Employment Lawyers: Unfair Dismissal and Retirement on Grounds of Ill Health

The Employment Appeal Tribunal (EAT) has ruled (First West Yorkshire Limited t/a First Leeds v Haigh) that where an employee is on long-term sick leave and his pension scheme contains provisions entitling him to an ill health pension on grounds of permanent incapacity, an employer will generally be expected to give consideration to ill health retirement before dismissing the employee for incapacity.

Mr Haigh worked as a bus driver for First West Yorkshire Limited. He had nearly 30 years’ service. In June 2005, he suffered from a suspected stroke while driving a bus. As a result, the DVLA suspended his PSV licence for a minimum of 12 months. In October of that year, the company’s occupational health adviser reported that Mr Haigh remained unfit but might be able to undertake alternative duties before the licence suspension period expired. Mr Haigh then suffered a second episode and so it was unlikely that he would regain his PSV licence until October 2006, by which time he would be 60 years old. The company’s pension scheme allowed retirement on the ground of permanent incapacity.

A decision was taken to dismiss Mr Haigh on the ground of incapacity and this occurred in November 2005. Hr Haigh appealed and the appeal meeting was adjourned as the medical picture was at that time incomplete.

On 14 February 2006, the occupational health adviser again reported on Mr Haigh’s condition. At this time, the doctor advised that he was seeking an up-to-date report from the specialist treating Mr Haigh and that his condition could not be classified as permanent at that stage. A letter from the specialist was received on 9 March but Mr Haigh’s appeal against the decision to dismiss him was resumed on 24 February. He was then given a choice – either he took some further sick pay but lost all opportunity to seek an ill health pension, or he was dismissed. Mr Haigh declined to accept the company’s terms and was dismissed.

The Employment Tribunal (ET) was critical of the company’s failure to consider sufficiently the medical evidence, particularly with regard to the question of ill health retirement. Medical evidence should have been obtained before skipping the important step of retirement on grounds of ill health. In the ET’s view, Mr Haigh was unfairly dismissed. It appeared that the company wanted to avoid the cost of his ill health retirement but it was not entitled to deprive him of this right if, ultimately, it should turn out that he was permanently unfit to work. First West Yorkshire appealed against this decision.

The EAT dismissed the appeal. It confirmed that, as a general rule, when an employee is absent through ill health for an extended period, before dismissing the employee an employer will be expected to take reasonable steps to consult him, to find out by means of appropriate medical evidence the nature of and the prognosis for his condition and to consider alternative employment. The EAT went on to say that where an employer ‘provides an enhanced pension on retirement through ill health, it seems to us that an employer will also be expected to take reasonable steps to ascertain whether the employee is entitled to the benefit of ill health retirement’.

Pinder Reaux & Associates