A cast-iron case for medical incapacity

We often hear about employers attempting to terminate an employment relationship by way of
medical incapacity, only to be stung in the Authority later on for “crying halt” too soon (more on this
later), or for getting it procedurally wrong. Morton v Farmers’; Trading Company Ltd [2021] NZERA 64
demonstrates that, thankfully, employers can medically exit an employee and come away unscathed.


April 2019: Ms Morton, a store manager at Stevens, injured her hand while lifting a cast iron grill. Ms
Morton kept the health and safety manager updated regarding the status of her injury, and continued
working her usual hours and duties.

28 August 2019: Ms Morton was advised that surgery would be required, and she received a steroid
injection in preparation for the surgery. Unfortunately, as a result of the injection, Ms Morton’s pain
increased and her mobility decreased. She was certified unfit to work for a month.

20 September 2019: Stevens contacted Ms Morton to set up an occupational therapist assessment.
Ms Morton’s work capacity was assessed at 10% and she continued to perform administrative tasks.

7 October 2019: Ms Morton was certified as unfit for work between until 17 November 2019, and
again from 18 November until 12 January 2020.

12 November 2019: Stevens wrote to Ms Morton, inviting her to attend a meeting on 15 November
2019 to discuss “your medical condition and your situation and our concerns about your ability to
return to work in the near future”. Stevens added they “will need to consider whether your
employment can continue or whether we will need to terminate it”. Stevens asked Ms Morton to bring
any medical reports regarding her medical condition.

20 November 2019: the meeting was delayed to allow Ms Norton time to arrange a support person to
attend, and the location was changed to one which was more convenient for Ms Morton.

25 November 2019: Stevens wrote to Ms Morton and confirmed the company’s preliminary view that it
was not reasonable to continue Ms Morton’s employment due to the seriousness of her medical
condition and lack of indication as to when she would be able to recommence her role.

27 November 2019: The parties met to discuss other potential roles within Farmers.

2 December 2019: Ms Morton provided a medical certificate certifying her fit to perform office duties
up to 25 hours a week.

3 December 2019: The parties met again, and Stevens confirmed its decision to dismiss Ms Morton.
This was confirmed by letter on 4 December 2019. The letter also detailed a part-time office support
role that Ms Morton would apply and be interviewed for.

The Authority confirmed Stevens had acted as a fair and reasonable employer and dismissed Ms
Morton’s claim of unjustifiable dismissal.

Key takeaways

When terminating an employee for medical incapacity, employers should first turn their mind to:

  • ‘Light’ duties the employee may be able to perform instead of their regular duties;
  • The possibility of reduced hours;
  • The ability to fill the employee’s role on a short term basis by using existing staff or hiring a
    fixed-term employee;
  • Redeployment opportunities that may be available, either within the company or to a parent company (as was the case here);
  • Obtaining as much medical information as possible, whether through a specialist, an occupational therapist assessment or the employee’s own medical practitioner (with their consent – employers may need to refer to the employee’s individual employment agreement); and
  • Maintaining consistent and continuous communication with the employee.

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