Losing your patience

Extended sick leave opens up a whole range of logistical, organisational and
moral dilemmas for employers. Any employee who feels aggrieved at the way that
their absence has been dealt with could bring a formidable array of claims,
ranging from unfair dismissal to breaches of their human rights. Deepa Nathan
provides some practical tips on managing long-term sickness absence, and in the
light of recent legislation, looks at the covert surveillance of employees

An unfair dismissal claim is an obvious choice for an employee who has been
dismissed due to prolonged absence. In this situation, though, the compensatory
award is capped at £51,700. However, there is no cap on claims brought, for
example, under the Disability Discrimination Act 1995 (DDA). Other potential
claims include personal injury; breach of contract, pension-related claims and
claims relating to alleged breaches of the Data Protection Act 1998 or the
Human Rights Act 2000.

However, there are a number of steps that employers can take to minimise
their exposure to such claims.

Pre-emptive measures

It is vitally important that your organisation prepares a comprehensive
sickness policy. Within this, long-term sickness absence provisions should
clearly address the following issues at the very least (bearing in mind that
any relevant employee consents and employer’s powers should be given
contractual effect).

– Procedure – the policy should set out what the employee’s obligations are
in regard to the notification of absence and triggers should be included that
make clear what action can be taken by the employer after a specified number of
days’ absence have elapsed.

– Contractual benefits – the policy should state what levels of sick pay the
employer is prepared to provide. If you only provide statutory sick pay, this
should be made clear. By contrast, if employees are offered permanent health
insurance and can apply to receive the benefits of this insurance policy after
a specified length of time, this should also be stated. Eligibility for such
benefits should be conditional on the employee complying with his or her
obligations stated in the policy (for instance, in relation to providing
information about his or her illness).

– Consent – if an employer needs to investigate the employee’s condition to
find out the likely prognosis, it is imperative that the employee gives their
consent to the investigation. The sickness policy should contain an unambiguous
statement to the effect that the employee has provided his consent to being
examined by a doctor nominated by the employer and to the employer obtaining a
copy of the resulting medical report.

– Termination – the policy should state the circumstances in which the
employer can terminate the employee’s contract due to prolonged absence. The
termination should not result in the employee being deprived of any contractual
benefit to which he would have been entitled had his employment not been
terminated (see Aspden v Webbs Poultry and Meat Group (Holdings) Ltd (1996)
IRLR 521.)

– Employers should also familiarise themselves with the provisions of the
company’s pension scheme that relate to ill health. The scheme is likely to
provide that an ill health retirement pension is payable to a member who is
absent on long-term sick leave and cannot return to work.

It’s worth noting that because line managers often have initial
responsibility for tackling the sickness absence of those employees who report
to them, the human resources department may not get involved until a later
stage. It’s very important then that the appropriate managers receive training
on how to handle sickness absence effectively.

After the absence – practical tips

When an employee is absent from work due to sickness, it’s important that
their employer takes control of the situation. It is not in the interests of
either the employer or the employee for the employer to fail to tackle the
issue decisively at an early stage. The golden rule is to follow the guidelines
set out in the employer’s sickness policy and, or, employment contracts.

There are key points that employers should bear in mind when dealing with an
employee on long-term sick leave:

– maintain regular contact with employees on long-term sick leave. For
example, an employer’s sickness policy may state that after three weeks’
continuous absence, the employee will normally receive a home visit to discuss
how best to tackle the absence. However, if the employee objects to the idea of
a home visit, the employer should not force the issue

– if the home visit establishes that a return to work is not imminent, the
employer can consider using the company doctor to investigate the medical
condition of the employee. The employee’s consent to the examination and to the
disclosure of the report to their employer is required. You could also consider
whether it is appropriate to obtain a specialist’s report

– the medical report(s) will influence the appropriate course of action. If
the prognosis is that the employee is fit to return to work, you should discuss
with the employee the best way to facilitate this at a return-to-work
interview. If the prognosis is not so positive, the estimated recovery time
given by the doctor should be considered. If the report suggests that the
employee should be able to return to work in a couple of weeks, it would
generally be unreasonable to terminate the employee’s contract due to
capability before the specified two weeks have elapsed

