Recent employment case law has suggested that where an employee has been unfairly dismissed and subsequently suffers mental incapacity, an employment tribunal should not treat the beginning of such incapacity as a ‘cut-off point’ when deciding the amount of compensation to be awarded. Rather, the tribunal should have assessed how long the employee’s employment would, but for the dismissal, have continued as from the date of his incapacity, as well as the value of benefits, such as sick pay and notice pay, that he would have received in that period.
In the case in question, Wood v Mitchell SA Ltd, the employee was diagnosed with hepatitis C in mid-2006 and by November was signed off sick for two weeks, becoming entitled to statutory sick pay (SSP). The employer asked the employee to obtain written confirmation from his GP that he would be fit to work, however the GP considered that such confirmation should come from a doctor instructed by the employer. The employer refused to take up this suggestion, and when confirmation from the GP was not forthcoming, the employee was dismissed on the ground of incapability with effect from 15 December.
The employee succeeded in his claim for unfair dismissal on the basis that the employer had not made sufficient enquiries about his illness before deciding to dismiss him. In determining compensation, the tribunal found that, had the employee not been dismissed, he would have continued to receive SSP from 15 December and resumed work with the employer on 1 February 2007. It therefore awarded loss of SSP for that period. It also accepted that the employee had made reasonable attempts to mitigate his loss between January and March 2007 and awarded loss of earnings accordingly. However, it limited his compensatory award to 31 March 2007. This was because around that date, the employee had become incapacitated due to mental ill health. In the tribunal’s view, this supervening illness, completely unrelated to his employment, had stopped his losses being attributable to the dismissal.
At appeal, the Employment Appeal Tribunal (EAT), amongst other things, held that the tribunal had taken too narrow a view by only awarding the employee losses up to the point when he became unfit to work because of his psychiatric illness. It had failed to take into account an employee’s contractual and statutory rights which are of benefit even if he or she becomes ill, including sick pay and the right to notice. Further, if an employee goes on sick leave, an employer is expected to investigate whether a return to work is feasible before being able to dismiss fairly.
It followed that the date at which any ill health supervenes will not generally be a cut-off point when assessing compensation arising from unfair dismissal, even though the illness is not attributable to the employer’s action. Rather, the tribunal should seek to gauge how long the employment would have continued from that date; what pay and benefits would have accrued during that time; and whether the employee would have returned to work. The EAT emphasised that it was not completely discounting the possibility of an employee bringing a supervening illness on him or herself to such an extent that it would be just and equitable to treat the illness as a cut-off point for compensation purposes. However, this would be an unusual occurrence and would certainly not apply to psychiatric illnesses. Accordingly, the appeal was allowed.
Prior to this case, it had been assumed that the losses of an employee who became unfit for work following an unfair dismissal would then be curtailed since they were no longer attributable to the dismissal. With the above decision, this line of argument is no longer open to an employer – unless there are ‘unusual circumstances’ surrounding the illness. Provided the employee has mitigated their losses up to the date of the illness, they will generally be entitled to compensation for loss of any benefits they would have received were it not for the dismissal. This exercise will entail the tribunal having to decide how long an employer would have kept the employee in employment following consultation and a medical investigation.