Medical Capability Dismissal

  • End of Employment
Medical Termination
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Peninsula Group, HR and Health & Safety Experts

(Last updated )

Read about the legal requirements needed when dismissing workers on long-term sick leave. And discover alternative ways to help ill workers return to work before deciding on medical capability dismissal.

When a worker is on sick leave for a long time, you might have to decide whether you can afford to keep them.

Ideally, employers would provide support for sick workers and give them enough time to recover from ill health. But when workplace disruptions increase, you may face a reasonable decision for letting them go.

Read our guide on how to deal with dismissals due to medical capability. And discover your legal obligations for ill workers, avoiding harsh penalties falling on your business.

Can I dismiss a worker with long-term ill health?

The short answer is yes, you can dismiss an employee on long-term sick leave. But only after following reasonable legal procedures.

If it’s unlikely the ill worker will be healthy enough to return to work, you can consider dismissing them based on grounds of medical capability.

Workers on long-term absence can have impacts on business performance, productivity and ultimately, your bottom line. Let’s look at how medical capability dismissals are defined.

What is a medical capability dismissal?

Medical capability dismissal is a fair reason for dismissal based on a lack of capability due to health-related reasons.

Under the Employment Rights Act 1996, there are five factors that outline fair grounds for dismissing an employee:

The act legally defines it as, ‘capability assessed by reference to skill aptitude, health or any other physical or mental quality’.

Dismissing workers on long-term sickness absence should always be done sensitively. You must follow a fair procedure.

Work capability is generally based on a worker’s qualifications, competence, and health. To dismiss a worker based on incapability issues, you need to show that you gave them a fair opportunity to improve their work performance or return to health.

Why do I need to follow a capability procedure?

If you wrongly action a dismissal, you could be liable of discrimination and unfair dismissal, which could lead to:

  • Tribunal claims.
  • Financial penalties.
  • Business disruption.
  • Lowering workforce productivity.
  • Decrease in workforce morale.
  • Reinstatement or re-employment.

How to manage workers on long-term sickness leave

Dismissals should always be a last resort. Before opening that door, you must firstly consider alternative methods like:

  • Changing their work schedules.
  • Offering remote working.
  • Allow flexible working hours.
  • Re-assign their tasks and responsibilities.

Workers on long-term sick leave should be offered ‘reasonable adjustments’ to help them return to work.

You should establish the nature of their illness and the estimated timeframe of their absence. If it’s over seven days, they must present a fit note. Workers who are sick for over a month should be offered an absence review meeting. Especially if the chances of returning to work are low.

In the ill health capability dismissal meeting, discuss the following factors:

  • The type and level of illness.
  • Possibility of symptoms recurring.
  • Recovery time.
  • Length of absence.
  • Medical advice received.
  • Changes that will help returning to work.
  • Change of duties or alternative employment.

Employers should send written invitations for all meetings and document all decisions and agreements.

It’s also advised to ask workers for medical reports from GPs or hospitals (with permission). Or ask them to speak to an occupational health adviser, who can provide tailored support on reasonable work adjustments.

Workers with disabilities and terminal illnesses

Following dismissal procedures is especially vital for workers with a disability classed under the Equality Act 2010. For these workers, you should provide short-term or long-term workplace support and adjustments.

For workers with terminal illnesses, allow them to express their wishes about working first. That way you can make suitable business changes for their interests as well as your own.

Some terminally ill workers may want to work up until their last day. Others may be facing financial issues and rely on their PILON or other benefits. In the end, it’s better to understand their wishes before making rash assumptions.

How to issue dismissal due to medical capability

Firstly, hold all the absence review meetings needed for the ill worker. And make all reasonable adjustments you possibly can. After then, it may be time consider dismissal on capability medical grounds.

Each individual worker and situation will have separate outcomes and regulations. Revolving around specific health conditions, workplace positions, and business impacts.

Once you have decided on a potential dismissal, you need to follow the fair procedure written in your employment handbook. Invite the worker to the meeting and clearly outline your dismissal decision.

Present the medical information which shows their chances of returning to work are slim. And the alternative methods for reasonable work adjustments. After the discussions, provide written meeting documents to the worker.

Remember that throughout the dismissal process, check whether workers are entitled to:

  • Contractual notice.
  • Holiday pay.
  • Statutory sick pay.
  • Employment and Support Allowance (ESA).
  • Personal Independence Payment (PIP).
  • Universal Credit.

Letter for medical capability dismissal

After following a fair procedure and your decisions are legally accepted, you should present workers with a letter for medical capability dismissal.

The letter will outline your reasons for dismissal, their notice period, and the decided date for employment termination. As well as the fair process that followed reaching the decision.

Once you’ve made the decision of dismissal and the worker is aware, the letter should be sent as soon as possible. The letter should include the following:

Your reasons for dismissal

Clearly outline your reasons and include references with evidence to back them up. But be careful not to disguise your real reasons for letting worker go, as this will lead to allegations of unfair dismissal.

Evidence for your decision

Present evidence that backs up your decision on capability dismissal. Such as showing that it’s unlikely the person will be able to return to work in the near future

The dismissal procedure

Explain what is included in the procedure when actioning your decisions on dismissal. For example, additional medical reports, further absence meetings, or even any consultation processes that may be required.

The extent of notice periods

Clearly state whether the worker is required to carry out a notice period or not. Despite a minimum notice period being drawn in legislation, it falls on employers to decide whether to use it, or offer a longer contractual notice period.

Decisions on a contract termination

Once you’ve decided on an end date, you should let the worker know at the final meeting and include it within the letter. Also outline calculations for final salary payments and holiday pay.

You should also include any other practicalities that the worker will benefit from knowing. Things like P45 letters and arrangements for returning company property, etc.

Right to appeal decisions

Remember that workers have a legal right to appeal any decisions made throughout the dismissal process. Make sure they are aware of this right, as well as other methods for seeking further advice on appealing.

Peninsula provides expert advice on medical capability dismissal

In most situations, leaving dismissal as a last resort works out better for all parties. But if it’s unavoidable, it’s always best practice to end business relations on a mutually accepted and professional note.

Peninsula offers expert advice on medical capability dismissals. And our HR specialists can help you deal with the legal steps before taking the decision.

Peninsula clients also get access to 24/7 HR consultation on specialist guidance on employee relations and contract terminations.

And if you are not yet a client, you can still enjoy free advice from one of our business experts. Simply call us on 0800 028 2420.


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