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Employment Law: Dismissals For Incapability

  • Published: 2009-01-04 (Revised/Updated 2010-10-11) : Author: Tim Davies
  • Synopsis: In the context of incapability dismissals the Employment Tribunal will scrutinize the procedures followed by the employer prior to termination.

Main Document

Incapability Dismissals - Contrary to popular belief 'ill health' is a potentially fair reason for dismissal since it relates to the employee's capability to perform the work that they were employed to do.

However, in the context of incapability dismissals, the Employment Tribunal will scrutinize the procedures followed by the employer prior to termination, in order to determine whether the decision to dismiss was reasonable in the circumstances. A 'reasonable' employer would normally be expected to consider all the relevant medical evidence, consult with the employee and consider whether there are any steps that could be taken to assist the employee in returning to work. (Employers should also be mindful of the disability discrimination legislation and the need to make reasonable adjustments.)

But what if the employee's ill-health was caused by the employer in the first place? Should this be taken into account when deciding whether the employee's dismissal was reasonable?

This question was recently addressed by the Employment Appeal Tribunal (EAT) in the case of Royal Bank of Scotland Plc v McAdie (2006).

The Facts

Ms McAdie went off sick with work-related stress following her employer's failure to adequately address her grievances and the intimidating manner in which the process had been handled. After 9 months' absence, Ms McAdie was referred to an occupational health doctor who diagnosed "severe adjustment disorder, secondary to alleged work-place issues, including harassment". The doctor expressed doubt that the condition could be treated due to the depth of ill-feeling held by Ms McAdie and concluded that a return to work appeared impossible. Following this report, Ms McAdie was dismissed on grounds of incapability. She subsequently brought a claim for unfair dismissal.

The Employment Tribunal initially upheld her claim, finding that her ill-health had been caused by the manner in which the Bank had dealt with her grievance and that this was crucial in determining the fairness of the dismissal. In the Tribunal's opinion "no reasonable employer would have dismissed in these circumstances, because no reasonable employer would have found themselves in these circumstances. A reasonable employer would have investigated the matter properly at an early stage."

EAT's Decision

However, the EAT overturned this decision. In their view, the fact that an employer may have caused the incapacity did not mean that it could never effect a fair dismissal. Whilst the cause of an employee's illness was a factor to be taken into consideration, the focus must always be on the reasonableness of the employer's actions in the circumstances that existed at the time of the proposed dismissal - not whether the employer should have got itself into those circumstances in the first place.

In the present case, the medical evidence was very clear and the simple fact was that there was no alternative to dismissal. The Bank's decision could not therefore be said to be unreasonable. The appeal was allowed and the claim dismissed.


The case of McAdie serves as a useful reminder of the dividing line between unfair dismissal claims and personal injury claims. Save in the context of discrimination cases, the Employment Tribunal has no jurisdiction to hear claims for personal injury. The appropriate course of action for an employee who suffers injury (physical or mental) as a result of a breach of duty by their employer, is to bring a personal injury claim in the civil courts. However, this will require the employee to show that the injury suffered was reasonably foreseeable and this can prove to be a significant hurdle, particularly in "work-related stress" cases.


Flexible Working Extended to Carers

The Government has published the Flexible Working (Eligibility, Complaints and Remedies) (Amendment) Regulations 2006, which extend the right to request flexible working to certain carers of adults. The Regulations will come into force on the 6 April 2007 and will extend the right to request flexible working to employees who are, or expect to be, caring for a person who is over the age of 18 and in need of care, and who is either: married to, the partner of, or the civil partner of the employee; a relative of the employee; or living at the same address as the employee. The right is subject to a qualifying period of 26 weeks continuous employment.

Disability by Association

Carers of disabled people may acquire further legal rights following the referral of Attridge Law v Coleman to the European Court of Justice. Although most discrimination legislation protects employees from detrimental treatment on the grounds that they associate with someone in a protected group (e.g. a white employee dismissed for marrying a black person), the same does not apply to the Disability Discrimination Act 1995 (DDA).

On the face of it, the DDA only applies if the employee themselves are a "disabled person". The issue before the ECJ is whether the DDA should be given a wider interpretation so as to prohibit discrimination of an able bodied employee on the grounds of their association with a disabled person.

If the claimant's case is upheld, the scope of the DDA will be significantly extended.

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