When a disciplinary process meets medical incapacity

17 Apr 2023
Author: Mikayla Spanbroek

When a disciplinary process meets medical incapacity: Navigating complex circumstances as a fair and reasonable employer. 

A recent ruling Employment Relations Authority navigates the complexities of a disciplinary process resulting in a medical incapacity dismissal. The case VXO v Northland District Health Board [1] is a good example of circumstances where, despite the employee being negatively impacted, the process undertaken by the employer in investigating the alleged conduct, and the potential for medical incapacity were found to be fair and reasonable in the circumstances. 


VXO was employed as a Senior Medical Officer in the Paediatric Team. VXO provided direct supervision of BUW.  

A complaint was lodged against VXO alleging that he made BUW feel uncomfortable and the details of text exchanges were provided.  

Given the serious nature of the allegation an investigation was commenced and an employee who was unconnected to the paediatric department was confirmed as the elected investigator. The investigator confirmed that she had no prior contact with the complainant or VXO and was experienced in undertaking similar investigations. She could therefore conduct an unbiased investigation. 

VXO was informed of and provided with the complaint at a meeting as well as a letter confirming that an investigation was being commenced and the support that was available. The letter included an invitation to an investigation meeting to which it was strongly advised that VXO brought a support person.   

VXO was informed that he was being placed on special leave until the investigation was completed, which was estimated to be a couple of weeks.  

VXO attended the investigation meeting at which VXO was shown a transcript of the text message conversations that had been prepared from BUW’s phone. VXO recalled the inappropriate and unprofessional text messages and comments he had made to BUW. VXO confirmed that at some point the boundary became blurred and in retrospect the conversation went too far.  

VXO was provided a copy of the meeting notes which he amended and signed.  

VXO received a letter of concerns in relation to outcome of the investigation and NDHB’s conduct policies. VXO was notified that the preliminary outcome was dismissal with no available appropriate alternatives. A meeting was proposed to allow VXO the opportunity for VXO to respond to the concerns and the preliminary outcome.  

Before the meeting could take place NDHB received a letter from VXO advising that he had been taken to hospital for a stress induced illness. VXO was subsequently absent for 3 months on paid sick leave. During this time NDHB engaged another paediatrician to cover VXO’s role while paying VXU’s full salary. This created a significant and ongoing cost for NDHB.  

VXU advised that he would be unlikely to recover unless his name was cleared for the allegations and the disciplinary process was ceased.  

In accordance with the VXU’s collective agreement, a medical incapacity inquiry commenced. At this time VXU had been on sick leave for 8 months and had not been at work for 11 months.  

A medical assessment was requested by NDHB, the results of which provided no indication that VXU would be able to return to work in the reasonable future. The decision was made to terminate VXO’s employment due to medical incapacity. Time was allowed between the notice of termination and the end of employment date as a further allowance for VXU to recover.   

Findings of the Authority: 

Fair, Reasonable and Justified Dismissal 

The framework for Medical Incapacity is as follows [2]: 

  1. The Employer must give the Employee a reasonable opportunity to recover. Terms of employment, relevant policy, the nature of the employee’s position and length of employment may be relevant factors around what is reasonable in the circumstances. 
  2. The Employer must undertake a fair and reasonable inquiry into the prognosis and estimated time of return, engaging appropriately with the Employee. This should involve seeking and considering medical information, explaining the reasons for the inquiry, explaining the possible outcome of the inquiry and providing the employee with an opportunity to comment. 
  3. The employer must fairly consider what the employee has to say before terminating their employment. An Employer is entitled to have regard to the business needs and is not obligated to keep a job open indefinitely. The Employee has obligations to be responsive and communicative.  
  4. The employee’s reduced ability to take on certain tasks should be considered. A level of engagement with the employee and attempts to facilitate a return to work may reasonably be expected. Fairness in terms of the process cuts both ways, reflective of the mutual obligations that exist in employment relationships. 

In this case, the Authority found that VXO was provided a reasonable period to recover before a review of his medical incapacity was commenced. NDHB made a sufficient enquiry into the prognosis and VXO’s expected return and NDHB actively sought engagement from VXO in the process. VXO’s comments were considered prior to any decision being made. The Authority confirmed that VXO’s request to dismiss the allegations and disciplinary process was unreasonable and redeployment options were not a feasible consideration in light of the disciplinary process having a likely outcome of dismissal.  

Investigation Process Created No Disadvantage  

For an unjustified disadvantaged it must be established that there was an unjustifiable action by the employer which affected the terms and conditions of employment to the employee’s disadvantage.  

The Authority found that VXO was not unjustifiably disadvantaged by the disciplinary process for the following reasons: the investigation process was thorough and fair; VXO was provided with appropriate support and the opportunity to respond at every stage; VXO’s responses were genuinely considered; NDHB’s policies were consulted; and VXO was provided with clear reasoning for NDHB’s proposed decisions. On the basis that VXO had breached NDHB’s policies to a degree that constituted serious misconduct, there was a substantive justification for the preliminary decision of dismissal resulting from the disciplinary process.  

While the placement of VXO on special leave without consultation was considered as a minor procedural flaw by the Authority, it was found that at no time did VXO object to the suspension prior to the personal grievance being raised. On this point, the Authority noted that the duty of good faith is one both parties are expected to adhere to by being communicative and responsive. 


This case highlights that employment matters can be complex and unique, which can be difficult for employers to navigate. We encourage seeking advice from the DTI Employment team, who can discuss practical strategies with you for approaching employment issues and in doing so, minimise legal risk. 

If your organisation is faced with a serious employment issue such as serious misconduct, an independent and high-quality investigation is an important part of ensuring both the disciplinary process and any resulting decisions are fair and justifiable. Director Andrea Twaddle and Senior Associate Anna Jackman are qualified and experienced workplace investigators who can conduct independent investigations, and along with Director Jaime Lomas, Associates Katy Baxter and Kirsty Tyson regularly advise and assist employers and employees with employment investigations and disciplinary processes.  


[1] VXO v Northland District Health Board [2023] NZERA 97.
[2] Lal v The Warehouse Group Ltd [2017] NZEmpC66 at [33] - [36].

When a disciplinary process meets medical incapacity
About the Author
Mikayla Spanbroek
Mikayla Spanbroek is a Solicitor, graduating in Law (first class Honours) and Accounting at the University of Waikato in 2023. Mikayla works in the specialist employment law team at DTI Lawyers.