Introduction to this document

Letter of dismissal on long-term incapacity grounds

Use our letter when dismissing an employee due to long-term sickness absence. You must first have followed a fair dismissal procedure, including obtaining medical evidence and consulting with the employee and considering the severity of the impact that the employee’s continued absence is having on your business.

Confirmation of dismissal

Long-term sickness absence can amount to a fair reason for dismissal on the ground of lack of capability. However, for a dismissal to be fair you will need to show that the employee’s absence record was a sufficient reason to justify dismissal and that you acted reasonably in dismissing them for this reason. This will necessarily involve obtaining up-to-date medical evidence which supports your decision, consultation with the employee, gathering evidence of the adverse impact of their continued absence on your business and reviewing whether there are any other roles that they could do, subject to a trial period if necessary, prior to taking any decision on whether or not to dismiss. Assuming you’ve correctly complied with a fair procedure, if you then take the decision to dismiss the employee, the Letter of Dismissal on Long-Term Incapacity Grounds will help you.

Notice and holidays

An employee under notice of termination of employment is entitled to be paid their normal rate of pay during the statutory minimum notice period if they are incapable of work because of sickness or injury (contractual notice over and above statutory minimum notice can still be paid at sick pay rates, which might be nothing if the employee has already exhausted their entitlement to SSP). This rule applies regardless of whether the employee had been receiving SSP or contractual sick pay from you prior to notice having been given. However, this provision does not apply where the notice due to the employee under their contract of employment is at least one week longer than the statutory minimum notice requirement (which is, broadly, one week’s notice for each complete year of service up to a maximum of twelve weeks’ notice). As for accrued holiday pay, this is a complicated area, and the employee also has a statutory right to carry over up to four weeks of their untaken annual leave from one holiday year to the next if they were unable to take it due to sickness absence, provided they then take it (or are paid in lieu of it on termination) within 18 months of the end of the holiday year in which the entitlement originally arose. Therefore, seek legal advice on the position if you are unsure.