David Harvey, ACCA Head of Small Business, offers some guidance on how to deal with the thorny issue of dismissing employees who are sick.
Human resources problems are often the last thing that owner-managers want to deal with. They may prefer to sweep them under the carpet or ignore them until they go away of their own accord.
But there are often pressing personnel issues which will not disappear. Disruptive employees or people with major performance difficulties may require director level attention. Another key problem is dismissing a member of staff who has been off sick for longer than the business can afford.
No one wants to fire an employee, especially if that individual is ill. But keeping someone on the payroll who is incapable of doing his or her job harms the business as a whole. This is particularly true in a small business, where one person's employment costs make up a large proportion of revenue.
It may be that paying these costs is the difference between business survival and failure. However, it is vital that employers are aware of their rights and the rights of the sick employee. Employers can face claims of unfair dismissal or disability discrimination. Tribunals can award up to £50,000 for unfair dismissal, with no limits placed on disability discrimination. It is crucial that employers know what is involved.
Small businesses are disadvantaged in comparison to their larger counterparts in dealing with this complex issue. It is possible that small businesses will have formal procedures for unfair dismissal, a detailed contract dealing with long-term sick issues, a contractual Sick Pay Scheme or a personnel department in place.
Firing long service employees is problematic even with the existence of formal procedures. There is no fixed definition of what period constitutes 'long term'. To deal with this matter, employers can consider a programme of soft procedures. The employer is advised to meet with the sick employee on a regular basis. Setting up a 'sick leave review', with further meetings and a written record of what is discussed should be put in place. Employers should be aware of offering long term health insurance as a benefit as this would appear to a tribunal as confirmation of employment.
Employers are advised to provide an alternative to dismissal if possible (perhaps to offer the sick employee another role within the business) and then state clearly what the consequences of long term sick leave could be. An employer can also request access to the employee's medical records with his or her permission through his or her GP. Depending on terms and conditions, employers may also reserve the right to get a second opinion. Employees have the right to refuse access, but if they do, employers, in turn, have the right to make a decision on the evidence they have before them.
By establishing a set of procedures and involving the sick employee in the process, it is possible to come to a fair conclusion where both employer and employee have co-operated. If the dismissal of a sick employee goes as far as a tribunal, a number of factors are taken into consideration including the extent to which employers are fair and reasonable, co-operation by the employee, the size of the business and the effect of the sick employee on the business.
Employers must also watch out for claims of disability discrimination if firing a sick employee. However, this legislation does not affect the smallest businesses - disability discrimination does not apply to businesses employing 15 people and under. According to the Disability Discrimination Act 1995, one cannot dismiss an employee for long term sickness if the sickness is a result of a disability. In addition to making any necessary adjustments to the workplace, and perhaps finding alternative work for the employee within the company, it is vital to meet with the employee on a regular basis and to be seen to be fair.
If an employer finds that an employee who has been sick must be dismissed it is crucial to introduce a set of informal procedures. Employers must consult with the employee, get as much information as possible about the illness, offer an alternative position if at all possible and be seen to be fair and reasonable. But at the end of the day, the needs of the business must be put as the top priority and it may be that firing the employee, especially if the employee is not co-operating, is the only option. If, despite introducing informal procedures, a legal dispute does arise, it is advisable to seek professional advice. Employers can contact their insurers (employers are legally required to have Employers' Liability Insurance) and a solicitor who specialises in employment law for advice and support.
It is entirely fair in principle for an employer to dismiss a sick employee but the degree of fairness will depend on individual circumstances. Employers should assess the particular nature of specific cases and not make general assumptions.
David Harvey, ACCA Head of Small Business