– if the medical evidence indicates that an employee is unlikely to be well
enough to return to work in the foreseeable future, you may wish to consider
whether it is necessary to terminate their employment. An employer would need
to consider a number of factors before reaching the decision to terminate an
individual’s employment. In particular, whether any adjustments could be made
to the employee’s role to enable him to return to work. You should also take
into account factors such as the prognosis, the previous sickness record of the
employee, requirements of the business and the availability of alternative

Any such termination must be carried out in accordance with the employee’s
employment contract and any relevant policies. The individual should be
consulted and made aware that his employment is at risk before any final
decision on termination is made. An employer should also consider whether the
employee is eligible for an ill health retirement pension.

One of the problems that employers face when managing long-term sickness
absence is the refusal of the relevant employee to co-operate in the process.
For instance, employees may simply refuse to consent to their employer obtaining
a medical report about their condition. If the employee refuses to co-operate
without good reason, the employer may be justified in deciding how to proceed
on the basis of the information it already has.

Big brother

There may be instances where an employer feels that further investigation of
the employee’s alleged ailment is necessary because, despite the medical
evidence, the employer has reasonable grounds to believe that the employee is
malingering. In these situations, employers sometimes wish to deploy tactics
such as covert surveillance.

An employee who finds they have been under surveillance while absent from
work on long-term sick leave may feel that their privacy has been invaded. The
Human Rights Act 2000 (HRA) expressly states that individuals have a right to
respect for private life. An employee generally cannot bring a claim against a
private employer for breach of the HRA. However, if the employee brings, for
example, an unfair dismissal claim against their employer, the employment tribunal
is obliged to interpret the relevant legislation in a manner compatible with
the HRA. It may therefore conclude that the dismissal was unfair because the
employee’s right to privacy was breached.

Keeping within the law

However, it would appear that from a human rights perspective, there is
nothing to prevent covert surveillance, although such surveillance would need
to be justifiable and carried out lawfully. For instance, if an employer
appointed a private investigator (PI) to investigate the employee’s absence,
and they trespassed on the employee’s property to obtain video footage, this
would be unlawful.

It is vital that there is a legitimate reason for carrying out covert
surveillance. If an employer has received credible information from a third party
that an individual is malingering while receiving company sick pay, it could be
argued that the legitimate reason for carrying out the surveillance is to
protect against crime, as fraudulently claiming sick pay is a criminal offence.
Keep in mind, however, that the surveillance should go no further than is
necessary to satisfy its aim.

Employers faced with the issue of an employee on long-term sick leave must
tread with caution. However, the law does recognise that an employer cannot
hold open an absent employee’s job indefinitely. Provided that an employer has
managed the absence fairly from an early stage and addressed a checklist of
possible pitfalls, it will be in a strong position to defend employees’ claims

Deepa Nathan is an associate in Allen & Overy’s employment, pensions
and incentives department

Data protection legislation

Recent data protection legislation will affect any surveillance carried out
by an employer. Any evidence obtained through surveillance which relates to an
employee’s medical condition is likely to be considered sensitive personal data
for the purposes of the legislation and, generally, can only be processed with
the employee’s explicit consent.

This means that an employer would need to establish that one of the
recognised exemptions could be applied. Surveillance would need to be in the
legitimate business interests of the employer and further additional tests
would need to be satisfied because the data being obtained would probably be
classed as "sensitive". One of the possible exemptions (regulation 1
of the Data Protection (Processing of Sensitive Personal Data) Order 2000)
requires that the processing is in the "substantial public interest",
is necessary for the purposes of the detection of an unlawful act and must be
carried out without the employee’s consent, so as not to prejudice the above

Investigation of an alleged fraud perpetrated by a malingerer could probably
satisfy the last two requirements, but the employer may have problems arguing
that the investigation was in "substantial public interest".

There is little guidance available on how this concept will be interpreted.
It is hoped that the Code of Practice on data protection, due to be issued
later this year, will clarify issues relating to surveillance. But until
further guidance is provided, an employer would be unwise to underestimate the
risks involved in carrying out covert surveillance.

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