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Long-Term Illness

Published November 13, 2017 (last updated on June 14, 2024) | Adam Wyatt - Copywriter and Content Creator

Despite the ability to take long-term sick leave, when facing a long-term illness, it is common for employees in New Zealand to be concerned about not just their health, but their ability to work and the chance of finding employment in the future. Likewise, employers have to keep the business running and decide how long to keep the position open for an employee with a long-term illness or even one who has taken long-term sick leave.

What Employers Need to Know

It can be difficult to manage a business when an employee is away from work because of long-term illness or injury.. If the employee is not able to fulfill their role, there needs to be a discussion on whether to keep the position open – and for how long – and if it is reasonable to end their employment.

Open communication is the best way to find out:

  • How long the employee thinks they will be off work

  • Whether they need to take unpaid long-term sick leave or not

  • If they think they will be able to do their job again

These questions should be asked in a respectful, supportive manner and only relate to the employee’s ability to fulfill their role. Employees should not be under the impression they are being disciplined or discriminated against.

What Employees Need to Know

For employees, it is important to be upfront about their illness and explain how it may impact their ability to work. This may be confronting at first, but this information can help employers look for alternative roles or positions that may be more suitable for the employee.

An employee can refuse to provide medical information if an employer asks for it – even if it is part of their employment agreement.

How to Manage Employees with a Long-Term Illness

Take reasonable steps to allow the employee to recover from their long-term illness:

  • Allow the employee to take paid sick leave, they are entitled to up to 5 days of sick leave each year.

  • If the employee is still unwell, they could be entitled to use their annual holidays or an employer can grant sick leave in advance.

  • Maintain communication with the employee about their illness or injury, and how their recovery is going.

  • If the employee is receiving payments from the Accident Compensation Corporation (ACC), seek to understand their current capacity from their Case Manager. The employee may have a return to work (RTW) plan from their treating doctor, which will assist an employer with understanding what work the employee could potentially complete and what adjustments may need to be made to their job.

Dismissing Employees with a Long-Term Illness

If an employer has good reason to believe the employee is not able to do their job and the position cannot be left open, they may be able to end the employment on reasonable grounds.

To ensure the dismissal process is fair and reasonable, employers should consider:

  • The terms and conditions of the employment agreement

  • If the employee has used up their paid sick leave entitlements

  • How long the employee has been away from work

  • The amount of medical information they have about the employees illness or injury

  • If there is any way to reassign the employee into another role or position that is more suitable

  • Whether the illness or injury was due to negligence on the employer’s part

Medical Retirement and Dismissal for Medical Incapacity

There are two ways to end an employment agreement for someone with a long-term illness: medical retirement and dismissal for medical incapacity.

Medical retirement allows an employee to leave the organisation and look for work that is more accommodating for their illness or injury. This should be the first viable option for employers before resorting to dismissal for medical incapacity.

When dismissing an employee for medical incapacity, it is important to remember that the process can take several weeks or months. It also requires attending a number of meetings and providing documents to ensure that both parties have the chance to present evidence and any possible alternatives to dismissal.

For advice on how to manage long-term sick leave in NZ, contact Peninsula on 0800 568 012.

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