? The Court of Appeal says 'yes', as employers everywhere breathe a sigh of relief. Junaid Haroon explains.

The case

This is a rather sad case. Suzanne McAdie had worked for the Royal Bank of Scotland (RBS) for over 20 years. She had risen through the ranks to a senior position – that of assistant corporate manager. In 1995, Ms McAdie suffered from cancer and upon her return to work opted for a less stressful, part-time position.

On a happier note, she had a baby and took maternity leave. On returning to work in 2001, she found that her assessment grade had been reduced, but it was reinstated after she raised a grievance against her manager.

In 2003, that same manager (now promoted) required Ms McAdie to transfer to another branch to cover a long-term absence. Ms McAdie did not want to move, but move she (reluctantly) did in July 2003. Even so, the move continued to be debated.

In September 2003, Ms McAdie's health deteriorated and she was signed off work sick. She raised a grievance about her transfer and managerial conduct leading up to and following her transfer. There were procedural difficulties in handling the grievance.

Ultimately, the grievance was dismissed but it was recommended that Ms McAdie return to work in a different role and in a location of her choice. By that time Ms McAdie felt it was too late.

In June 2004, RBS initiated its long-term sickness procedure. In November, RBS's occupational health team diagnosed Ms McAdie with 'severe adjustment order' resulting from alleged workplace issues including harassment. It was noted that recovery was only likely if the workplace issues were resolved.

But Ms McAdie told RBS that she did not feel she would be able to return to work. So, RBS gave her 12 weeks' notice and dismissed her.

Ms McAdie claimed unfair dismissal and the employment tribunal (ET) agreed. The ET found that Ms McAdie's incapacity was caused by RBS's handling of the grievance. The case eventually reached the Court of Appeal (CA). The CA decided that the mere fact that an employer is responsible for an employee's ill health doesn't prevent a fair dismissal.

Comment

If the ET's decision had stood, then employers found responsible for contributing – even partly – to an employee's incapacity would have been forever precluded from fairly dismissing an employee.

The CA adopted a more pragmatic approach: an employer who causes or contributes to an employee's incapacity, is expected to 'go the extra mile'. This will include exploring opportunities for redeployment and giving an employee more time to recover then would otherwise be reasonable.

But how much more time? There's no definitive point in time when it will be fair to dismiss and each case has to be considered on its own merit. Factors to take in account include: prognosis for recovery, the extent to which the employer caused the illness and whether alternative arrangements can be found, and in what timescale.

It's also worth noting that an employer who is responsible for causing an employee's incapacity is also at risk of other claims. Ms McAdie herself brought a claim of sex discrimination, although it was dismissed.

Other potential claims include disability discrimination, personal injury, constructive dismissal and claims under health and safety legislation. There's no cap on compensation for discrimination, and a successful claim in circumstances similar to those of the McAdie case could result in very substantial damages being awarded – employers beware.

Junaid Haroon is a trainee in the employment law team at Hempsons.