Redundancy, Performance or Medical Incapacity

There are times an employer is faced with different paths for bringing an employee’s employment to an end. They may be considering whether an issue is a performance matter or whether a disciplinary route is appropriate. Or is it actually a redundancy because the tasks the employee can undertake aren’t the full role, but they have been doing the limited job for so long now? If you add a medical issue preventing the employee from performing part of their role, does it become a medical incapacity termination?

A recent case in the Employment Relations Authority considered the redundancy v medical incapacity issue.

The employer was the Inland Revenue (IR) and the employee was identified as OSP. OPS had been an employee at IR for over three decades, however through that time could not undertake any customer face to face or phone tasks because of a medical condition. The case considered the circumstances leading to OSP’s dismissal on grounds of medical retirement after a significant restructuring within IR.

OSP had been employed by IR for approximately 31 years, starting in 1992. In 2017, IR underwent a major restructuring following a business transformation process, resulting in changes across various facets of the organisation, including policies, IT, roles, and processes. As part of this restructuring, OSP’s original role was disestablished, and he was offered a Customer Service Officer (CSO) position, which entailed public contact. He worked in the Family section of the IR.

OSP accepted the new role on the basis of verbal assurances from his Team Leader that for the ‘foreseeable future’ he wouldn’t have to undertake any customer facing tasks. OSP’s interpretation of ‘foreseeable future’ was in effect the rest of his working life at IR. He signed the new employment agreement and position description without any alterations or conditions. The ERA noted he was advised to seek independent advice before signing the new agreement. The primary contention was whether OSP reasonably believed that he would not be required to perform customer-facing duties when accepting the CSO role. The Authority found that OSP’s acceptance of the role was unconditional, and customer contact was a fundamental aspect of the position.

The full change process took about four years after being disrupted by covid 19. After the transition of child support tasks to the new START database, there were no longer enough tasks for OSP that kept him away from customers or phones. From the employer’s perspective OSP was unable to fulfill the requirements of the CSO role due to his medical condition.

OSP contested his dismissal, asserting that it was unjustified, and that IR had breached provisions of the collective agreement. He argued that his role was redundant, rather than necessitating medical retirement. OSP sought remedies including redundancy compensation and compensation for humiliation and loss of dignity.

The ERA assessed whether IR could reasonably accommodate OSP’s disability. Despite efforts to explore options, it was concluded that OSP’s medical condition posed a barrier to performing the required tasks, making continued accommodation impractical.

The dispute revolved around whether OSP’s termination should be classified as a medical retirement or a redundancy situation. The ERA determined that the role itself was not redundant; rather, OSP’s medical condition rendered him unable to perform the role.

An important factor in this decision is that despite OSP carrying out an amended role for a considerable period of time, the ERA determined the CSO position description that was originally signed, was OSP’s role.

As with so many situations in employment relationships, this was not a simple situation.  While the employer did their best to accommodate an employee’s individual needs for many years, there is a limit to what an employer is obliged to do and a time when it is fair for the employer to bring the employment relationship to an end.