Medical incapacity: a recent update

This article provides a summary of two recent cases which involve interesting issues relating to medical incapacity and provide some guidance on what amounts to a reasonable opportunity of recovery.

What is an appropriate length of time?

In Amcor Flexibles an employee, whose role involved working with dangerous printing machinery, started suffering from seizures at work.

Amcor Flexibles investigated the employee’s medical condition over the space of approximately six months and engaged specialists who drafted no less than six independent medical assessments on the employee’s condition. The employee also engaged a specialist to provide a separate report.

The reports varied in their recommendations, with the first and sixth report stating he could return to work with no restrictions. However, all other reports placed restrictions on him and the seventh report, which had followed two other seizures at work, concluded that the employee must not do any safety critical work until his condition had stabilised or had been resolved and his hours of work and duties were also restricted.

The employee’s dismissal took place eight months after he experienced his first seizure at work. However, the process of dismissing the employee for medical incapacity, from inviting him to a meeting to providing him with a decision, took less than one month. The employee claimed that he was unjustifiably dismissed as the process of terminating his employment did not give him a reasonable opportunity to recover.

The Employment Court looked at the process carried out by Amcor Flexibles over the entire eight month period and held in favour of Amcor Flexibles. The Court stated that the employee was given a “reasonable opportunity to adequately manage his epilepsy so it could properly assess if he was able to safely return to his usual duties.” The eight months from the first incident to the dismissal and the number of detailed reports over a six month period gave the employee that reasonable opportunity to take steps to manage the epilepsy.

Are Records of Settlement as robust as we think?

In TUV v WXY the parties entered into without prejudice settlement negotiations which resulted in the employee’s exit. The parties executed a legally compliant Ministry of Business, Innovation and Employment (MBIE) Record of Settlement (RoS) to formalise their agreement.

However, eight months after the RoS had been signed off by an MBIE Mediator, the employee provided a medical opinion that she had been medically incapacitated at the time she signed the RoS and when the mediator called her before signing off on the agreement. The medical opinion also stated that she lacked capacity to instruct her lawyer.

The employee filed in the Employment Relations Authority (Authority) and claimed that she had been unjustifiably (constructively) dismissed. The Authority dismissed her claim on the basis that the RoS was binding and barred her from bringing future claims against the employer. The employee appealed to the Employment Court and argued that she had signed the RoS under duress and the agreement constituted an unconscionable bargain.

In determining whether to uphold the RoS the Employment Court considered a two step test, which asked whether:

(a) the employee was able to understand the general nature of any agreement entered into; and

(b) the other party was aware of her unsound mind at the time their agreement was reached.

The employee was held to be incapacitated at the time of signing the RoS but the Court found that the employer was not aware of this and could not have reasonably known of her lack of capacity. Given that the second limb of the test was not satisfied, the RoS was upheld.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen Drewitt, Maria Green,  Hannah Martin, Joseph Harrop, Holly Struckman, Alex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia Strickett, Ken Huang, Mary Zhou, Shi Sheng Cai (Shoosh), Sarah Kirkwood, Janeske Schutte, Lingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew Shaw,  Fiona McMillan