Dismissal unfair due to failure to consider ill-health retirement

The Employment Appeal Tribunal (EAT) has concluded that it was unfair for an employer to dismiss an employee due to long term sickness without first considering whether he was contractually entitled to be medically ‘retired’ or granted an ill-health pension.

First West Yorkshire Ltd t/a First Leeds v Haigh (2008 IRLR 182) concerned an employee with nearly 30 years’ service who worked as a bus driver. He suffered from a stroke, was signed off work and his public service vehicle licence was suspended. The employer’s sick pay scheme stated that where employees were incapable of carrying out their role, the company would consider them for any suitable alternative employment. In the absence of such alternatives, they would be ‘retired’ or dismissed on medical grounds. Retirement in this context meant retirement under the company pension scheme and was very beneficial to eligible employees.

After the employee had been absent from work for eight months, his manager took the decision to dismiss him. The employee appealed to the company’s managing director who gave him a choice: he could either be dismissed or his sick pay would be extended with a view to the employee retiring at the age of 60. This second option was conditional upon the employee agreeing not to apply for an ill-health pension. As the employee felt unable to accept this condition, he was dismissed.

The Employment Tribunal and EAT considered the dismissal to be unfair. The EAT noted that an ill-health dismissal will usually be considered fair if the employer has taken reasonable steps to consult with the employee, has obtained medical evidence regarding the nature of the condition and the future prognosis and has considered alternative employment. However, where an employer provides an enhanced pension on retirement through ill-health, the employer is also expected to take reasonable steps to ascertain whether the employee is entitled to such a benefit.

This case should serve as a warning to those employers who offer ill-health pension benefits to employees. It is important that in long-term sickness situations, all the possible options are considered and full medical evidence is obtained before a final decision is made.


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