Dismissal Due to Illness UK: Capability Process Guide

Overview

Capability dismissal on health grounds is one of the potentially fair reasons for ending employment recognised under the Employment Rights Act 1996. In simple terms, it covers the situation where an employee can no longer carry out the job they were employed to do because of illness or injury, and where there is no realistic prospect of them returning to that role within a reasonable period.

It is distinct from misconduct, redundancy, or performance issues unrelated to health, and it carries its own procedural expectations. The illness may be long-term, such as a serious physical condition or a mental health issue causing extended absence, or it may involve frequent shorter absences that together make the role unworkable.

Because many health conditions meet the definition of a disability under the Equality Act 2010, employers also have to think about reasonable adjustments and the risk of discrimination before moving toward dismissal. A fair procedure is never a formality. Tribunals look closely at whether the employer genuinely explored alternatives and treated the employee with reasonable respect along the way.

Key steps

1. Start with medical evidence, not assumptions. Before any formal decisions are taken, the employer should gather up-to-date medical information, usually through an occupational health referral or, with consent, a report from the employee's GP or specialist. The purpose is to understand the likely prognosis, whether the employee can return, and what adjustments might help. Acting on guesswork rather than evidence is one of the most common ways employers trip up.
2. Hold meaningful welfare and review meetings. Regular meetings during sickness absence give both sides a chance to discuss how the employee is doing, share medical updates, and talk through options. These should feel supportive rather than confrontational. The employee is entitled to be accompanied at formal capability meetings by a colleague or trade union representative, and notes should be kept so there is a clear record of what was discussed and agreed.
3. Consider reasonable adjustments and alternative roles. Where a condition may amount to a disability, the employer has a legal duty to consider reasonable adjustments. This can include phased returns, amended duties, changes to hours, equipment, workplace modifications, or redeployment to a more suitable vacancy. The question is not whether adjustments are perfect, but whether they are reasonable in the circumstances of the employer and the job.
4. Move to a formal capability hearing only when appropriate. If, after proper exploration, the evidence shows the employee cannot return within a reasonable timeframe and no adjustments will bridge the gap, the employer can hold a formal capability hearing. The employee should be given clear written notice of the hearing, the evidence being relied on, the possible outcome including dismissal, and the right to be accompanied. The decision-maker should weigh everything considered to date rather than treating the hearing as a rubber stamp.
5. Offer a right of appeal and confirm the outcome in writing. If dismissal is the outcome, the employer must set this out in writing, explain the reasons, confirm notice pay and any contractual entitlements, and offer the right to appeal to a different, more senior manager where possible. The appeal is a genuine opportunity to reconsider the decision, not a formality, and fresh medical evidence or new information should be looked at properly.