Medical Incapacity

Medical Incapacity

What are the rules?

People get hurt & suffer illnesses, sadly that’s part of life. Hopefully genuine cases will be given compassion and support to ensure employees early return to work. Sometimes this is not possible. 

This blog will delve into the impact medical issues has at work and what you need to know as an employer. We’ll look at relevant case law, learnings and timeframes and as usual the reminder above all else to seek advice early on. 

Quick Tips

  1. Check the prognosis and gather relevant information
  2. Assess all available options
  3. Consult, consult, consult!

Case Law

There is a fair bit of case law that looks into medical capacity – two cases I will draw attention to are Lal v The Warehouse Ltd and Morton v The Farmers’ Trading Company Ltd.

In Lal v The Warehouse, Ms Lal sustained an injury to her ankle while at work on 31 August 2012. In July 2013 she was assessed as able to perform light duties for 5 hours per day but did not return to work in any capacity from October 2013. Ms Lal refused to return to work to undertake her rehabilitation despite the measures The Warehouse has put in place to facilitate it. Ms Lal’s challenge against The Warehouse was dismissed on 3 October, and her dismissal was justified. 

In Morton v Farmers, Ms Morton hurt her wrist at work on 11 April 2019 during her work. Ms Morton attended Physiotherapy and was active in providing information to her employer (Farmers). Ms Morton went from being able to work light duties to no duties for prolonged periods. By 4 December 2019 Ms Morton’s employment ended and her claim for unjustified disadvantage was unsuccessful.


We can derive from these cases that employers have an onus of good faith, as usual, to gain all relevant information and to assess all possible options when dealing with injuries and/ or illnesses at work and to seek comment from the employee before making their decision.

It is well established that an employer is not bound to hold a job open indefinitely for an employee who is unable to attend work. An employer will be required to prove that they had both 1. substantive justification and 2. a procedurally fair process when it dismisses an employee.

Key points to note, In Lal v The Warehouse, Chief Judge Inglis set out this broad framework in which dismissals for medical incapacity should be assessed.

  1. was the employee was given a reasonable opportunity to recover, taking into account the employment agreement, any relevant policy, the nature of the position held by the employee and the period of employment?
  2. did the employer undertake a fair and reasonable inquiry into the return to work prognosis engaging appropriately with the employee. Such an inquiry is likely to involve seeking and considering relevant medical information?
  3. were any comments of the employees fairly considered before the decision to dismiss was made?


The timeframes will largely depend on a few factors, some of them are:

  • the specific nature of the illness/ injury – what’s the prognosis?
  • agreements and policies/ procedures
  • alternative solutions – what light duties are available?

Employers should be aware that a dismissal for medical incapacity will take many weeks if not months.

Other factors

Employers will have to understand if the employee is on ACC or not so they can determine what other payments they are obliged to pay them – including the use of paid leave.

Seek help – the best way of protecting yourself is to be equipped with knowledge.