Ongoing case looks at frequent sick leaves, fitness for job
One of the toughest areas of employment law is the issue of when an employee is taking a lot of genuine sick leave and/or is just not medically up to doing their job.
For clarity, we are not talking about someone who is away for a long period of time because of an injury or illness. We are talking about someone who is taking a lot of genuine sick leave or is just not medically able to fulfil their employment agreement.
A recent case suggests that employers should essentially pick a path and stick with it when dealing with an employee with whom there is a range of issues. As always, these matters will be very fact-specific.
In the decision of DQJ v. The Commissioner of the Inland Revenue Department [2024] NZERA 723, the Inland Revenue Department (IRD) terminated an employee’s employment on the grounds that the employee had frustrated their employment agreement through absenteeism, conduct (sleeping at work) and “problematic interactions with the majority of her team.”
The employee arrived late to work 77 per cent of the time in the previous 11 months and by more than 10 minutes 45 per cent of the time. This behaviour caused her team undue stress, decreased morale, and generated a higher workload for the rest of her team.
The Employee pursued the matter to the Employment Relations Authority and was seeking interim reinstatement while awaiting a full hearing on the matter.
Despite the employer’s challenges, the Authority was unconvinced the doctrine of frustration applied, noting:
That the IRD should have adopted an alternative process to be a fair and reasonable employer. The alternative process could have included:
adopting a medical incapacity process
a formal performance management process
a disciplinary process, to provide clear warnings and opportunities to address concerns raised.
The threshold for frustration was not met. The Authority held that frustration requires an “exceptional event.” Whilst the coworker’s actions were challenging, it remains contentious whether it constituted an “exceptional event.” Alternatively, performance issues may have been addressed and overcome through a standard employment process.
The Authority did not grant interim reinstatement; however, the matter is due to proceed to a full hearing later in 2025.
In short, we are still no further ahead as to how an employer should manage an employee who is constantly away for genuine reasons.
However, what is clear is that merging a range of issues and saying the employee has frustrated their employment agreement is unlikely to be upheld.
On 28 January 2025, the Employment Court held that pending the outcome of the Authority’s investigation, the employee is to be granted interim reinstatement, solely to the payroll.
The Employment Court held that, in accordance with “equity and good conscience,” the employee is to be temporarily reinstated because they have a “seriously arguable case” of being unjustifiably dismissed and are not in a strong financial position.
Fiona McMillan is a Partner in the Employment Law team at Lane Neave in Auckland. Andrew Shaw is the Head of the Employment Law team at Lane Neave in Christchurch. Andy Bell is a Partner specialising in employment law and relationship property in Wellington. Abby Lohrey is a Solicitor specialising in employment and health & safety law at Lane Neave in Auckland. Kaitlin Windmeyer is a summer law clerk at Lane Neave in Auckland.
