Medical Incapacity and Employment in New Zealand
When an employee is unable to perform their job due to illness or injury, employers in New Zealand may need to address the situation under the principles of medical incapacity. This process requires employers to act fairly and reasonably, adhering to the fundamental principle of good faith that underpins all employment relationships [Source: Employment Relations Act 2000, s 4].
What is Medical Incapacity?
Medical incapacity refers to an employee's inability to perform the inherent requirements of their job due to a long-term or recurring illness, injury, or disability. It is distinct from temporary sickness, although persistent short-term absences could eventually lead to an incapacity process. The law does not provide a specific definition of 'medical incapacity' but sets out the requirements for an employer's actions when an employee cannot fulfil their duties.
The Duty of Good Faith
The duty of good faith (an obligation for employers and employees to be active and constructive in their employment relationship) is central to managing medical incapacity [Source: Employment Relations Act 2000, s 4]. Both parties must deal with each other openly, honestly, and without misleading each other [Source: Employment Relations Act 2000, s 4(1A)(c)]. For employers, this means engaging constructively with an employee's medical situation.
Employer's Obligations in a Medical Incapacity Process
An employer considering dismissal for medical incapacity must act as a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred [Source: Employment Relations Act 2000, s 103A]. This generally involves a thorough and fair process, which includes:
- Gathering Medical Information: The employer should seek relevant medical information to understand the employee's condition, its likely duration, prognosis, and how it impacts their ability to perform their role. This must be done with the employee's consent [Source: Privacy Act 2020, Principle 3]. The employer should inform the employee what information is needed and why.
- Consultation and Discussion: The employer must discuss the medical information with the employee, providing them an opportunity to comment on it and offer their own medical reports or opinions [Source: Employment Relations Act 2000, s 4].
- Considering Reasonable Accommodations: Employers are generally expected to consider whether any reasonable accommodations could enable the employee to return to work, either in their current role or an alternative one. This might include modified duties, changes to the work environment, or flexible hours [Source: Health and Safety at Work Act 2015, s 36, which outlines duties to manage risks to health and safety, potentially including those related to an employee's capacity].
- Fair Process Meeting: Before any decision on employment is made, the employer must meet with the employee to discuss the situation, the options considered, and the potential outcomes. The employee has the right to have a support person (a person who attends a meeting with an employee to provide emotional and practical support) or representative (a person, such as a lawyer or union delegate, who speaks on behalf of the employee) present at such meetings [Source: Employment Relations Act 2000, s 4].
- Decision-Making: The employer must genuinely consider all available information, including the employee's input and medical advice, before making a decision. Dismissal should generally be a last resort after all other reasonable options have been explored.
Employee Rights
Employees subject to a medical incapacity process have several rights:
- Right to a Fair Process: To be treated fairly and reasonably throughout the process, consistent with the duty of good faith [Source: Employment Relations Act 2000, s 4].
- Right to Privacy: Medical information is sensitive personal information. Employers must collect, hold, and use this information in accordance with the Privacy Act 2020, generally only with the employee's consent and only for the purpose for which it was collected [Source: Privacy Act 2020, Principle 1; Privacy Act 2020, Principle 3]. Disclosure of this information must also comply with privacy principles [Source: Privacy Act 2020, Principle 11].
- Right to a Support Person or Representative: Employees can bring a support person or representative to any meetings concerning their medical incapacity [Source: Employment Relations Act 2000, s 4].
- Right to Provide Own Medical Evidence: Employees have the right to provide their own medical reports or opinions for the employer to consider.
Termination for Medical Incapacity
If, after following a fair and reasonable process, the employer determines that the employee is medically incapacitated to the extent that they cannot perform the inherent requirements of their role, and no reasonable accommodations or alternative roles are viable, dismissal may be justified [Source: Employment Relations Act 2000, s 103A]. The employer must be able to demonstrate that their decision was what a fair and reasonable employer could have done in the circumstances.
When to Seek Independent Legal Advice
If an employer is considering initiating a medical incapacity process, or an employee is subject to such a process, it is highly recommended to seek independent legal advice. Community Law Centres offer free advice and can provide guidance on specific situations, rights, and obligations under New Zealand employment law.