HR Insights: Medical Incapacity Terminations | Lessons from Recent Case Law

Medical Incapacity Termination: Procedural Fairness Remains Critical

Background

A recent Employment Relations Authority (ERA) decision, Putaanga v MOVe Freight Ltd [[2025] NZERA 425], highlights the importance of following a full and fair process when considering termination for medical incapacity. Employers must ensure they consult thoroughly with employees and consider up-to-date medical information before making decisions.

Case Summary

Mr Putaanga, a Class 5 driver with MOVe Freight Ltd, suffered a workplace head injury in September 2019 and returned to part work in February 2020 under a return-to-work plan. In May 2022, MOVe terminated his employment for medical incapacity. Mr Putaanga claimed his dismissal was unjustified, a claim upheld by the ERA.

Key points included:

• Mr Putaanga had been unable to work more than five and a half hours per day due to fatigue, as reflected in ACC certificates.

• At a meeting on 12 May 2022, MOVe did not enquire about rehabilitation, the employee’s return-to-work programme, or his current health and prognosis.

• The ERA found the meeting lacked genuine interest in updated medical information, and the termination decision appeared predetermined.

ERA Findings

While MOVe had a legitimate business case to replace an employee on ACC and had provided part-time work over 18 months, the process was procedurally unfair. The ERA noted that MOVe could have:

• Requested access to medical or ACC records, or sought consent to speak with his doctor

• Obtained an independent medical examination

• Allowed a proper opportunity for Mr Putaanga to update medical information

The ERA ruled the dismissal unjustified and awarded $9,000 for hurt and humiliation and $12,000 for unjustified dismissal. No lost wages were awarded due to ACC coverage.

Key Takeaways for Employers

• Having a business justification and prior part-time work arrangement is not sufficient if procedural fairness is lacking.

• Always obtain up-to-date medical information before considering termination for medical incapacity.

• Give employees a reasonable opportunity to update medical information and allow time for pending medical assessments.

• Consider employees’ paraphrasing of expert medical information carefully before making termination decisions.

For further guidance on this case, refer to our Case Law resources. For specialist advice, contact Michael at hradvice@businesscanterbury.org.nz

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