Employment tribunals tend to come down hard on cases of unfair dismissal at law firms, particularly where sick leave is concerned. Victoria Willson reports

Absence management is a challenge for all employers, with numerous potential pitfalls. There are various types of absence, but sickness absence is probably the most significant in terms of costs to employers. These costs include salary, overtime and temporary replacement expenses. It is also important to consider indirect costs, brought about by the drop in quality of service that sick leave can result in. By implementing mechanisms, costs can be reduced and a firm's overall profits can be maximised.

The Chartered Institute of Personnel and Development (CIPD) 2008 annual survey report on absence management states that on average sickness absence costs employers £666 per employee per annum, which equates to eight days per employee and 3.5% of an employee's working time.

A report from People Count Law into absence in 90 law firms, published in November 2007, found that sickness absence in the legal sector was lower than the UK average, although the survey did not include absence levels for all types of employee.

Monitoring

A key element of absence management is to accurately measure and monitor absences. Employers should also be aware of their obligations under the Data Protection Act when collecting, using and storing information about sickness absence.

Sickness absence policies

A clear policy that supports the organisation's business objectives and culture is recommended. Effective (non-contractual) policies should spell out employees' rights and obligations when they have time off work, and should be reviewed and updated regularly. The policy should include sick pay, reporting procedures, requirements for self certificates and/or doctor's notes and medical examination reports.

Training

Human resources professionals and line managers should receive training in absence management. Managers have an important role to play in reducing absence levels. The training should cover absence policies, legal and disciplinary aspects, occupational health, return to work interview skills, counselling and give guidance on how to monitor and reduce sickness absence.

Dealing with sickness absence

Short-term intermittent absence

Absence should be proactively monitored and the employee should be spoken to informally. Thereafter consideration should be given to disciplinary sanctions. Discretion should be exercised, although employees should be treated consistently.

Long-term absence

Employers should establish the reason for the absence and consider whether the employee is likely to return to work in the foreseeable future. If they are deemed unlikely to return, permanent health insurance (PHI) schemes and ill health early retirement pensions should be considered.

Employers should keep in contact with absent employees. It depends on the circumstances, but weekly or fortnightly contact is recommended. Also, the timings and type of contact should be agreed with the employee.

Medical evidence should be sought. It is usually advisable to obtain independent expert evidence rather than just a report from a GP. A careful letter of instruction should be sent with correct questions asked. Employers should obviously comply with the Access to Medical Reports Act.

A risk assessment should be undertaken to identify any measures or adjustments to facilitate an employee's return. Examples include phased return to work, and changes to work patterns or hours. The medical expert can also be asked about measures or adjustments.

Disability

Employers should always consider whether the employee is potentially disabled pursuant to the Disability Discrimination Act 1995 (DDA). Numerous GP sick notes refer to stress. Stress is not an illness in itself, nor is it a disability, although there may be an underlying illness, such as depression, which can be a disability.

An employee is disabled for the purposes of the DDA if they have a physical or mental impairment which has a substantial and long-term effect on their ability to carry out normal day-to-day activities.

In some situations this will be obvious. In cases where it is not, medical reports that deal with this should be obtained. Only a tribunal can make an assessment as to whether an employee is disabled, although this is likely to follow medical evidence.

In addition, if an employee is disabled, an employer has a duty to make reasonable adjustments. These can include making physical alterations to the workplace, reallocating duties, transferring the employee to a vacant post, altering working hours and providing special equipment.

Considerations as to whether an adjustment is reasonable include the effectiveness and practicability of the steps made to accommodate the employee, costs incurred in relation to available resources, the availability of external assistance and the size and nature of the employer.

Dismissal

Dismissals for ill health reasons are notoriously difficult to justify as tribunals are usually sympathetic towards sick employees. Tribunals expect law firms, in particular, to have gone the extra mile.

It is a common misapprehension that it is unfair to dismiss an employee before their sick pay entitlement has been exhausted. This is not the case – although this is one of the various factors considered by a tribunal. Current medical evidence is required, which is then used as a basis to support the decision to dismiss. A meeting should be held with the employee to discuss the medical evidence.

If an employee is to be dismissed, employers should follow the statutory dismissal procedures: writing to the employee explaining the issues; holding a meeting between the parties; and, if necessary, conducting an appeal. Employers should also follow their own dismissal or capability procedures.

Potential claims

Unfair dismissal

Employees with more than one year's continuous service have the right not to be unfairly dismissed.

For a dismissal to be fair, it needs to be substantively and procedurally fair. When considering whether a dismissal is fair, tribunals consider the nature of the illness, prospects of return, length of service, possibility of ill health retirement, and reasonableness of keeping the job open.

If an unfair dismissal claim is successful an employee can be awarded up to £72,900 (basic and compensatory award). Failure to follow the statutory dismissal procedures gives a minimum basic award of four weeks pay and an increase of between 10% and 50% to the compensatory award.

Disability discrimination

There is no minimum qualifying period for claims under the DDA. If an employee is disabled, employers should not discriminate against employees on the grounds of their disability or for a reason related to their disability. In addition, there is a duty to make reasonable adjustments.

For a successful claim under the DDA, an employee is likely to have a claim for injury to feelings (with an award of up to £25,000) and also for uncapped compensation.

At my firm Davies Arnold Cooper LLP, sickness absence is proactively managed. In simple terms, this is done by monitoring sickness absence, having discretionary sick pay, treating employees consistently and encouraging a work life balance.

Victoria Willson is an associate at Davies Arnold Cooper.