You Did What Now?! Terminating an Employee on Leave

Navigating through any dismissal process can be challenging (much like eating Grandma’s boiled cabbage!) for an employer, and it can become even more complex when the employee you’re about to terminate is away from work on leave.

A business can terminate an employment agreement even while the employee is on leave but, there needs to be a justifiable reason and a fair and reasonable process followed. The reason needs to be backed by evidence for a company to cut its ties, otherwise a personal grievance claim may be raised by the employee for discrimination, disadvantage or unfair dismissal.


  • While employers are able to dismiss an absent worker because of unavoidable circumstances such as when the business is facing financial constraints or closing down – they cannot however, terminate an employee for the primary reason being that they are on leave.
  • Employers should clarify with the employee that the decision to terminate the employment has nothing to do with the employee taking leave. Evidence would be required to support the grounds for dismissal e.g. poor performance, misconduct, incapacity, redundancy, etc.
  • In order to ensure fairness in the dismissal process, employers should hold face-to-face meeting(s) with the employee on leave. Doing this gives both the employer and employee an opportunity to address the issue(s), follow procedure, and find a way to move forward.
  • If an employee has been accused of misconduct or serious misconduct and then taken sick or annual leave, the employer is obliged to do all they can to ensure a response to the allegation is sought and received from the employee. Employers are still required to act reasonably when considering whether to carry on with disciplinary procedures while an Employee is on leave.

The Employment Relations Act requires that an employer must act fairly and reasonably before a decision is made to dismiss an employee and this requirement would be difficult to demonstrate if the employee hadn’t been met with and given an opportunity to respond to the situation/allegation and provide feedback. Imagine being sentenced by a judge for a crime you didn’t commit without first being given the opportunity to present your case!


Aside from having justifiable grounds for dismissal, an employer should be conscious of the timing of the notice of termination. If it is issued during or close to a period of sick or annual leave, this could be viewed as a reason for termination and could be troublesome for the employer.

Notice is the period of time contractually required to be given by employers (and employees in the case of a resignation) to terminate an employment agreement and lawfully bring employment to an end.
An example of a unique situation in which notice could be given immediately even if an employee were on leave, would be during a business closure and this is when employees would need to be advised at the same time.

Medical Incapacity

In the situation of an employee on long-term sick leave potentially leading to medical incapacity, the employer does have the ability to terminate if the employee can no longer perform their duties. For a company to end the employment arrangement, the employer would need to prove it had (with privacy considerations noted) considered medical information about the employee’s condition and their fitness to safely do their role at the moment or the prognosis for their recovery. The employee must provide their consent for the employer to be able to access this information, including getting permission to speak with any health practitioner/specialist about the employee’s health and rehabilitation options. The Employer should also consider other possible alternative options to dismissal and then make a decision. Possible options to contemplate before going down a termination due to medical incapacity path might be to consider part-time working hours, a graduated return to work, reduced work, light duties or even a job-share arrangement.


A business can terminate an employment agreement while the employee is away from work on leave, as long as the employer acts fairly and reasonably during the process. So, in the challenging case of eating Grandma’s boiled cabbage which will never improve – advise Grandma it’s not palatable, suggest she has a better chance of cooking brussel sprouts instead or politely decline the meal invitation!

If you would like to discuss how we may be able to support you with managing employment-related challenges, call Safe Business Solutions Ltd! Freephone 0508 424 723 or email